Risk sentiment improved Tuesday, with US stocks receiving a boost after President Trump announced he will seek financial relief for workers and businesses affected by the coronavirus outbreak. This fuelled a recovery in US Treasuries, boosting the US dollar index, and also saw traders ditch safe-haven assets, including the Swiss franc.
Quasimodo support on the weekly timeframe at 0.9255 capped downside, albeit after a brief spell to lows at 0.9182 (levels not seen since June 2015. Further recovery on this timeframe could extend as far north as resistance from 0.9447.
H4 action extended gains north of 0.92, running through 0.93 and retesting the latter as support Tuesday for an additional push to 0.94. A break of 0.94, as you can see, has weekly resistance at 0.9447. Note the relative strength index (RSI) failed to overthrow 50.00 after bottoming at 15.00.
A whipsaw through 0.94, tripping buy-stop liquidity, to weekly resistance at 0.9447, could be in the offing today. While yesterday’s recovery attracted early buyers, upside lacks conviction until the weekly resistance mentioned above at 0.9447 is consumed. This level, therefore, may be an area fresh sellers join and current longs liquidate partial profits (essentially selling, too).
Conservative traders may want a H4 close back beneath 0.94 to form, after testing weekly resistance. Entry on the breakout candle is then an option, targeting 0.93 as the initial port of call.
Disclaimer: The information contained in this material is intended for general advice only.