Monday 17th November: Weekly technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the Euro has had a relatively positive week with prices closing near its highs (1.25453) at 1.25207. There is clear buying interest currently being seen around a weekly combined demand/Quasimodo support area at 1.22403-1.24420/1.22866. Assuming the buyers continue to show strength here, we could potentially see price hit the weekly swap level looming just above at 1.26229 sometime during the week.

Daily Timeframe: Last week is showing that price still remains capped between a daily supply area at 1.25763-1.24794, and a long-term daily demand area seen at 1.22877-1.23809. Therefore, buying may not be the best path to take at the moment, as we would effectively be buying into supply. Let’s take a look at the 4hr timeframe to see how price is structured within the aforementioned daily supply area.

4hr Timeframe: The 4hr timeframe reveals that price consolidated beautifully between the psychological levels 1.25 and 1.24 for the best part of last week. It was only until late Friday we saw a breakout higher forcing price directly towards a 4hr Quasimodo resistance level at 1.25431, where selling interest came into the market just before the close. For anyone who got short at this level, remain vigilant to the possibility of strong support lurking just below at 1.25.

In the event that the buyers can hold out above 1.25 early on in the week, this could be early signs of potential weakness within the aforementioned daily supply area which may induce further buying.

We were initially planning to attempt to trade the 1.25 long if we had confirming price action on the lower timeframes, but we decided against it, as it is very possible further selling could still ensue back into last week’s range. Therefore, with all of the above taken into consideration we have decided to sit on our hands for the time being and see how price action unfolds in today’s sessions.

Buy/sell levels:

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

GBP/USD:

Weekly Timeframe: The GBP/USD pair sold off heavily last week, consequently forcing price to close below a weekly resistance flip level seen at 1.57166 and trade directly into a strong area of weekly demand coming in at 1.54260-1.56110. Should we be looking for buying opportunities around here early this week?

Daily Timeframe: The daily timeframe shows that the market closed (1.56656) within a daily decision-point demand area at 1.55602-1.56802 (located within the aforementioned weekly demand area). We can clearly see buying interest did indeed enter that market on Friday – check out the obvious buying tail at 1.55917. Nonetheless, the only way to find out if the buying here was legit, and not just traders short covering would be a follow-through to the upside early on this week, preferably closing above 1.57166 (weekly resistance flip level). As a consequence this move would potentially clear the path north up to a daily supply area coming in at 1.59438-1.58338. Let’s take a look on the 4hr timeframe to see what it can offer us.

4hr Timeframe: The 4hr timeframe shows that towards the end of the week, buyers and sellers were seen trading in between the round-number level 1.56, and a combined 4hr supply/round-number area at 1.57208-1.56927/1.57 (this area surrounds the weekly resistance flip level at 1.57166).

To answer the question posed in the weekly timeframe analysis regarding whether we should be looking for buying opportunities or not, the simple answer to this is ‘yes’ in our opinion. Be that as it may, we do not recommend buying the pound right away. A break above the aforementioned 4hr supply/round-number area would be required beforehand, which would potentially give us confirmed direction north on this timeframe up to at least a 4hr decision-point supply area coming in at 1.57804-1.57578.

Also we must bear in mind that the 4hr supply/round-number area has extra significance since it encapsulates the weekly resistance flip level at 1.57166, so a break above here could effectively be an early signal that prices will eventually rally up to the daily supply area mentioned above at 1.59438-1.58338.

With all of the above taken into consideration we are going to remain flat on this pair at this point in time, and see how price action unfolds today and even possibly tomorrow.

Buy/sell levels:

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

AUD/USD:

Weekly Timeframe: The Aussie Dollar made quite a significant gain against the U.S dollar last week, as price rallied around 180 pips off of a weekly Quasimodo support level coming in at 0.85769. Assuming the buyers do not lose their enthusiasm, we could potentially see prices rallying up to around 0.88874 sometime this week.

Daily timeframe: The daily timeframe shows that on Friday, the buyers pushed price further above the daily decision-point supply area seen at 0.87608-0.86798 (marked with a blue arrow). Since the majority of sellers are possibly consumed around here now, this likely clears the path north to a daily supply zone coming in at 0.88961-0.88302. Let’s take a look on the 4hr timeframe to see what we can find.

4hr Timeframe: The 4hr timeframe shows that price pushed above a 4hr supply area last week at 0.87608-0.87419 (located deep within the aforementioned daily decision-point supply area), potentially clearing the path north towards 0.88. Before this happened though, notice that price faked below the low 0.86646 beautifully; this looked like a clear hunt for liquidity to us.

