Friday 20th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows price still remains trading between weekly supply coming in at 1.1678-1.1458, and a weekly Quasimodo support level visible at 1.1109. Nevertheless, much of the recent trading action has been seen taking place just below the aforementioned weekly supply area.

Daily Timeframe: The situation on the daily timeframe remains relatively unchanged. The buyers and sellers continue to be seen pulling for position between a daily demand area seen at 1.1260-1.1318 and a daily swap level sitting at 1.1411.

4hr Timeframe: The 4hr timeframe shows that price is currently ranging between 1.1411 (seen a little above the aforementioned daily swap level), and 1.1336 (located just above the aforementioned daily demand area). For anyone considering trading within this band, tentative buys are seen at 1.1341 and sells at 1.1434. However, we would not recommend trading these levels without confirming price action from the lower timeframes, since fakeouts tend to be a common occurrence within consolidative environments.

A break below this 4hr range would likely force the market to test a small 4hr demand area at 1.1304-1.1318 (located just within the aforementioned daily demand area). Buying with corresponding lower timeframe confirmation around the 1.1321 mark is feasible as long as one remains aware that they are effectively buying not too far from weekly supply at 1.1678-1.1458.

Conversely, a break higher would likely attract further buying towards the 4hr supply area seen at 1.1497-1.1462. We’ve placed a pending sell order just below here at 1.1457 and a stop just above at 1.1503, since this area remains relatively fresh, and is located just within the limits of the aforementioned weekly supply area.

Current buy/sell orders:

• Buy orders: 1.1341 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.1321 [Tentative] (Predicative stop-loss orders seen at: 1.1295).
• Sell orders: 1.1434 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.1457 (Predicative stop-loss orders seen at: 1.1503).

GBP/USD:

Weekly Timeframe: The latest from the weekly timeframe shows that price is currently being held above a weekly swap level seen at 1.5270. The next area to watch for selling activity comes in around weekly supply at 1.5784-1.5541.

Daily Timeframe: The daily timeframe shows that the buyers and sellers are currently battling for position around a daily swap level coming in at 1.5433. This level, as you can probably see, remains a key obstacle to a move towards the aforementioned weekly supply area.

4hr Timeframe: Recent developments on the 4hr timeframe show price closed above a daily swap level at 1.5433, and did in fact attempt to retest it as support. The buyers were clearly overwhelmed at this level which as a result saw the market slip back below this barrier down to around the 1.5400 region.

So that we are all on the same page here, let’s just quickly recap. The weekly chart shows price has room to move north following the break of a weekly swap level, while the daily timeframe suggests selling may enter the market owing to price trading around the underside of a daily swap level at the moment (see above). This leaves us with just the 4hr timeframe…

Buying at this time may not be the best path to take owing to the fact that price was unable to successfully crack the daily swap level resistance (see above). By the same token, selling this market is just too risky in our book, especially with potential support looming just below at 1.5400. A convincing break below this number would be needed before we’d consider shorting. Therefore, opting to stand on the side lines here may very well be the most conducive position to take for the time being.

Current buy/sell orders:

• 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: Following the back-to-back weekly indecision candles that formed around weekly demand at 0.7449-0.7678, very little follow-through interest from either side of the market has been seen this week.

Daily Timeframe: The daily picture shows that for the past two weeks, the AUD/USD pair has been ranging between two daily swap levels (0.7844 and 0.7691). However, recent movement reveals that the majority of trading is taking place below the upper resistance band of this consolidation – the 0.7844 level.

4hr Timeframe: The 4hr timeframe shows that price has once again found support – this time coming in around a small 4hr demand area seen at 0.7741-0.7771. Although the Aussie has found support, price is still unable to clear immediate resistance above at 0.7844 (daily swap level). Because of this, any buying done from the current 4hr demand area would (for us) require lower timeframe confirmation with clear and easy-to reach targets.

In short, the team is going to be watching for confirmed intra-day buys around the aforementioned 4hr demand area today. We feel that buying at demand is far more favorable for the simple reason that price is currently hovering around a weekly demand area (see above) at the moment.

Current buy/sell orders:

• Buy orders: watching for confirmed buys around 4hr demand at 0.7741-0.7771 (Predicative stop-loss orders seen at: 0.7735).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers continue to pull for position around the upper limits of a symmetrical triangle formation (121.83/117.43).

Daily Timeframe: The latest from the daily timeframe reveals that price is currently being supported by a daily decision-point demand area at 118.32-119.09. A break below this boundary could very well see price drop towards a daily demand area coming in at 116.86-117.54.

4hr Timeframe: The USD/JPY pair continues to show support from 4hr demand area at 118.32-118.54 (located deep within a daily decision-point demand area at 118.32-119.09), as price was aggressively bought from here, forcing the market to test the 119.00 region.

At this point in time, buying this market is something our team (as mentioned in the previous analysis) remains wary of for the following reasons:

1. Price is currently seen reacting from the upper limits of the weekly symmetrical triangle (see above).
2. Price action around the daily decision-point demand area (see above) is not exactly showing much in the way of buying strength at present. What is more, this daily area was also slightly breached on the17/02/14, thus some of the buy orders may have already been consumed.
3. Round-number resistance at 119.00.

