Monday 16th February: Weekly technical outlook and review (U.S Bank holiday today)

EURUSD:

Weekly Timeframe: Last week shows that the buyers and sellers continued 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, the majority of trading has been taking place below the aforementioned weekly supply area. Therefore, for anyone considering entering long on the Euro, you may want to bear this in mind.

Daily Timeframe: Following Thursday’s rally from the small daily demand area at 1.1260-1.1318, the GBP quickly found resistance around a daily swap level seen just above it at 1.1411, which consequently forced the market to print a bearish pin bar candle into the close (1.1381).

4hr Timeframe: As we already know from the daily analysis (above), price has just closed below a daily swap level at 1.1411. In the event that price takes out the minor low seen at 1.1377 today, it is very likely price will continue south down towards a 4hr swap level visible at 1.1350, which if you look at the daily timeframe, you’ll see it is located just above the aforementioned daily demand area. That being said, for anyone considering buying at this 4hr level, one would need to be prepared for price to fake lower into this demand before rallying higher.

On the other hand, if the sellers at the aforementioned daily swap level are not interested in taking things lower, and were purely using this barrier to liquidate longs, it is possible price will continue higher today towards a 4hr supply area seen at 1.1497-1.1462.

Given the points made above, we are going to keep a close eye on the 1.1350 level today for lower timeframe buying confirmation. Assuming that we find an entry long here, we’ll be looking to take most of our position off the table at the aforementioned daily swap level, since let’s not forget that price is currently trading just below weekly supply at the moment (see above).

Likewise, if price hits the aforementioned 4hr supply area, we will begin watching for lower timeframe selling confirmation around the 1.1460 mark. For any shorts entered into here, we’ll look at taking half the position off at the daily swap level and attempt to let the rest run, since at this point we may have weekly sellers selling with us!

Current buy/sell orders:

• Buy orders: 1.1350 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: 1.1460 [Tentative] (Predicative stop-loss orders seen at: 1.1503).

GBP/USD:

Weekly Timeframe: Last week saw sterling strongly close above a weekly swap level seen at 1.5270. Assuming that the buyers can hold the market above this level, we then feel there’s a good chance that price will likely test the weekly supply area seen at 1.5784-1.5541.

Daily Timeframe: Friday’s trading action saw selling interest come into the market just below a daily swap level visible at 1.5433, and, like the Euro, saw price consequently form a bearish pin bar candle into the close (1.5379). This daily swap level remains a key obstacle to a move towards a daily decision-point supply area coming in above at 1.5619-1.5548, which if one looks back to the weekly chart; you’ll notice that this area is nicely located just within the aforementioned weekly supply area.

4hr Timeframe: Recent developments on the 4hr timeframe show that price did indeed react bearishly from within the green zone at 1.5400/1.5433. It was mentioned in our previous analysis that we had our eye on this zone and was going to be watching how the lower timeframe action unfolded. We unfortunately missed a lovely confirmation sell signal on the 30 minute timeframe when price faked above a 30 minute supply at 1.5418-1.5411 at 3pm GMT time on Friday. What made this setup even more attractive was the 30 minute Quasimodo resistance level coming in at 1.5413, which had ‘short me’ written all over it.

All is not lost though. If price continues to decline in value this week, and breaks the 1.5370 low, we’d definitely consider shorting this market on a retracement down to around the 1.5351 level. With that being said, for any traders considering shorting here as well, please do bear in mind that (as mentioned above) we just saw price close above a major weekly swap level, so be sure to monitor your short positions carefully, and exit at the first sign of any trouble.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: the team is watching for lower timeframe confirmation just below the green zone at 1.5400/ 1.5433 (Predicative stop-loss orders are seen at: dependent on where one confirms this level).

AUD/USD:

Weekly Timeframe: The week ended for the Aussie with price forming yet another weekly indecision candle above a weekly demand area coming in at 0.7449-0.7678. Assuming that the buyers begin to show strength here, a rally higher could well be seen up towards a weekly swap level visible at 0.8064.

Daily Timeframe: For the past two weeks, the AUD/USD pair has been seen ranging between two daily swap levels coming in at 0.7844 and 0.7691. A break above this daily range would likely force the market out of its current indecisive phase, and inspire further buying up to a small daily supply area seen at 0.8050-0.7994 (located just below the aforementioned weekly swap level). Conversely, a push below would likely attract further selling towards a daily demand area at 0.7449-0.7598 (located deep within the aforementioned weekly demand area).

