Thursday 22nd January: Today’s ECB press conference will likely cause high volatility in the markets – remain vigilant.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers remain battling for position within a major weekly demand area coming in at 1.1373-1.1617. A win for the buyers here will likely see the Euro visit 1.1758, an ignored weekly Quasimodo level.

Daily Timeframe: Yesterday’s trading action reveals that the buyers attempted to push the Euro higher, but found the 1.1678 hurdle too strong to overcome. As a consequence, this formed a ‘middle-of-the-road’ inverted hammer pattern.

4hr Timeframe: For anyone who read our last report on the Euro, you may recall us mentioning that we were short from 1.16017 and were attempting to target 1.1500. As we can all see, price never made it to our target, instead, we ended up closing our position for a small profit at 1.1571 for the simple reason that price closed above a 30-minute supply area visible at 1.1566-1.1553.

Recent developments show that the EUR/USD is presently consolidating ahead of the ECB press conference which is scheduled to commence this afternoon at 1:30pm GMT time. Range limits are seen between a 4hr support area at 1.1530-1.1546, and a 4hr supply area coming in at 1.1647-1.1625. We feel that price will likely meander within this range until the ECB action gets under way. That being the case, buying or selling the Euro at this point in time could cause unnecessary stress. Waiting for price to break and (possibly) retest this range would be a far more conservative approach, and one that we firmly support.

A break above the current 4hr range would likely open the gates for price to challenge the 1.1700 line; conversely a push below would likely force the market to test 1.1500.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

GBP/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers remain battling for point just above a weekly demand area at 1.4812-1.5097. From a technical standpoint, this area of weekly demand should be particularly attractive to investors, since it boasts trendline confluence from the low 1.4225 (17/05/10). To the upside, potential resistance sits at 1.5270, a major weekly swap level.

Daily Timeframe: Crammed trading action is being seen on the daily timeframe as buyers and sellers clash between the weekly swap level mentioned above, and support from a daily Quasimodo support area coming in at 1.5007-1.5097.

4hr Timeframe: The rebound from 1.5200 recently extended lower forcing the market down towards 1.5100; where at the time of writing indecision is being seen by both the buyers and sellers.

In our opinion the GBP/USD has been a rather tricky instrument to trade of late, owing to the fact that there has very little noteworthy movement on the higher timeframes. With everything taken into account, our team has absolutely no interest whatsoever in putting our money at risk trading this pair. As such, we intend to remain flat for the time being. Hopefully, more promising price action will be seen later today as the ECB press conference takes center stage at 1:30pm GMT time.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders are seen at: N/A).

AUD/USD:

Weekly Timeframe: The weekly timeframe shows selling coming into the market around the underside of a recently broken descending channel (limits can be found at 0.9556 – 21/10/13 … 0.8846 – 05/08/13). This has likely caused panic among traders who bought within the weekly demand area at 0.8064-0.8460, potentially adding fuel to the recent selling.

Daily Timeframe: The recent selling interest around the 0.8214 high clearly attracted further sellers into the market yesterday, as prices were driven south towards a small daily demand area coming in at 0.8031-0.8072.

4hr Timeframe: The 4hr timeframe saw the Aussie Dollar take out several technical support barriers as prices plummeted into a nice-looking 4hr demand area at 0.8067-0.8091 (sits just above the aforementioned daily demand area).

Let’s recap here, so that we’re all on the same page. The weekly chart is showing weakness within a major weekly demand area at the moment, while the daily and 4hr charts are currently trading at demand. There’s clearly a conflict of signals here, and as such, any positions taken on this pair will require confirmation and strict trade management rules.

Risk/reward parameters argue against entering long at the moment with price seen teasing the 0.8100 handle as resistance. Selling on the other hand will only be permitted once the aforementioned daily demand area is consumed.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: The USD/JPY pair shows price hovering just above a major weekly swap level coming in at 115.50.

