Friday 13th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers continue to trade between a weekly supply area coming in at 1.1678-1.1458, and a weekly Quasimodo support level seen at 1.1109. Nevertheless, at this point in time, buying and selling is taking part closer to the aforementioned weekly supply barrier.

Daily Timeframe: After a lackluster performance over the past three days, buying interest was seen coming into the market from within a small daily demand area at 1.1260-1.1318. This move was very likely fuelled by the negative U.S unemployment data released yesterday.

4hr Timeframe: The 4hr timeframe shows price has broken out of its 74-pip range (1.1343-1.1269), which consequently attracted further buying up to the 1.1400 handle. No major Eurozone data is due for release today, so technicals will likely control most of the trading activity in upcoming sessions…

A break above the 1.1400 number could well see a rapid retest forcing the market towards a small 4hr supply area coming in at 1.1497-1.1462. Buying the potential retest is valid strategy as long as one remains aware that they are buying very close to the weekly supply area (see above in bold). In fact, the 4hr supply area is located just within the weekly supply area!

Conversely, In the event that sellers are able hold the market below 1.1400 today, this would likely push price back down to retest the upper limit of the recently broken 4hr range (see above). Selling at market around 1.1400 would be considered a risky trade in our book. So, with that, we intend to wait for price action on the lower timeframes to confirm that selling strength is present before considering a short trade here.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: currently watching 1.1400 for selling confirmation on the lower timeframes (Predicative stop-loss orders seen at: dependent on where one confirms this level).

GBP/USD:

Weekly Timeframe: The situation on the weekly timeframe shows that sterling has strongly broke above a weekly swap level seen at 1.5270. This move has likely opened the gates for further upside towards a weekly supply area visible at 1.5784-1.5541.

Daily Timeframe: Yesterday was clearly a good day for anyone long sterling, as price closed above the aforementioned weekly swap level, and has (at the time of writing) almost hit a neighboring daily swap level seen above at 1.5433.

4hr Timeframe: The 4hr timeframe shows that the recent buying originated from a small 4hr demand area seen at 1.5195-1.5227. Price rallied strongly from here breaking above both the 1.5300 level and the converging downtrend line extended from the high 1.5681. This move consequently forced the market to test 1.5400. In the event that price breaks above 1.5400, entering long may not be the best path to take considering that the daily swap level at 1.5433 is looming just above. A far more conservative approach to buying would (in our opinion) be to wait for price to break above and retest this daily level.

Selling on the other hand between 1.5400 and 1.5433 (green box) is something that has caught our team’s eye. However, we have no intention of selling at market here, owing to the fact that price has just strongly broken above a major weekly swap level (see above). Therefore, we have decided to patiently watch how price action unfolds on the lower timeframes around this green zone, if a confirmation sell signal is seen, we’ll then look to get short and ride the probable wave down to at least Friday’s high at 1.5351.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: currently watching for lower timeframe confirmation between 1.5400 and 1.5433 (Predicative stop-loss orders are seen at: dependent on where one confirms this level).

AUD/USD:

Weekly Timeframe: The weekly timeframe shows that the Aussie is currently trading, or should we say ‘consolidating, or even hesitating’ above a major weekly demand area (0.7449-0.7678) at the moment.

Daily Timeframe: Yesterday’s trading action shows that the Aussie once again ‘spiked’ below the daily Quasimodo support area seen at 0.7699-0.7834. Assuming that most of the buyers are consumed around this area, we feel there’s a good chance that price will continue driving south until reaching the daily demand area coming in at 0.7449-0.7598 (located deep within the aforementioned weekly demand area).

4hr Timeframe: Recent developments on the AUD reveal that the 0.7700 level gave way relatively easily, which in turn saw the market aggressively sell off down towards a 4hr demand area coming in at 0.7625-0.7675 (located just within the aforementioned weekly demand area). There were clearly energetic buyers waiting here as price rallied above the 0.7700 level towards a small, yet clearly active 4hr supply area seen at 0.7792-0.7768.

Entering short from this 4hr supply area could be something our team is interested in if lower timeframe confirmation presents itself. In fact, take a look at the 30 minute timeframe, notice how price reacted at the 4hr supply area, and took out the low 0.7740, this to us is confirmation that price may be heading south down to at least 0.7728. Therefore, if price retraces before hitting our desired target (0.7728), we intend to sell from 0.77626 with a stop set just above at 0.77793.

