Beginning with the weekly timeframe this morning, we can see that this unit remains lurking beneath the edge of a formidable resistance area coming in at 1.1533-1.1278. The zone has managed to cap upside since May 2015, so it’s not a base one should ignore. On the daily timeframe, however, the candles are seen consolidating between a support level drawn from 1.1142 and a trendline resistance etched from the low 1.0711.
Transferring over to the H4 timeframe, it’s easy to see that the single currency recently stabilized around the 1.12 handle following a modest selloff from a high of 1.1250 during yesterday’s London morning segment. Based on this recent movement, we have some interesting harmonics at play:
• First up is the H4 mid-level support at 1.1150, shadowed closely by daily support mentioned above at 1.1142. What makes this small zone so interesting is the H4 AB=CD (see black arrows) 127.2% Fib ext. at 1.1140 taken from the high 1.1268. • The second area of interest can be seen between 1.13/1.1269. This zone boasts a H4 resistance at 1.1279, a round number at 1.13 and a H4 AB=CD (see black arrows) 127.2% Fib ext. at 1.1269 taken from the low 1.1168. Also of interest here is the daily trendline resistance mentioned above, as it intersects beautifully with the 1.13 handle.
Our suggestions: Technically speaking, there is equal opportunity to trade this pair both a long and short today, as both noted zones boast a daily support/resistance.
However, we do slightly favor the resistance area 1.13/1.1269 since there is less restriction seen below the zone. The support area noted at 1.1142/1.1150 has a rather large demand planted above it at 1.1161-1.1189 that could potentially act as a resistance!
Data points to consider: US Core durable goods orders and US prelim GDP q/q at 1.30pm GMT+1.