Friday 6th February: NFP decision could cause wild swings and invalidate any technical signals today – remain vigilant.

EUR/USD:

Weekly Timeframe: The rebound seen from the weekly Quasimodo support level last week at 1.1109 has recently extended higher into a weekly supply area coming in at 1.1678-1.1458.

Daily Timeframe: Current action on the daily timeframe shows that price is stalling just below a major daily decision-point supply area coming in at 1.1678-1.1540 (located deep within the aforementioned weekly supply area).

4hr Timeframe: The 4hr timeframe reveals that the buyers recently spring boarded themselves north from 1.1300 up towards 1.1500 consequently wiping out any gains seen on Wednesday.

In our opinion, the 1.1500 level is a key obstacle to a move towards a combined 4hr supply/Quasimodo resistance area seen above at 1.1678-1.1589/1.1637 (located deep within the aforementioned daily decision-point supply area). With the volatility expected from today’s NFP announcement, price could very well cut through 1.1500 and hit this combined 4hr supply area. Given the points made above (Weekly/Daily), our team is relatively comfortable setting two pending sell orders around this area (half the position on each). The first at 1.1582 just below the actual zone itself, and the second set just below the Quasimodo resistance level at 1.1630. Both trades have the same stop-loss location at 1.1690.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 1.1582 (Predicative stop-loss orders seen at: 1.1690) 1.1630 (Predicative stop-loss orders seen at: 1.1690).

GBP/USD:

Weekly Timeframe: Strong buying from the weekly Quasimodo support level at 1.5007 (located within weekly demand at 1.4812-1.5097) recently saw prices break above the 1.5270 weekly swap level. Because of this, the path north is now likely free for price to challenge a weekly supply area seen at 1.5784-1.5541.

Daily Timeframe: Yesterday’s trading saw Sterling close above both a minor daily supply area visible at 1.5211-1.5140 and the weekly swap level mentioned above at 1.5270. This move has likely cleared the path north for further buying up to a daily swap level coming in at 1.5433.

4hr Timeframe: The recent ascent saw the pair break above a relatively important 4hr supply area seen at 1.5318-1.5272. This has (similar to the daily analysis) likely opened the gates for prices to challenge the aforementioned daily swap level.

There were likely an incredible amount of buy orders triggered above this 4hr supply area – buy stops from traders attempting to fade, and buy orders from breakout buyers. Now, if these buy orders are not sufficient enough to continue pushing the GBP north, a decline in value will be seen. In the event that this does occur, and taking into account the volatility that is expected today from the mighty NFP, we feel there is a good chance that prices will drop back down to a 4hr demand area coming in at 1.5164-1.5188, which we believe is the origin of the recent rally north. It would be at this point we’d look to buy around 1.5192 with a stop just below at 1.5159.

Current buy/sell levels:

• Buy orders: 1.5192 (Predicative stop-loss orders are seen at: 1.5159).
• Sell orders: Flat (Predicative stop-loss orders are seen at: N/A).

AUD/USD:

Weekly Timeframe: The weekly picture shows that price spiked below a weekly demand area at 0.7699-0.7974 into yet another weekly demand area coming in just below at 0.7449-0.7678.

Daily Timeframe: Ever since price spiked below the daily Quasimodo support area (03/02/15) at 0.7699-0.7834, hesitation has been seen in the market. This could be due to traders waiting for the all-important NFP announcement later on today.

4hr Timeframe: From a technical standpoint, the information from the higher timeframes show that price may have faked out below the aforementioned daily Quasimodo support area into a weekly demand area mentioned above at 0.7449-0.7678. That being the case, a rally higher may well be in store…

Two buy zones have recently caught our eye:

1. The first being a 4hr Quasimodo support barrier at 0.7718. This level would require lower-timeframe buying confirmation since the 0.7700 round-number level is lurking just below which could induce a fakeout.
2. Secondly, a potential fakeout zone seen at 0.7625-0.7675. We call it the fakeout zone since it is the deepest area within the overall (potential) fakeout seen on the higher timeframe. Under normal trading conditions. This zone would be good enough for a pending buy order, but since the market is on red alert today (NFP), we are going to also need to see buying confirmation here.

