On the bigger picture, one can see that the currency has been on a tear since shaking hands with a weekly channel support extended from the low 0.6827 five weeks ago. Further buying is likely to place the unit within striking distance of weekly resistance penciled in at 0.8065. This level boasts a robust history so expect active sellers to make an appearance here! Turning our attention to the , supply at 0.7986-0.7951 held firm on Tuesday, chalking up a clear-cut indecision candle. A break of this area would, in our opinion, unlock the door for weekly price to challenge the noted resistance.
Buying this market, although promising on the weekly and H4 charts, is still not something we’d label high probability due to the aforementioned daily supply.
Selling, on the other hand, remains attractive from 0.80. Assuming the number is tested, the break of the noted daily supply would likely activate stops. These stops, once filled, become buy orders. Buy orders are what’s required in order to sell. Therefore, there is a good chance that players with big pockets may be looking to take advantage of this liquidity pocket.
This setup may not trigger today, but is certainly one to keep on the watchlist, we believe.
Data points to consider: US industrial production m/m and capacity utilization rate at 2.15pm; FOMC member Mester speaks at 9.30pm GMT .
Areas worthy of attention:
Resistances: 0.80 handle; 0.8065; 0.7986-0.7951.