We firmly believe that higher prices are going to be seen on the Aussie next week as we have higher-timeframe direction backing us for the time being (see above). With that being said, before a rally can ensue, we have to be prepared for a small decline in value as the big guys will likely require further liquidity to buy into this market. Therefore, we are going to be watching the following near-term 4hr levels for potential buying opportunities this week: 0.87192, just above a small 4hr resistance flip level at 0.87154, and also 0.87021, just above the psychological number 0.87. First take-profit levels for us would be situated around 0.88 as shown on the chart.

In our opinion, confirmation from the lower timeframes would be required for anyone who wishes to trade at these levels, since there’s always the possibility that pro money may want to collect any unfilled buy orders that may be remaining around the fakeout level (0.86646). Touch trading this level around 0.86688 is something we would consider with a stop set at 0.86439, once again targeting 0.88.

Buy/sell levels:

• Buy orders: 0.87192 [Tentative] (Predicative stop-loss orders seen at: 0.87100) 0.87021 [Tentative] (Predicative stop-loss orders seen at: 0.86659) 0.86688 (Predicative stop-loss orders seen at: 0.86439).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: Last week shows that the USD/JPY continued on its relentless march north, consequently hitting a major weekly supply area coming in at 117.931-116.799. Is entering the market south a wise move now? Let’s take a look on the lower timeframes to see how price is structured.

Daily Timeframe: The daily timeframe clearly shows that price has firmly closed above a daily Quasimodo resistance area at 115.911-115.021, indicating that the path north is likely clear up to a major Quasimodo resistance level at 117.120 (located deep within the aforementioned weekly supply area). Therefore, as per this timeframe more buying could indeed be seen up to this level before serious sellers enter the market. Let’s take a look at what the 4hr timeframe is saying.

4hr Timeframe: The 4hr timeframe shows that a push above 116 was indeed seen, which was later essentially retested as support (116.042) around the close.

Assuming that the buyers can hold above 116, we see very little reason why prices cannot trade to 117, which is if you remember only 12 or so pips below the daily Quasimodo resistance level mentioned above. With that being said, we would not consider buying here since price could just as easily break lower, as we mustn’t forget that larger sellers could indeed enter the market here around the current weekly supply area mentioned above. However, we would be very interested in selling around 117 (116.946) but only with lower timeframe confirmation mind you, since psychological levels are prone to fakeouts.

To wrap up, we see this pair at a level where a decision needs to be made. Take a look on the 4hr chart to see what we believe price could potentially do this week.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).
• Sell orders: 116.946 [Tentative] (Predicative stop-loss orders seen at: Stops will be dependent upon which confirmation signal you use here).

EUR/GBP:

Weekly Timeframe: Last week was clearly one for the buyers. A powerful move north of about 200 pips was seen out of a major weekly demand area coming in at 0.76931-0.78623. We see very little in the way on this chart that could hinder prices from trading higher towards a weekly resistance level coming in at 0.80328 sometime this week.

Daily Timeframe: The daily timeframe shows that the Euro rallied for three consecutive days last week, with the sellers showing very little interest along the way. Like the weekly timeframe – we see very little in the way stopping further buying from entering the market until around 0.80351, a daily Quasimodo resistance level (3 pips above the aforementioned weekly resistance level). Let’s take a look on the 4hr timeframe to see what we can find.

4hr Timeframe: Just before the close on Friday, we saw the market make one final push north up to around the psychological level 0.8, where minor selling interest was seen around 0.79988.

In the event that price closes above 0.8, and successfully retests it as support, we see very little stopping prices from reaching a 4hr supply area seen above at 0.80453-0.80245 (active sell orders are seen just below at 0.80227), which encapsulates a daily Quasimodo resistance level (0.80351) beautifully. On the other hand, assuming that the sellers begin to liquidate their positions around this round-number level, this could potentially cause a reversal from here and form a bearish close, which could indeed be tradable targeting the small 4hr decision-point demand area below at 0.79341-0.79410. Therefore, with the above in mind, we are going to patiently watch price action unfold today before making any firm decisions.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.80227 (Predicative stop-loss orders seen at: 0.80473).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that the sellers were clearly too strong for the buyers last week around the medium-term weekly high at 1.12775. In our opinion, a weekly close below this level would be required to invalidate a bullish bias, and until then we feel this market is still headed north. Let’s see what we can find on the lower timeframes.

Daily Timeframe: The daily chart shows a clearer picture of what was just seen on the weekly timeframe. Notice that on Wednesday and Thursday last week, price looked very bullish. It was only until Friday when the sellers slammed price back down to around the 1.12775 level. Like the weekly timeframe – a daily close below this level could be an even earlier signal that the bulls have lost steam, and could potentially force prices down towards 1.11830, a daily Quasimodo support level.

4hr Timeframe: The 4hr timeframe shows that ever since Monday last week, price has been effectively consolidating between a combined 4hr supply/round-number area coming in at 1.14007-1.13844/1.14, and a 4hr decision-point demand area seen at 1.12624-1.12873 (encapsulates the 1.12775 weekly level) , which was not apparent at the beginning of the week.