Current buy/sell levels:

• Buy orders: watching for lower-timeframe confirmation around 0.7718 (Predicative stop-loss orders seen at: dependent on where one confirms this level) 0.7681 [Tentative] (Predicative stop-loss orders seen at: 0.7621).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows price remains hovering above a major weekly swap level (115.50) at the moment, as long as price continues to trade above here, our bias will remain bullish.

Daily Timeframe: Little price movement on the daily timeframe has resulted in the market forming what looks to be a bullish continuation flag. Overall though, the pair remains trapped between a small daily supply area seen just above at 119.95-119.14, and a daily demand area seen below at 115.55-116.38. It will be interesting to see what the 4hr timeframe has to say about this…

4hr Timeframe: The recent movements on the 4hr timeframe show that price continues to range between a 4hr supply area at 118.84-118.52, and a 4hr demand area coming in at 116.91-117.22. However, since the beginning of the week, price has been confined to a smaller, more compact 4hr range (within the larger range). Limit high/lows can be seen at 116.86/117.68.

Today’s NFP volatility will likely see one of three things happen today:

1. A break above and retest of the small 4hr range (117.68) would likely attract buying interest up to the upper limits of the larger 4hr range (118.84-118.52). This is something we’re personally interested in participating in.
2. A break below and retest of the small 4hr range (116.86) would likely motivate the sellers to push this market south down towards a 4hr demand area coming in at 115.55-116.06. Again, something we’d be interested in taking part in.
3. And finally three. Price can whipsaw the market breaking one side of the range, only to reverse and break the other side; this tends to fool trigger-happy traders, and is extremely common during high-impacting events. As such, we tend to let price do its thing for 10/15 minutes before analyzing for opportunity.

With the above in mind, buying the retest around 117.68 with confirmation is very high probability since we are trading above a higher-timeframe weekly swap level at present (see above). Selling (refer to point 2) on the other hand is something we would need to be careful of since shorting here could potentially put you in the position of selling into higher-timeframe support (see weekly and daily above), so this trade would require constant monitoring, along with very strict trade management rules.

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/CAD:

Weekly Timeframe: Selling interest is clearly present from the weekly Quasimodo resistance level at 1.2765. Assuming that the sellers continue with this intensity, we feel there is a very good chance that price will hit the weekly swap level seen at 1.2260 sometime soon.

Daily Timeframe: The daily timeframe shows that over the past two days, price has been stalling around the recently broken daily decision-point demand area at 1.2378-1.2468. It will be interesting to see what the 4hr timeframe has to offer…

4hr Timeframe: Recent developments on the 4hr timeframe saw price react beautifully from a 4hr supply area at 1.2643-1.2574. From here price took out the 1.2500 handle with relative ease and is now seen hovering just above a minor 4hr swap level coming in at 1.2379. This level effectively remains a key obstacle to a move down towards 1.2300/1.2260 (weekly swap level – see above).

Heavy selling from the weekly Quasimodo resistance level, and a break below a rather large daily decision-point demand area (see above) still deters us from buying this market at the moment. Ultimately, what we’re looking for is price to close below the aforementioned minor 4hr swap level and retest it as resistance. This is something we’d be interested in shorting with confirmation down to 1.2300/1.2260. Assuming that this does occur and price reaches its target, our bias would likely then switch to longs since the 1.2300 handle and weekly swap level just below at 1.2260 forms an awesome zone of support which will likely repel the market into the close today

To sum up, we’re looking for price to break and retest 1.2379 targeting 1.2300/1.2260. With that we’d look to exit our position and go long from the 1.2300/1.2260 area. All of this is obviously dependent on which way the numbers fall from the NFP though.

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/CHF:

Weekly Timeframe: The recent developments on the weekly timeframe reveal price is presently retesting the weekly swap level at 0.9204 which at the time of writing is showing very little bullish interest. It will be interesting to see what the lower timeframes have to say about this…

Daily Timeframe: The daily timeframe shows that price is currently stalling above the aforementioned weekly swap level. Assuming that the buyers can hold out above here, we see very little reason why price cannot challenge the weekly swap level seen just above it at 0.9382.

