Kicking this morning’s report off with a quick look at the weekly timeframe shows us that the unit is currently shaking hands with the underside of a supply zone drawn from 1.2778-1.2653. Also from this scale, we can see that the market has been in a clear downtrend since May, and all this recent advance could be is a correction.
The story on the daily timeframe, nevertheless, reveals that sellers have been struggling to register anything of note from supply at 1.2663-1.2511. In fact, price is currently toying with the top edge of this zone, as we write.
Across on the H4 timeframe, we can see that the bears managed to defend the mid-level resistance 1.2650 on Monday. The green area is there to show that just below this resistance, we also have a Quasimodo resistance plotted at 1.2637 and a 127.2% AB=CD Fib ext. point at 1.2631.
Suggestions: While daily price looks vulnerable to the upside, both weekly and H4 structures seem robust. For that reason, the small green H4 zone is still a strong sell, in our humble view. To be safe though, we would advise placing stops a few pips above the current daily supply at around the 1.2667ish mark. The first take-profit target, for us, would be the 1.26 handle.
Data points to consider: No high-impacting news events scheduled today.