Technically speaking, there’s equal opportunity to trade this unit both long and short today.
• For longs, we’re looking at a retest of 1.12 since it converges with the recently breached H4 edge taken from a high of 1.1268 and a H4 38.2% Fib support at 1.1198 (drawn from the low at 1.1109 – green circle).
• For shorts, the H4 resistance at 1.1279 and 1.13 handle is a reasonable area to consider selling from, given its relationship with the two aforementioned higher-timeframe supplies.
Our suggestions: While there’s scope for both a long and a short today, we favor the sell side of this market right now. With daily price trading so close to supply that has connections with a weekly supply, we feel it’s just too risky to buy this market from1.12, despite its neighboring confluence.
With that in mind, our main focus turns to 1.13/1.1279. Ultimately, we’d need a reasonably sized H4 candle to form here, preferably a full-bodied candle, before pulling the sell trigger. This will help avoid getting stopped on a fakeout and inform us that seller interest exists.
Data points to consider: US ADP non-farm employment change at 1.15pm, US weekly unemployment claims at 1.30pm and US ISM Manufacturing PMI figures at 3pm GMT+1.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: 1.13/1.1279 (waiting for a reasonably sized H4 bear candle – preferably a full-bodied candle – to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s wick).