Friday 27th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: Selling interest has recently come into the market below weekly supply at 1.1678-1.1458. Assuming that the sellers can continue with this tempo, we see very little reason why price cannot retest the weekly Quasimodo support level at 1.1109.

Daily Timeframe: The daily timeframe shows that price has closed below a small daily demand area coming in at 1.1045-1.1127, which as a result, has very likely cleared the path back down towards a daily demand area seen at 1.1045-1.1127 (encapsulates the aforementioned weekly Quasimodo support level).

4hr Timeframe: The recent descent (which we can only assume was because of the positive core CPI data released yesterday) on the EUR/USD pair, as you can see, has taken out several technical barriers along the way, and is, at the time of writing, seen retesting the 1.1200 handle as resistance. In the event that the sellers can hold out below 1.1200, our primary focus for today will be looking for confirmed shorts around this level. For anyone thinking the same, please do be aware that if you decide to sell here, you’ll effectively be selling down towards a long-term weekly Quasimodo support level seen in pink at 1.1109, so careful trade management is advised.

However, if price closes above 1.1200, we’ll then shift to begin watching for price to retest this level as support. Any buys taken here, in our opinion, will need confirmation, and will (for us anyway) have a fixed take-profit target set at 1.1237, seen just below immediate 4hr supply above at 1.1262-1.1240.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: currently watching for lower timeframe price action around 1.1200 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

GBP/USD:

Weekly Timeframe: The weekly timeframe shows that selling interest has been seen around the underside of a major weekly supply area coming in at 1.5784-1.5567.

Daily Timeframe: Yesterday’s trading saw price hit, and clearly react from a beautiful-looking daily supply area positioned at 1.5619-1.5548 (located just within the aforementioned weekly supply area). This move consequently forced the market to close below a daily swap level seen at 1.5426.

4hr Timeframe: The recent descent on the GBP should not really come as a big surprise to anyone considering where price is located in the bigger picture (see above) at the moment. We were initially looking for prices to rally a little higher before selling off, hence the reason why we set a pending sell order at 1.5580 just below the 4hr Quasimodo resistance level.

At the time of writing, price has just broken below Tuesday’s low which is seen at an even 1.2400. This has likely cleared the path south down towards a clear 4hr swap level coming in at 1.5351. To take advantage of this potential move, one can either short at market, effectively selling the breakout, or, if you’re like us – conservative, one could wait for price to retest the daily swap level seen just above at 1.5426, and sell with corresponding lower timeframe confirmation around the 1.5420 mark.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: 1.5420 [Tentative] (Predicative stop-loss orders are seen at: dependent on where one confirms this level).

AUD/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers continue to battle for position just above a weekly demand area coming in at 0.7449-0.7678. Should a rally higher be seen from here, weekly resistance is not expected to come into the market until around the 0.8064 region.

Daily Timeframe: The latest coming from the daily timeframe shows that the market clearly found resistance around the 0.7911 area, which, as you can probably see, has pushed price back into the range seen between 0.7844 and 0.7691.

4hr Timeframe: Recent developments from the 4hr timeframe reveal that price has faked out above a small 4hr supply area at 0.7905-0.7881, and sold off, taking out both the daily swap level 0.7844, and the round number 0.7800.

To make sure that we’re all on the same page here, let’s just quickly recap. The weekly chart shows price hovering above weekly demand, while on the daily chart, price has been forced back into a consolidation zone (see above for levels). So, where does this leave us on the 4hr timeframe? Well, selling the breakout of 0.7800 down to 4hr demand at 0.7738-0.7764 could be an option, not one that we would personally take though since the risk/reward (even if one waited for price to retest 0.7800) would not exactly be what we’d call attractive. In all honesty, there is not really much that appeals to us on this pair at the moment, therefore, we’ve decided to take a seat on this one and wait for more conducive price action.

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/JPY:

Weekly Timeframe: The weekly timeframe shows that price closed just above the upper limits of a symmetrical triangle formation (121.83/117.43) last week, which, if further support is seen here, could potentially push the market north up to a weekly Quasimodo resistance level coming in at 122.18.

Daily Timeframe: The USD/JPY continues to be supported by a daily decision-point demand area coming in at 118.32-119.09. However, this support barrier does not look very stable in our opinion due to the recent attempts to break below here seen on the 16/02/15, 17/02/15, and on the 20/02/15.

4hr Timeframe: The 4hr timeframe shows that price closed above 119.00, which, as you can see, consequently forced the market higher to break above a minor 4hr swap level coming in at 119.40. If the buyers manage to hold out above this level, our primary objective for the day will be to watch for confirmed longs around this area. In the event that we find a suitable entry long here, we have two targets in mind. The first comes in at 119.80, seen a little below Tuesday’s high at 119.82, the second, is seen just below the round number 120.00 at 119.95.

However, in the event that 119.40 gives way today, and the market sells off, we see very little support stopping price from reaching at least the 119.00 region. This is not really something our team would be interested in shorting, simply because you could effectively be selling into potential support from the aforementioned daily decision-point demand area.

Current buy/sell orders:

• Buy orders: watching for lower timeframe confirmation around the 4hr swap level 119.40 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that price is still being held lower by a weekly Quasimodo resistance level at 1.2765. If further selling is seen from here, price will likely hit the weekly swap level coming in at 1.2260.