4hr Timeframe: The latest from the 4hr timeframe shows that price has been ranging around the underside of a small 4hr supply area at 0.7794-0.7768, which at the time of writing has shown very little convincing selling interest. For those who read our last report on the Aussie, you may recall that we set a pending sell order at 0.77626; this order was later filled at 23.39pm GMT time on Thursday. The short trade did move into profit, and since we believed the market had further to drop, we set our stop to breakeven and left the trade to run, which as you can all see was eventually stopped out.

To be sure that we’re all on the same page here, let’s just quickly recap. The weekly chart is showing indecision just above a weekly demand area at the moment, while the daily timeframe is currently seen ranging between two daily swap levels (see above for levels). This – along with the recent price behavior seen on the 4hr timeframe, shorting from the current 4hr supply area is something we would not consider to be high probability now, and as such, our team has chosen to step aside on this one.

That being the case, assuming that price breaks above this 4hr supply area and once again attacks the daily swap level seen at 0.7844; it would be at this point that we’d begin looking for confirmation to sell around the 0.7840 mark on the lower timeframes. Selling with a pending order here may be a viable strategy to some traders considering this level’s history, but our team remains wary, owing to the fact that price is presently hovering above a weekly demand area (see above) at the moment.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.7840 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

USD/JPY:

Weekly Timeframe: Last week saw the market print a nice-looking bearish pin bar candle near the upper limits of a compressed symmetrical triangle. All of this has formed in between a major weekly swap level seen at 115.50 and a weekly Quasimodo resistance level visible at 122.18.

Daily Timeframe: Following Wednesday’s break of the daily supply area seen at 119.95-119.14, price sold off for the remainder of the week down to a small daily decision-point demand area coming in at 118.32-119.09. In the event that the buyers can hold out within this area, further upside may well be seen on the USD/JPY pair this week. Let’s take a look at what the 4hr timeframe has to say about this…

4hr Timeframe: The 4hr timeframe shows that crammed trading action was seen on Friday between the 119.00 barrier and a small 4hr demand area seen at 118.32-118.54 (located deep within the aforementioned daily decision-point demand area). A break below this 4hr demand area would likely clear the path south down towards a 4hr swap level visible at 117.86.

Selling with lower timeframe confirmation on the break and retest of the aforementioned 4hr demand area is something we may be interested participating in this week for the following reasons:

• Selling on the retest provides a profit gap of around 68 pips down to 117.86 (the 4hr swap level just mentioned above).
• A break below the aforementioned 4hr demand area would at the same time likely clear buying opposition from the aforementioned daily decision-point demand area as well, thus freeing the path south for further selling down towards a daily demand area seen at 116.86-117.54, seen a little below 117.86.
• The weekly chart is currently showing price trading around the upper limits of a symmetrical triangle, thus giving us extra confidence that resistive pressure may well be seen in the market this week.

Conversely, a break above 119.00 could potentially force the market to test immediate resistance coming in at 119.35. With regards to buying this pair, our team has come to a general consensus that longs will only be considered if/when price breaks above the 4hr swap level seen at 119.35, since buying on the break of 119.00 would not provide enough room for us to take the profits we’re looking for.

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 long-term weekly Quasimodo resistance level seen at 1.2765 continued to hold the market lower last week. 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 daily decision-point demand area seen at 1.2378-1.2468 continues to provide support to the market. 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: Friday’s trading action shows that selling interest came in from a small, yet clearly reactive 4hr supply area at 1.2572-1.2522. From here, price was able to break (red arrow) below the 4hr demand area seen at 1.2429-1.2469, which if you look on the daily timeframe, you’ll notice that this area is hovering just within the aforementioned daily decision-point demand area.

The break of this 4hr demand has likely cleared the majority of traders out who attempted to fade and sell the breakout of this area. This has likely cleared the path south down towards a 4hr support level at 1.2379 (located near the lower limits of the aforementioned daily decision-point demand area). 1.2379 in our opinion remains a key obstacle to a move towards a potential buy zone colored green seen between the 1.2300 level, and the weekly swap level mentioned above at 1.2260.