However, even though we have a live pending short order in the market, we still remain fully aware that we are effectively selling into weekly demand (see above), so in the event our order gets filled, we will be constantly monitoring our position and WILL exit at the first sign of trouble.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.77626 (Predicative stop-loss orders seen at: 0.77793).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows that the USD/JPY pair is currently seen consolidating between a major weekly swap level coming in at 115.50, and a weekly Quasimodo resistance level seen at 122.18.

Daily Timeframe: Following a strong break above the daily supply area at 119.95-119.14, price aggressively sold off yesterday down towards a small daily decision-point demand area at 118.32-119.09.

4hr Timeframe: The recent sell off saw price consume several technical support barriers, and only found enough supportive pressure to contain this selling once price hit a small 4hr demand area seen at 118.32-118.54, which if you look on the daily timeframe, you’ll notice that this area is beautifully located deep within the aforementioned daily-decision-point demand area.

Buying now (at market) would in our opinion not be the best path to take simply because you would essentially be buying into round-number resistance at 119.00. Waiting for price to break above the high 119.17 seen on the 30 minute timeframe would be (in our opinion) a far more conservative approach. This will do two things: 1, signal that higher prices are likely, and 2, it will permit us to place a pending buy order around the 118.69 mark (which is where we believe the decision was made to initially buy the market up to 119.00 on the 30 minute timeframe). Placing a pending buy order here readies us so that if price retraces before rallying, we’ll be sure to catch the move before it continues to the next point of interest, which appears to be the 4hr swap level coming in at 119.35.

Current buy/sell orders:

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

USD/CAD:

Weekly Timeframe: The situation on the weekly timeframe reveals that the market is currently being held lower by a long-term weekly Quasimodo resistance level seen at 1.2765. In the event that further selling is seen from here, we feel there is a good chance that price will hit the weekly swap level coming in at 1.2260 very soon.

Daily Timeframe: The daily timeframe on the other hand shows that the market is presently being held higher by a daily decision-point demand area at 1.2378-1.2468. This area of demand remains a key obstacle to a move towards the aforementioned weekly swap level. It will be interesting to see what the 4hr timeframe has to say about this…

4hr Timeframe: It was mentioned in the previous analysis that if price broke below the small 4hr decision-point demand area at 1.2570-1.2600 and successfully retested it as supply, this would be our cue to begin watching the lower timeframes for confirmed shorts down towards the 4hr demand area coming in at 1.2429-1.2469 (located within the aforementioned daily decision-point demand area). As we can all see price did exactly that, unfortunately though, we were not around for this move!

At the time of writing, the buyers and sellers are currently battling for position around the aforementioned 4hr demand area. Entering long from here with lower timeframe confirmation is valid in our opinion as long as your targets are kept small and manageable. However, one would need to remain aware that they would be effectively buying into selling pressure from the aforementioned weekly Quasimodo resistance level. Nonetheless, let’s also not forget though, that this 4hr area is presently supported by the aforementioned daily decision-point demand area. In fact, as mentioned above, it is located within this area! First take-profit target for this buy trade (if lower timeframe buying confirmation is seen) is going to be set around the1.2561 level with a second and final target set just above at 1.2600.

Current buy/sell orders:

• Buy orders: watching for lower timeframe confirmation around the current 4hr demand area at 1.2429-1.2469 (Predicative stop-loss orders seen at: 1.2416).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/CHF: (Due to the recent lack of movement, our analysis for this pair remains the same as yesterdays)

Weekly Timeframe: Trading action on the weekly timeframe shows that price is currently retesting the weekly swap level at 0.9204 as support. Assuming that the buyers can hold out above this level, resistance will not likely come into the market until price hits the weekly swap level seen above at 0.9382.

Daily Timeframe: Similar to the weekly timeframe, the daily timeframe shows price retesting the weekly swap level at 0.9204. The daily timeframe however shows us that very little buying strength is being seen here at the moment, which could lead to price breaking below this weekly level and opening the gates for prices to challenge a daily decision-point demand area coming in at 0.8933-0.9018.

