In early trading on Thursday, the pair took a hit following less-than-stellar Chinese trade balance data. After driving through the 0.78 handle, the day ended with price bottoming around the top edge of a H4 demand base drawn from 0.7762-0.7779, which, as you can see, is holding firm at this time.
Weekly flow marginally surpassed the 2018 yearly opening level at 0.7801, but remains far too early to tell whether bids have dried up here yet. On the , demand at 0.7807-0.7841 was taken out during yesterday’s downside move (now acting ), consequently exposing a daily penciled in at 0.7732.
Potential trading zones:
Despite the response seen from the current H4 demand, this is not a buyers’ market. Yes, the 2018 yearly opening level may still contain active buyers, but with the 0.78 handle, a H4 resistance at 0.7812 and the daily mentioned above at 0.7807-0.7841 potentially hindering upside, we’d avoid entering into any buy transactions for now.
How about a short beyond the current H4 demand? This could be a viable approach as long as you remain cognizant of the nearby daily plotted at 0.7732. Between these two levels one has 30 or so pips to play with. So not really a lot to work with here!
Data points to consider: RBA statement at 12.30am; Chinese figures at 1.30am GMT .