Given the points made above, where does this leave us with regards to trading this pair? Well, considering that the market is being held lower at the moment on the weekly timeframe, and the 4hr demand area at 1.2429-1.2469 has been breached, we feel that selling with lower timeframe confirmation around the 4hr supply area seen just above at 1.2572-1.2522 may be worth considering. Targets for any shorts taken here would be set at 1.2379 and 1.2300. However, do bear in mind that by selling here, you would effectively be selling into the aforementioned daily decision-point demand area, so be sure to watch price action carefully. Concerning buying, our team will not commit to buying this pair until price reaches the aforementioned green buy zone seen below.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: Watching for lower timeframe confirmation around 4hr supply at 1.2572-1.2522 (Predicative stop-loss orders seen at: 1.2578).

USD/CHF:

Weekly Timeframe: Last week saw price retest the weekly swap level seen at 0.9204. 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, last week saw the buyers begin to show some strength around the weekly swap level seen at 0.9204. Assuming that the buyers can continue with this tempo and break above the 0.9343 high formed on 02/02/15, price will very likely test the weekly swap level seen just above at 0.9382.

4hr Timeframe: Recent developments on the 4hr timeframe has seen price teasing the 4hr swap level coming in at 0.9316. In the event that the buyers can convincingly close price above this level and successfully retest it as support, it is very likely further upside will be seen towards the weekly swap level at 0.9382. To take advantage of this potential move north, lower timeframe buying confirmation is a must here for us since swap levels in our experience tend to fakeout before moving in the desired direction.

Regarding selling at this 4hr swap level – this is something the team has recently discussed and came to a general consensus that shorting here is not viable due to the weak response seen at this level on Thursday.

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).

DOW 30:

Weekly Timeframe: Following the strong rebound seen two weeks ago from the ignored weekly Quasimodo level coming in at 17135, further extension was seen this week forcing price to close near its highs at 18010. In the event that further buying is seen this week, 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 last week saw price break above a daily swap level seen at 17896, and head towards a small daily supply area seen at 18098-18045. In our opinion, this area of supply is in effect the final obstacle to a move higher on the DOW; let’s see what we can find on the 4hr timeframe…

4hr Timeframe: The 4hr timeframe shows price has hit a small 4hr supply area seen at 18047-18014. This area is located just below the aforementioned daily supply area, and shows exactly why price did could hit the daily supply area last week!

Providing that the sellers can hold the market below this 4hr supply area, we feel there is a good chance that price will likely retest the 17923 4hr swap level. For anyone considering selling from this area, lower timeframe confirmation is most certainly recommended. If we see a sell signal here on the lower timeframes, we’ll look to ride the wave down to 17923, where we intend to take full profits.

However, if the buyers firmly close price above this 4hr area of supply, the market will likely trade to new highs. The reason for this is simple. Take a look above the 4hr supply area to the left, can you see how supply may well already likely be consumed? There are two 4hr supply areas that jump out to us; 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 taken out. Therefore, if the buyers continue north with strength, we believe that these small areas of 4hr supply will not stand much of a chance. It will be interesting to see what the market brings this week.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: watching for lower timeframe confirmation around 4hr supply at 18047-18014 (Predicative stop-loss orders seen at: 18054).

XAU/USD (Gold):

Weekly Timeframe: Last week saw Gold print an indecision candle just above a weekly swap level located at 1222.2. If buying strength is seen from this level, watch for the weekly swap level seen just above at 1251.5 to potentially repel the market. A break below 1222.2 on the other hand would likely open the doors to further downside towards a weekly demand area seen at 1166.8-1195.0.

Daily Timeframe: Friday’s trading action saw further buying enter the market, which consequently forced price higher into a daily decision-point supply area seen at 1245.8-1233.1. This area of supply remains a key obstacle to a move towards the weekly swap level mentioned above at 1251.5.

4hr Timeframe: The 4hr timeframe shows that the swing low 1217.3 (12/01/15) was clearly a respected number in the market. This should come as no surprise really considering that this level was located just above a daily decision-point demand area base coming in at 1204.4-1216.5.

From 1217.3, the market rallied up to a small 4hr supply area at 1238.6-1235.2 (located within the aforementioned small daily decision-point supply area), which as you can see, saw active selling just before the close at 1229.6.

With the above in mind, our team has no decided that no selling will be initiated until price closes below the weekly swap level at 1222.2. Buying on the hand is also rather tricky. Even though price is currently trading around a weekly swap level at the moment, we mustn’t forget that we are also seeing trading just below a daily decision-point supply area as well (see above). Therefore, shorting from the aforementioned 4hr supply area, which as mentioned above is located within this daily area, may not be the best path to take, as higher-timeframe opposition could very well enter the market from the weekly level (1222.2) this week. With that, our team has decided to step aside here and wait for further price action to develop.

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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