In our humble opinion we have no clear direction on this pair until either one of the above areas is consumed, so with that in mind we are going to remain flat until further price action unfolds. However, for any traders wishing to trade this range, tentative buy orders are seen at 1.12790, and sells at 1.13807. We would advise waiting for lower-timeframe confirmation here as consolidated areas such as these are prone to violent fakeouts at times.

Buy/sell levels:

• Buy orders: 1.12790 [Tentative] (Predicative stop-loss orders seen at: 1.12539).
• Sell orders: 1.13807 [Tentative] (Predicative stop-loss orders seen at: 1.14066).

USD/CHF:

Weekly Timeframe: The weekly timeframe still shows price is capped between a weekly supply area coming in at 0.98378-0.95895, and a weekly resistance flip level seen at 0.94546.That being said though, most of the current trading action last week took place within the weekly supply area, so any buy trades initiated will require strict trade management rules.

Daily timeframe: The daily timeframe shows that on Friday, active selling came into the market from a major daily supply area seen at 0.97505-0.96339 (located deep within the aforementioned weekly supply area). As a consequence, this forced prices to close below the daily decision-point demand level coming in at 0.95965, potentially clearing the path south down towards a daily demand area seen at 0.94405-0.94937. Let’s see what the 4hr timeframe picture looks like.

4hr Timeframe: The 4hr demand area coming in at 0.95789-0.95937 (located just below the daily decision-point demand level mentioned above) was breached just before the market closed (0.95889). This move has likely cleared the path south down towards a nice-looking 4hr resistance swap level seen at 0.95512.

However, before pro money can move the market south, a rally higher will likely ensue since stopping out buyers and trapping breakout sellers gives pro money sell orders – they need buy orders to sell into the market. Therefore, with that in mind, early in the week pro money will likely take advantage of this liquidity offering, and profit in a short-term move up to either 0.96 (tentative sell orders are seen just below at 0.95989), or the support swap level seen above at 0.96312 (tentative sell orders are seen just below at 0.96267), while at the same time accumulating buy orders along the way for a sell off down to 0.95512. Selling at the above levels would need lower-timeframe confirmation to avoid any potential fakeout; you may have to go down as low as the 1/5 minute timeframes to take advantage of this move though.

To wrap up, our bias is currently short primarily because of the following:

• Price is currently in weekly supply (levels above) at the moment.
• The daily timeframe is showing potential direction is currently heading lower for the time being.
• Likewise, the 4hr timeframe is also pointing to a move lower down to at least 0.95512, and possibly beyond.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.95989 (Predicative stop-loss orders seen at: 0.96172) 0.96267 (Predicative stop-loss orders seen at: 0.96396).

XAU/USD (GOLD):

Weekly Timeframe: The weekly timeframe shows yet another buying tail has formed just above a small weekly decision-point demand level at 1136.30. We see very little in the way stopping price from reaching 1244.08. Let’s take a look on the lower timeframes to see what we can find.

Daily Timeframe: For anyone who follows our analysis regularly, you may remember we were not comfortable buying this market long term until a close above the major support flip level at 1182.01 was seen. As we can all see, Friday’s trading sessions forced price to close above this level, which has likely confirmed buying strength from the aforementioned weekly decision-point demand level. Let’s see what the 4hr timeframe can offer us.

4hr Timeframe: For anyone who read our analysis regarding gold on Friday, you would likely remember us mentioning to watch for buying opportunities around 1149.42, which as we all can see reacted beautifully and traded right to the take-profit level at 1182.93. We do hope some of our readers were in on this move!!!

Price closed above the 1182.93 level with force, which should not be a surprise since this is practically the same as the major support flip level seen on the daily timeframe. Unfilled buy orders (1183.34) are likely lurking just above this level which in our opinion would be a perfect place to look for longs targeting the 4hr supply area above at 1202.61-1195.82. However, this trade will only be valid as long as price does not touch the 4hr supply area since we would not want added selling pressure against any potential buy trades taken around the 1182.93 level. We would advise watching the 5/3/1 minute timeframes for a lower-timeframe entry around this level, since merely placing a pending buy order could lead to an unnecessary loss, as price could easily slide down towards a 4hr resistance flip level coming in at 1174.33, where once again we would be watching lower-timeframe price action around 1175.75 for an entry long, targeting the aforementioned 4hr supply area.

Buy/sell levels:

• Buy orders: 1183.34 [Tentative] (Predicative stop-loss orders seen at: Dependent on how one confirms the level) 1175.75 [Tentative] (Predicative stop-loss orders seen at: Dependent on how one confirms the level).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

Source:: Monday 17th November: Weekly technical outlook and review.