Daily Timeframe: Yesterday’s trading action reveals that active sellers came into the market just below a daily supply area (119.95-119.14) around the 118.82 mark. This took us a little by surprise as we felt prices would likely rally higher towards the aforementioned daily supply before selling off. It will be interesting to see what the 4hr timeframe has to report.

4hr Timeframe: The 4hr timeframe shows that the recent sell off originated from deep within a 4hr supply area at 118.84-118.52. This move took out the 118.00 handle and saw follow-through selling down towards a 4hr demand area seen at 116.91-117.22. From here, price rebounded strongly and forced price north to retest 118.00 as resistance.

Assuming that 118.00 can hold the market lower, we see very little stopping prices from dropping back down to the aforementioned 4hr demand area. As a result, we’re going to be watching lower-timeframe price action closely here today for any sign of selling confirmation. If a signal is spotted, we’ll jump onboard and try to ride price down towards 117.27. However, a break above 118.00 would likely prompt a rapid retest, which is something we’d be very interested in participating in since the path north appears to be clear up to 118.48, just below the aforementioned 4hr supply area.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: watching for lower-timeframe confirmation around the 118.00 area (Predicative stop-loss orders seen at: dependent on where once confirms this level).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows price conquering yet another key weekly level at 1.2260, as the USD/CAD pair continues on its relentless march north. This move has consequently opened the gates for prices to challenge a major weekly Quasimodo resistance level seen at 1.2765.

Daily Timeframe: Yesterday saw the USD break above a daily supply area at 1.2265-1.2162, and trade directly into another daily supply area seen at 1.2504-1.2385. Could this area be enough to temporarily halt this buying onslaught?

4hr Timeframe: The 4hr timeframe shows that the recent ascent north rallied a little fewer than 300 pips. This move brought prices up to just below 1.2400, where at which point the buying pressure began to diminish.

In our opinion, 1.2300 is a critical juncture for this pair. Assuming that the buyers can hold out above this level into today and tomorrow, this will in turn see price close above the aforementioned weekly swap level and would likely suggest a more bullish bias going into next week. This will consequently see the aforementioned daily supply area come under pressure, which now remains a key obstacle to a move higher on the weekly timeframe.

With the above taken into account, buying around the 1.2300 region is something we’d definitely consider as long as lower-timeframe confirmation was also present. Selling this pair is something we are not very comfortable with at the moment, especially with prices recently breaking above such a huge level on the weekly timeframe.

Current buy/sell levels:

• Buy orders: watching for lower-timeframe confirmation around 1.2300 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DAX 30:

Weekly Timeframe: Last week shows that the rebound seen from the weekly decision-point demand area at 9126-9467 has recently extended higher and closed above a weekly resistance level at 10048. Providing that 10048 can hold as support, we see very little reason why the DAX cannot continue higher.

Daily Timeframe: Three days of sideways action on the daily timeframe implies that the recent upward momentum may be diminishing. As a consequence, this could see the German index decline in value down to a daily swap area coming in at 10094-10007. And provided that this area can provide support, we see very little stopping this market from continuing north.

4hr timeframe: The 4hr timeframe has shown little change since the market opened at 10276. This lack of movement likely shows that investors remain wary ahead of the key European Central Bank meeting scheduled today at 1:30 GMT time. With the above in mind, our analysis remains much the same as the previous:

The 4hr timeframe shows that ever since the market opened at 10276, the buyers and sellers have been ranging around the upper limit of an ascending channel (9216 – 16/12/14, 9919 – 19/12/14). In the event that this resistance is successful in motivating the sellers to push south here, we see buying opportunities at the following near-term swap areas:

1. 10094-10068 (tentative buy orders are seen at 10103); this area remains a relatively strong zone to watch for buying since its located deep within a daily swap area mentioned above at 10094-10007.
2. 9945-9917 (tentative buy orders are seen at 9953), this area also holds significance since it was likely here that pro money made the decision to break above the high10094, thus unfilled buy orders may still be lurking around this area.