4hr Timeframe: The 4hr timeframe reveals that the USD/CHF pair is currently boxed 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. In all honesty, price action looks a right mess at the moment and is something we have no interest whatsoever in trading.

Nonetheless, the NFP volatility may help motivate this pair to break out of this sluggishness. A break above the aforementioned 4hr swap level will likely fuel further buying towards the weekly swap level at 0.9382, and conversely, a break below the weekly swap level at 0.9204 could see price decline all the way down towards a 4hr decision-point demand area coming in at 0.8984-0.9054 (located just above a daily decision-point demand area at 0.8933-0.9018), which is something we’d be interested in participating in.

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).

DOW 30:

Weekly Timeframe: The weekly timeframe shows that for seven consecutive weeks price has been teasing the ignored weekly Quasimodo level seen at 17135. Provided that the buyers can continue to hold the market above this barrier, our overall bias will remain long.

Daily Timeframe: The small daily supply area at 17698-17649 gave way relatively easily on Wednesday, which as a result saw further buying yesterday up to a daily swap level coming in at 17896.

4hr Timeframe: The recent increase in value has seen price aggressively trade into a 4hr supply area visible at 17934-17855 (surrounds the aforementioned daily swap level).

Selling at this 4hr supply area is considered high risk in our book. Granted, we do have a daily swap level supporting this zone, but at the same time we would also be trading against weekly strength from the ignored weekly Quasimodo level (for levels see above) However, this does not mean selling here is totally out of the question. Assuming that we see lower-timeframe confirmation on say the 30 minute timeframe, we will still likely take a trade with a smaller than usual position and keep targets small and manageable at 17778 and 17629.

Assuming no signal to sell is seen, and price does indeed push further north, we see very little active supply (check out the supply consumption wicks seen at: 17923/17934/17944) to the left up until the 18047-18014 area.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: currently watching for lower-timeframe selling confirmation around 4hr supply at 17934-17855 (Predicative stop-loss orders seen at: 17940).

XAU/USD (Gold):

Weekly Timeframe: Recent developments on the weekly timeframe show that price is heading back down towards the weekly swap level seen at 1251.5 following a clear break above weekly supply at 1296.3-1269.3.

Daily Timeframe: The daily timeframe shows that the buyers and sellers are currently pulling for position in between a daily decision-point supply area seen at 1297.4-1284.3 and the weekly swap level mentioned above at 1251.5.

4hr Timeframe: Very little activity has been seen since we last analyzed our favorite metal. Price is currently seen bouncing between 4hr support at 1256.7, and a 4hr swap level at 1271.9. Trading in between this band is viable in our opinion (buys seen at 1257.4, sells at 1271.4) but would require confirmation on the lower timeframes (for us) since consolation seems to attract fakeouts by nature!

We know form the higher timeframe picture that price is presently trading above a weekly swap level (1251.5) at the moment, which in itself is a nice indication that we may eventually see higher prices. Where does this leave us on the 4hr timeframe then? Well, apart from buying and selling within the current ranging band, one would need to wait for price to breakout. A break above the 4hr swap level at 1271.9 would open the doors for further upside towards 4hr supply coming in at 1284.9-1278.1. Attempting to buy on the break, or retest for that matter would potentially cause unnecessary stress with the aforementioned 4hr supply looming just above, as such this is something we have no interest in taking part in. On the flip side, if price breaks below the 4hr support level at 1256.7, further downside will likely be seen towards the weekly swap level mentioned above at 1251.5. Now, we’re sure you’ll agree with us when we say that selling here is not really the most effective way to trade, especially into a weekly swap level! Buying on the other hand once price hits the 1252.1 mark (just above the weekly swap level at 1251.5) would (with lower-timeframe confirmation) be a low-risk high probability trade.

Current buy/sell levels:

• Buy orders: 1257.4 [Tentative] (Predicative stop-loss orders seen at: 1255.0) 1252.1 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: 1271.4 [Tentative] (Predicative stop-loss orders seen at: 1274.5).

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