Thursday had price action revisit and breach 110 amid broad USD selling, weighed by US Treasury yields clocking all-time lows. December’s opening level at 109.51 on the H4 timeframe and support coming in at 109.27 remain set as the next layers of support on this scale. Beyond here, aside from 1.09, limited support is visible until reaching January’s opening level at 108.62. The relative strength index also continues to meander north of oversold waters, unable to crack 34.00.
Before smashing that sell button, though, weekly price is seen crossing paths with support coming in at 109.68, formed in the shape of the 2019 yearly opening level. This remains a key fixture in this market and could, despite the strong bearish vibe surrounding the dollar right now, offer the market some much-needed respite. Beyond weekly support, traders likely have eyes for daily trend line support, taken from the low 104.44, and the 200-day SMA (orange – 108.41).
Well done to any readers who took advantage of bearish themes beneath 112 on Friday; this was a noted move to be aware of. The risk/reward from here is just mouth-watering.
Going forward, 110 is likely to give way, knowing weekly support resides just beneath at 109.68. A test of this weekly base, followed up with a close back above 110, could prompt a recovery in this market, fuelled on the back of sell-stop liquidity taken from beneath 110.
Note, however, although we’re testing weekly support, the likelihood of a whipsaw forming through this base to December’s opening level at 109.51 or H4 support at 109.27 is a strong possibility. So, keep this in mind If you are looking for buying opportunities today.
Disclaimer: The information contained in this material is intended for general advice only.