Daily Timeframe: The daily picture reveals that support is currently being seen from a weak-looking daily decision-point demand area at 1.2378-1.2468. The reasons for why we believe this area to be fragile is simply because on two occasions price has broken below this zone (03/02/15 – 17/02/15), and has, as a result likely weakened any buying pressure here. In addition to this, we also noticed that each time price hit this area; the buyers were not strong enough to form a higher high.

4hr Timeframe: Recent developments on the 4hr timeframe show that buying interest came into the market a few pips above a 4hr swap level seen at 1.2379. This consequently pushed price up to a small 4hr swap level at 1.2509, where, at the time of writing, selling pressure is currently being seen. Selling from this level is something our team would be interested in doing, if we see lower timeframe confirmation. Targets for this trade, assuming we find an entry that is, would be the 1.2450 mid-number level, and, given enough time, the 4hr swap level mentioned above at 1.2379.

However, In the event that the buyers manage to get above 1.2509 today, one may want to be careful entering long here for two reasons:

1. Minor lows to the left coming in at 1.2537/1.2550 could potentially be resistive.
2. The higher-timeframe picture is not exactly what we’d call in bull mode at the moment (see both the weekly and daily sections above).

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: currently watching for lower timeframe confirmation around the 4hr swap level 1.2509 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

USD/CHF:

Weekly Timeframe: The weekly timeframe shows that the buyers have recently pushed price back up to a weekly swap level coming in at 0.9529. In the event a break above this hurdle is seen, this would likely open the doors for further buying towards a weekly swap level located at 0.9746.

Daily Timeframe: The daily timeframe shows that volatility picked up yesterday which saw the market print a strong-looking (considering its location) bullish engulfing candle. This suggests that the daily swap area at 0.9529-0.9568 may be weakening and that a break higher could well be on the cards. Let’s see what we can find on the 4hr timeframe…

4hr Timeframe: Recent action from the 4hr timeframe saw price fake below a small 4hr (yellow box) range (0.9466/0.9517) down towards a 4hr swap level coming in at 0.9450. This level, albeit small, was enough to support a rally up to a daily swap area seen at 0.9529-0.9568.

From the weekly down to the 4hr timeframe, price is clearly trading around resistance (see above) at the moment. However, selling from the aforementioned daily swap area is something our team will only consider if we see corresponding lower timeframe confirmation, since let’s not forget that even though price is at collective resistance, the overall trend is still north. With that being said, our team has also come to a general consensus that buying this pair will only be looked at once, or indeed if the daily swap area at 0.9529-0.9568 is taken out.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: watching for lower timeframe confirmation around the daily swap area at 0.9529-0.9568 (Predicative stop-loss orders seen at: 0.9574).

DOW 30:

Weekly Timeframe: Following the close above the 18098 high last week, the buyers are, at the time of writing, managing to maintain their position above this number, which may well attract further buying going forward.

Daily Timeframe: The daily timeframe on the other hand, shows that for the past two days the volatility on the DOW has slackened somewhat. With that in mind, a move lower may well be seen sometime soon back down to the recently broken daily supply (now demand) area coming in at 18098-18045.

4hr Timeframe: The 4hr timeframe reveals that support, albeit very minor, has formed around the 18181 mark. If the buyers can defend this number today, price will very likely breakout to new highs.

For those of you who read our last couple of reports on the DOW, you may recall us mentioning that we still have a live buy position in the market at 18109. Our stop for this position is still set at breakeven and will remain there until price either breaks out above the 18242 high (where at that point we’ll move the stop into profit), or price closes below the temporary support mentioned above at 18181, which, as you can probably see will likely force price towards the 18148 4hr swap level. This is, in effect, our last line of defense, since if we see price weakness here, we’ll exit the full position for a small profit.

Current buy/sell orders:

• Buy orders: 18109 [Live] (Predicative stop-loss orders seen at: presently set at breakeven).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that active buying has been seen from the weekly demand area at 1166.8-1195.0, which as a result forced the market up to just below a weekly swap level coming in at 1222.2.

Daily Timeframe: Yesterday’s trading action saw further buying from the daily swap level at 1200.0 (located just above the aforementioned weekly demand area). However, as you can probably see, this buying did not last long as active sellers were seen entering the market around 1219.9, seen just below the aforementioned weekly swap level. It will be interesting to see what the 4hr timeframe has to say about this…

4hr Timeframe: For those who read our previous analysis on Gold, you may recall that we were watching for confirmed longs around the 4hr swap level at 1202.8 (red line). Unfortunately though, we did not manage to log an entry here which was a shame since price rallied just beautifully.

Let’s just quickly recap on what we know about Gold so far. The weekly chart shows that active buying has pushed price up to just below a weekly swap level, admittedly price has not hit this level yet, but all the same, it is close enough to be important! The daily chart shows much the same, the only difference is, support came from a small daily swap level (see above for levels). Therefore, in our opinion, we do not have much in the way of direction coming from the higher timeframes, so where does this leave us on the 4hr chart? Well, one could buy from the 4hr demand area seen at 1200.9-1205.2, but with selling being seen from just below the aforementioned weekly swap level at the moment, we would not really feel comfortable buying here. On the other hand, if we had to buy, we’d prefer to wait until price hit the 4hr demand area below at 1190.0-1197.2, as this area is located just within the aforementioned weekly demand area.

With all of the above taken into consideration, opting to stand on the side lines here may very well be the best path to take for the time being.

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).

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