Buying at these areas is high probability in our opinion. Nonetheless, placing pending orders at either area is too risky for out liking, since price so very often fakes below swap areas such as these, and with the volatility expected from the ECB press conference today, lower-timeframe confirmation is a must here.

Current buy/sell levels:

• Buy orders: 10103 [Tentative] (Predicative stop-loss orders seen at: 10055) 9953 [Tentative] (Predicative stop-loss orders seen at: 9903).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DOW 30:

Weekly Timeframe: The weekly timeframe shows that for six consecutive weeks price has been hovering above an ignored weekly Quasimodo level at 17135. In the event that this level fails, follow-through selling will likely be seen down towards a weekly support level coming in at 16051.

Daily Timeframe: Friday’s trading action saw buyers entering the market just above a daily demand area at 17032-17186 (this area surrounds the aforementioned ignored weekly Quasimodo level). Despite this enthusiastic buying, there has been very little follow-through seen this week indicating indecision is likely present at the moment. Hopefully the 4hr timeframe will offer us a little more information.

4hr Timeframe: From a technical perspective, the US DOW has moved very little as prices continue ranging between a 4hr supply area coming in at 17638-17537, and a 4hr demand area seen at 17248-17344. As a result much of our previous analysis remains valid.

Trading within this range offers potential buying opportunities around the 17355 mark, and likewise, sell trades at 17531. For anyone considering trading within this range, we would highly recommend using some sort of confirmation signal since fakeouts are so very common within ranging environments such as here.

In the event that price breaks south and continues down towards a 4hr decision-point demand area at 17084-17150, we’d be very interested in buying here @ market around the17155 mark. Not only is this 4hr demand beautifully located within the aforementioned daily demand zone, it also encapsulates the aforementioned ignored weekly Quasimodo level as well, consequently forming a highly confluent area for buy trades (for levels see above).

A break above however would likely force the market to test a 4hr decision-point supply level at 17779 (tentative sell orders are seen just below at 17770), which converges beautifully with a trendline formed from the high 18099. Selling from here would in our opinion require lower-timeframe confirmation owing to the fact that we do not see any logical areas to place a stop-loss order, and we would effectively be going against higher-timeframe opposition. We’re not expecting much from this level, other than a quick bounce trade.

Current buy/sell levels:

• Buy orders: 17355 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 17155 (Predicative stop-loss orders seen at: 17067).
• Sell orders: 17531 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 17770 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that Gold has broken above a weekly supply area at 1296.3-1269.3, which as a result leaves the weekly supply area seen above at 1391.9-1328.0 clearly in the limelight for the time being.

Daily Timeframe: Yesterday’s trading action saw the daily timeframe form an indecision doji candle, as price spiked above a small daily supply area at 1296.3-1289.2 (located deep within the aforementioned weekly supply area). Assuming that the majority of sellers are consumed here, increased buying interest may be seen up to a fresh area of daily supply coming in at 1319.2-1308.6.

4hr Timeframe: The recent sell off down towards 1286.1 has allowed us to take a long position at 1287.51. We were initially looking for confirmation here, but with both the weekly and daily timeframes showing that supply has likely been consumed now (see above); our confidence in this level has increased exponentially. Ultimately, we’re looking to ride this position up to a small 4hr supply area coming in at 1315.0-1311.2, which is beautifully located within the daily supply area mentioned above at 1319.2-1308.6.

For anyone who missed entering long around the 1286.1 region, all is not lost. Our Gold team is currently watching the lower timeframes for confirmed entries to pyramid our current position, as we feel there is a very good chance a continuation move higher is going to be seen.

Current buy/sell levels:

• Buy orders: 1287.51 [Live] (Predicative stop-loss orders seen at: 1283.00) watching for lower-timeframe confirmation around the 1286.1 area (Predicative stop-loss orders seen at: dependent on where one confirms the trade).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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