4hr Timeframe: As you can see, the USD/CHF pair is continuing to range between a 4hr swap level seen at 0.9316 (remains a key obstacle to a move towards the weekly swap level at 0.9382), and the weekly swap level mentioned above at 0.9204. With the slow, almost fragile price action seen at the moment, our team has no interest whatsoever in trading this pair.

However, we believe in being prepared, and as such, a break below and retest of the weekly swap level at 0.9204 could provide a nice selling opportunity down towards a 4hr decision-point demand area coming in at 0.8984-0.9054 (located just above the aforementioned daily decision-point demand area). Conversely, a break above the aforementioned 4hr swap level would likely attract further upside towards the weekly swap level seen at 0.9382. It would be at this point we’d feel comfortable looking for confirmed sell trades around the 0.9380 mark.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.9380 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

DOW 30:

Weekly Timeframe: Last week shows price rebounded strongly from the ignored weekly Quasimodo level coming in at 17135. In the event that further buying is seen, we feel there’s a very good chance that price will attack the overall high seen at 18098 sometime soon.

Daily Timeframe: Yesterday saw the buyers defend the daily swap level support coming in at 17896 which formed a beautiful buying tail in the process. As mentioned in the previous analysis, we believe that the recent movement has likely opened the door for more upside towards a small daily supply area coming in at 18098-18045.

4hr Timeframe: For anyone who read our previous analysis, you may recall us mentioning to watch for lower timeframe buying confirmation around the 4hr swap level at 17887, more specifically, the 17893 level seen just above it. As we can all see, price did indeed see a reaction here. Unfortunately though, we have yet to see any confirmation on the lower timeframes to permit trading long form here. Assuming that price can break above Wednesday’s high at 17980 today, we believe the DOW will likely head towards the 4hr supply area at 18047-18014.

However, if Wednesday’s high contains enough selling pressure to push prices back down to retest the aforementioned 4hr swap level again; we will, as before, be watching the 17893 mark for any buying confirmation and (if a signal is seen) look to take quick profits into the weekly close.

Current buy/sell orders:

• Buy orders: 17893 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that Gold has dipped just below the weekly swap level seen at 1222.2, which may have opened the gates for further downside towards a weekly demand area coming in at 1166.8-1195.0.

Daily Timeframe: The daily timeframe shows that the buyers and sellers are still seen pulling for position around the daily decision-point demand area coming in at 1204.4-1216.5. This consequently formed a nice-looking inverted hammer pattern, which in effect, could indicate buying may well be on the cards today.

4hr Timeframe: Recent developments on Gold reveal that there were indeed active buyers present around the 4hr swing low at 1217.3 (12/01/15), which as you can see managed to hold price higher yesterday. However, the 1232.8 number seen above was clearly too resistive for the buyers to overcome, thereupon bringing price back down to the 1217 region once again. That being the case, price has effectively not seen much change since yesterday, and as such most of our previous analysis will remain the same:

In the event that this 4hr swing low gives way today, price will likely continue drilling south towards a 4hr demand area seen at 1204.4-1210.6, which if you look on the daily timeframe, you’ll see it is located deep within the daily decision-point demand area mentioned above at 1204.4-1216.5.

Let’s quickly recap here so that we’re all on the same page. The weekly chart is currently indicating room for price to move south following the break of 1222.2, meanwhile on the daily chart, we can see price is trading around the base of a daily decision-point demand area (for levels see above) at the moment. So, where does this leave us on the 4hr timeframe? Well, just because the weekly chart has broken a support level, it does not necessarily mean price will automatically continue south. This is especially true when we have supporting demand coming in from the daily timeframe (as just mentioned above). Therefore, we believe if price is going to decline in value, it will only likely do so down towards the 4hr demand area at 1204.4-1210.6, and if price holds here, and shows strength, we feel there is a good chance a fakeout below the weekly support level may be in process. Under those circumstances, our team will expect Gold to increase in value, and as such we’ll be keeping a close eye on the lower timeframes for any confirmed buy trades around the 1211.7 mark as shown by the green arrows.

Current buy/sell orders:

• Buy orders: 1211.7 [Tentative] (Predicative stop-loss orders seen at: 1203.4).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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