Possible shorts below 1.3450...
Weekly gain/loss: 1.01%
Weekly closing price: 1.3472
The GBP/USD chalked up a fourth consecutive gain last week, increasing its value more than 130 pips. In consequence to this, weekly price concluded the week shaking hands with a weekly channel resistance extended from the high 1.2673. Regardless of the fact that this barrier was breached back in September, this line has proved worthy in the past and, therefore, may very well suppress buying this week and send the British pound lower.
Assuming that the weekly channel resistance holds ground, daily price shows that the unit could trade as far south as the daily support level pegged at 1.3371. To the upside, nevertheless, there’s room for the daily candles to push up to a daily Quasimodo resistance level penciled in at 1.3618 (sited beneath weekly resistance at 1.3683 – the next upside target beyond the current weekly channel resistance).
A quick recap of Friday’s trading on the H4 timeframe reveals that the pair failed to muster enough strength to breach the H4 mid-level resistance coming in at 1.3550 and sold off. UK’s manufacturing PMI surprised to the upside in November but was largely ignored. Despite a brief spate of buying (influenced by escalating political tension in the US) during US hours, H4 price wrapped up the week crossing paths with the H4 mid-level support at 1.3450, which happens to intersect beautifully with a H4 channel resistance-turned support taken from the high 1.3229.
Suggestions: Buying from the H4 mid-level support at 1.3450 may seem attractive knowing that the line fuses with a H4 channel, but it is not a setup we’d label high probability. Entering long as weekly price connects with weekly resistance tends to end in drawdown.
So, rather than buying 1.3450, we’re looking for H4 price to close beneath this level. A decisive H4 close lower coupled with a retest and a reasonably sized H4 bearish candle (preferably in the shape of a full or near-full-bodied candle) would, in our view, be enough to suggest shorts. Also of particular interest here is the H4 tail seen marked with a black arrow at 1.3432.This, we believe, has consumed the majority of buy orders beneath 1.3450, potentially opening up downside to the 1.34 handle, followed closely by October’s opening level at 1.3367 (sits directly below the daily support mentioned above at 1.3371).
Data points to consider: UK construction PMI at 9.30am; US factory orders m/m at 3pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.3450 and then look to trade any retest seen thereafter (waiting for a reasonably sized H4 bearish candle to form following the retest – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).
Weekly closing price: 1.3472
The GBP/USD chalked up a fourth consecutive gain last week, increasing its value more than 130 pips. In consequence to this, weekly price concluded the week shaking hands with a weekly channel resistance extended from the high 1.2673. Regardless of the fact that this barrier was breached back in September, this line has proved worthy in the past and, therefore, may very well suppress buying this week and send the British pound lower.
Assuming that the weekly channel resistance holds ground, daily price shows that the unit could trade as far south as the daily support level pegged at 1.3371. To the upside, nevertheless, there’s room for the daily candles to push up to a daily Quasimodo resistance level penciled in at 1.3618 (sited beneath weekly resistance at 1.3683 – the next upside target beyond the current weekly channel resistance).
A quick recap of Friday’s trading on the H4 timeframe reveals that the pair failed to muster enough strength to breach the H4 mid-level resistance coming in at 1.3550 and sold off. UK’s manufacturing PMI surprised to the upside in November but was largely ignored. Despite a brief spate of buying (influenced by escalating political tension in the US) during US hours, H4 price wrapped up the week crossing paths with the H4 mid-level support at 1.3450, which happens to intersect beautifully with a H4 channel resistance-turned support taken from the high 1.3229.
Suggestions: Buying from the H4 mid-level support at 1.3450 may seem attractive knowing that the line fuses with a H4 channel, but it is not a setup we’d label high probability. Entering long as weekly price connects with weekly resistance tends to end in drawdown.
So, rather than buying 1.3450, we’re looking for H4 price to close beneath this level. A decisive H4 close lower coupled with a retest and a reasonably sized H4 bearish candle (preferably in the shape of a full or near-full-bodied candle) would, in our view, be enough to suggest shorts. Also of particular interest here is the H4 tail seen marked with a black arrow at 1.3432.This, we believe, has consumed the majority of buy orders beneath 1.3450, potentially opening up downside to the 1.34 handle, followed closely by October’s opening level at 1.3367 (sits directly below the daily support mentioned above at 1.3371).
Data points to consider: UK construction PMI at 9.30am; US factory orders m/m at 3pm GMT.
Levels to watch/live orders:
• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.3450 and then look to trade any retest seen thereafter (waiting for a reasonably sized H4 bearish candle to form following the retest – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).
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