With regards to selling, short-term opportunities may be seen today around the 119.00 barrier. We would advise waiting for confirmation here though, since we do not see a lot stopping price from hitting 119.35 above.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: watching for confirmed intra-day sells around 119.00 (Predicative stop-loss orders seen at: N/A).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that the long-term weekly Quasimodo resistance level seen at 1.2765 continues to hold the market lower. Further downside from here will likely see price hit the weekly swap level coming in at 1.2260.

Daily Timeframe: The daily timeframe on the other hand shows that the daily decision-point demand area seen at 1.2378-1.2468 continues to support this market. With that in mind, this hurdle remains a key obstacle to a move towards the aforementioned weekly swap level.

4hr Timeframe: Recent developments on the 4hr timeframe reveal that price has consumed a small 4hr supply area coming in at 1.2489-1.2449, which in turn saw further buying up to another 4hr supply area seen at 1.2572-1.2522.

With the above taken into account, buying this pair at the 4hr decision-point demand area seen just below at 1.2435-1.2456 is something we would not consider high probability for two reasons. Firstly, price is, at the time of writing, consolidating just above this area which is never a good sign when considering buying just below it. Secondly, the daily decision-point area at 1.2378-1.2468 may be supportive at the moment, but as you can probably see, this barrier has been breached more than once, which could suggest weakness in the market.

Selling this pair on the other hand would only be considered if/when price closes below the 1.2379 level (lower limits of the aforementioned daily decision-point demand area), since the path south would then likely be clear for profit down to at least 1.2300.

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/CHF:

Weekly Timeframe: Following the retest of the weekly swap level at 0.9204 last week, price has recently broken above a weekly swap level resistance barrier coming in at 0.9382. In the event that the market closes the week above this boundary, it would, in our opinion, likely suggest a more bullish bias going forward.

Daily Timeframe: Recent developments on the daily timeframe show that yesterday was clearly a good day for anyone long this pair. Price closed above a daily swap level at 0.9468, which in turn has likely opened the gates for price to challenge the 0.9558 daily swap level.

4hr Timeframe: For anyone who follows our analysis on a regular basis, you may recall us mentioning to be prepared for prices to retest the weekly swap level at 0.9382. As you can see, price did in fact retest this boundary, which subsequently saw a rally higher. Unfortunately, our team was unable to find a lower timeframe entry into this move.

Shortly after price closed above the daily swap level at 0.9468, a 4hr bullish pin-bar candle formed. This has likely given traders confidence that this barrier may hold as support. That being the case, we intend to watch for lower timeframe buying confirmation around this region today. In the event that we find an entry long here, our overall profit target for this trade will be set just below oncoming resistance (0.9558 – daily swap level) at 0.9555.

Current buy/sell orders:

• Buy orders: watching for lower timeframe price action confirmation around the daily swap level at 0.9468 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DOW 30:

Weekly Timeframe: Following the strong rebound from the ignored weekly Quasimodo level coming in at 17135, further extension was seen last week forcing price to close near its highs at 18010. In the event that further buying ensues today, we feel there’s a very good chance that price will attack the overall high seen at 18098 very soon.

Daily Timeframe: The daily timeframe shows that price still remains trading around a small daily supply area at 18098-18045. If further downside is seen from here, price will likely retest the daily swap level coming in just below at 17896.

4hr Timeframe: The 4hr timeframe shows that price is currently swinging between a 4hr supply area at 18047-18014 (located just below the aforementioned daily supply), and a 4hr swap area coming in at 17952-17911 (seen a little above the aforementioned daily swap level).

A close above this range would likely (a little different from our previous analysis) open the doors to new highs on the DOW. The reason for this is simple. Above this area of supply, there are two 4hr supply areas marked with green arrows; the first comes in at 18093-18062, and the second at 18061-18046. Both of these areas have already been hit, and with that, some of the selling pressure here likely taken out. Therefore, if strong buyers come into the market and closes price above the current 4hr supply, these small pockets of 4hr supply above will likely not stand much of a chance.

A close below this range on the other hand will immediately see price test the daily swap level coming in at 17896, which could in itself provide a nice base to look for confirmed buys into the market.

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).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows price has recently dipped below the weekly swap level at 1222.2, which as you can see has clearly attracted further selling down to just above a weekly demand area coming in at 1166.8-1195.0.

Daily Timeframe: Wednesday’s pin-bar candle that broke below the daily decision-point demand area at 1204.4-1216.5 saw very little follow-through buying yesterday. This likely suggests that further selling may well be in store today.

4hr Timeframe: For those who read our previous report on Gold, we mentioned to watch the 4hr swap level seen at 1217.3 for confirmed shorts. As you can see, price has reacted nicely to this level, and for anyone who entered short here should be nicely in the green at the moment. The overall target remains the same – the 4hr decision-point demand area seen below at 1186.6-1194.3, which, if hit, could in effect be a nice area to begin looking for longs, since this zone represents the upper limits of the aforementioned weekly demand area (see above).

Current buy/sell orders:

• Buy orders: will watch how price behaves if/when price reaches the 4hr decision-point demand area at 1186.6-1194.3 (Predicative stop-loss orders seen at: N/A).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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