1.2520/1.25 is an interesting zone for shorts...
Mid-way through yesterday’s London session, the pair caught a fresh bid off a H4 trendline support etched from low 1.2346 and managed to close the day above the nearby H4 mid-way resistance at 1.2450. Seeing as how the unit lacks higher-timeframe (structural) direction at present, our desk sees no reason why price will not continue to gravitate north and connect with the 1.25 handle today, which we believe could potentially hold prices lower.
There are a number of technical aspects that support this view:
• H4 bearish AB=CD (black arrows) 127.2% ext. at 1.2503.
• December’s opening level at 1.2516.
• The underside of a H4 supply coming in at 1.2547-1.2520.
Our suggestions: Assuming one shorts the 1.2520/1.25 H4 zone (yellow box) at market, stop-loss orders should ideally be placed above the H4 mid-way resistance at 1.2550. For the more conservative traders out there, you may want to consider waiting for additional confirmation in the form of a reasonably sized H4 bearish candle. This would, in effect, give you the choice of either placing stops above the trigger candle or beyond the current H4 supply.
Data points to consider: UK GDP (second estimate) at 9.30am, MPC member Cunliffe speaks at 11am, MPC member Shafik speaks at 8am. FOMC member Powell speaks at 6pm, FOMC meeting minutes at 7pm GMT.
There are a number of technical aspects that support this view:
• H4 bearish AB=CD (black arrows) 127.2% ext. at 1.2503.
• December’s opening level at 1.2516.
• The underside of a H4 supply coming in at 1.2547-1.2520.
Our suggestions: Assuming one shorts the 1.2520/1.25 H4 zone (yellow box) at market, stop-loss orders should ideally be placed above the H4 mid-way resistance at 1.2550. For the more conservative traders out there, you may want to consider waiting for additional confirmation in the form of a reasonably sized H4 bearish candle. This would, in effect, give you the choice of either placing stops above the trigger candle or beyond the current H4 supply.
Data points to consider: UK GDP (second estimate) at 9.30am, MPC member Cunliffe speaks at 11am, MPC member Shafik speaks at 8am. FOMC member Powell speaks at 6pm, FOMC meeting minutes at 7pm GMT.
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