Even though retail sales, PPI and consumer sentiment came in negative last week, the greenback was able to recoup some losses after the news were released. Most importantly, our sell position was triggered at our set level. This move was somehow priced in and followed through a very bearish signal that had formed a day earlier on Thursday-that inverted hammer which was confirmed by that bear candle on Friday. It is worth noting that those reversals happened at 38.2 Yearly Fibonacci level and was also June’s high before that reversal bear candle happened-on Brexit.
We shall therefore keep holding our shorts today and initiating any strong signal in the lower timeframes. Since it is also a Monday, except no major news with light volume and with no major economic news anticipated other than Empire State Manufacturing index at 1230 GMT, other data will be expected to cause low volatility.
To the charts and this should be our game plan:
Look to initiate short positions in the 15 min chart only when there is a good sell signal printed by the stochastics at 50-61.8 Fibonacci level drawn from Friday’s Hi-Lo and target 0.705 regions in the daily chart. Look to increase this TP margin especially if there is a convincing break below the support trend line and if price action breaks strongly below that 0.712 price level. This is our minor support zone, marked by previous hammers on 08.08.2016, 06.07.2016 and in 21.06.2016.
At the moment price is trending higher in the 15 Min chart and we should look to trade as follows:
Sell Limit: 0.721-0.722 (within last week’s 50-61.8 Fibonacci levels)
Have a good trading day.