Monday 23rd March: Weekly technical outlook and review.

EUR/USD:

Weekly timeframe perspective: Last week’s action saw price form a bullish engulfing candle a few pips from above the long-term weekly swap level coming in at 1.0411. However, last week’s close 1.0813 was unable to close above the prior week’s opening line at 1.0828, thus leaving us unsure to the validity of this candle pattern.

Nevertheless, if further buying is seen this week, it is possible price will make a bee line for the weekly swap level seen at 1.1109. Let’s see what we can find on the lower timeframes…

Daily timeframe perspective: Since Wednesday last week, the buyers and sellers have been seen pulling for position around a daily swap level resistance seen at 1.0825. This barrier is, as far as we can see, a key obstacle to a move towards the weekly swap level mentioned above at 1.1109.

4hr timeframe perspective: With the weekly chart showing price trading just above support, and the daily timeframe showing resistive qualities (see above), where does this leave us on the 4hr timeframe?

Well, as you can see, price reacted fantastically to the 4hr demand area at 1.0578-1.0618, and managed to break above not one, but two psychological levels (1.0700/1.0800). This assault finally ended with active selling entering the market at around 1.0884, which consequently forced price to retest 1.0800 into the close. Buying from here into potential daily resistance (see above) is not really something our team would be comfortable participating in.

Therefore, our main focus today is to wait for either a close above 1.0900, or failing that, a close below 1.0800.

A close above 1.0900 would likely give us the following:

1. An early signal that the daily swap level resistance mentioned above at 1.0825 has been consumed.
2. Likely confirming strength to the bullish engulfing pattern seen on the weekly timeframe.
3. A clear the path up to 1.1000.
4. Potential buying opportunities on any retest seen of 1.0900.

Conversely, if the 1.0800 level gives way, watch for price to retest this level as resistance and look to short this baby (with lower timeframe confirmation of course) down to 1.0700, and potentially the aforementioned 4hr demand seen below.

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).

GBP/USD:

Weekly timeframe perspective: Last week’s action saw the GBP teasing the underside of a weekly Quasimodo resistance (prior support) level seen at 1.5007. In the event that further downside is seen from this point, price, as far as we can see, could potentially decline all the way down to a major weekly demand area coming in at 1.4225-1.4482. It will be interesting to see what the lower timeframes make of this.

Daily timeframe perspective: From this angle, we can see that price is currently confined between a daily decision-point supply area seen at 1.5136-1.5020, and a daily demand area coming in at 1.4686-1.4805. A break below this area of demand will, in our opinion, do two things:

1. Confirm selling strength from the aforementioned weekly Quasimodo resistance level.
2. Likely clear the path south down to a daily demand area at 1.4343-1.4465, which, if you look back to the weekly chart, you’ll notice is located within the aforementioned weekly demand area.

4hr timeframe perspective: Given that the weekly chart is showing potential resistance in the market, and the daily timeframe is in somewhat of a consolidative phase (see above), what can we see from the 4hr timeframe?

Well, recent developments show that price rallied beautifully on Friday from the 4hr Quasimodo support level at 1.4698. From here, price took out both 1.4800 and 1.4900, which, as you can see, ended when price closed (1.4951) for the week 50 or so pips below the mighty 1.5000 threshold. Considering what we know from the higher timeframes, we have no intention to trade this pair long term until price makes a clean break from the daily-timeframe consolidation (see above).

However, this does not mean we cannot play for medium/short term moves. Support is seen at 1.4900 which could be tradable for a bounce north, should a break below this number be seen though; one could look to play the retest down to 1.4800, and possibly the 4hr demand below it at 1.4721-1.4767. Resistance on the other hand, comes in at 1.5000, which, if hit, will likely see a bounce south, a break above here, however, could see price retest this number as support and rally up to 1.5100, with the possibility of a fake up to 1.5150.

For anyone considering trading these psychological zones above, we’d recommend waiting for some sort of confirmation signal on the lower timeframes before doing so, as there’s nothing worse than getting caught by a fakeout, and then price moving in you originally anticipated direction!

Current buy/sell orders:

• Buy orders: 1.4900 [Tentative – confirmation required] (Predicative stop-loss orders are seen at: dependent on where one confirms this level).
• Sell orders: 1.5000 [Tentative – confirmation required] (Predicative stop-loss orders are seen at: dependent on where one confirms this level).

AUD/USD:

Weekly timeframe perspective: Buying interest was seen last week from within a weekly demand area at 0.7449-0.7678, which, as you may already be aware, converges beautifully with a long-term trendline extended from the low 0.4775.

Daily timeframe perspective: From this angle, we can see that price closed the week at 0.7771, just below a daily decision-point supply area seen at 0.7859-0.7789. In order for further upside to be seen from the aforementioned weekly demand area this week, the buyers will need to consume any selling opposition that may reside around this zone of daily supply.

4hr timeframe perspective: The latest 4hr action shows that price rocketed north from the 4hr demand area at 0.7572-0.7614, took out 0.7700, and finally ended with price rebounding from 0.7800 into the close.

Although price is trading just below a daily decision-point supply area (see above) at the moment, selling from the 0.7800 level is not really something our team would be comfortable in doing, The reasons for why are simply, for one, it is likely too tempting for pro money to break higher up to the 0.7843 (located deep within the aforementioned daily decision-point supply area) region – think of the buy stops sitting above 0.7800. And two, let’s also not forget that price is currently trading from a weekly demand area at 0.7449-0.7678. With that being said, a break above 0.7800, would, in effect, be our cue to begin watching for price to retest this level as support and rally to 0.7843.A strong close above 0.7483, however, would likely mean the following:

• Game over for the aforementioned daily decision-point supply area.
• The path north will then likely be clear up to at least 0.7900, a combined Quasimodo/round number level.
• Potential buying opportunity on any retest seen of 0.7843.

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 perspective: Last week shows that selling was seen on the USD/JPY pair, which as a consequence forced price down towards a minor weekly decision-point demand area coming in at 118.22-119.40. If price can hold out above this level, we then feel there’s a very good chance that the buyers will attack the weekly Quasimodo resistance level seen above at 122.18.

Daily timeframe perspective: From the daily timeframe, we can see that price is currently capped between a daily supply area coming in at 122.01-121.10 and a weak-looking daily demand area at 119.37-119.81. A break above here will clearly allow price to challenge the aforementioned weekly Quasimodo resistance level. A break lower on the other hand, will likely force price to test a small daily demand area seen at 118.61-119.05, which, if you look back to the weekly chart, you’ll notice that it’s located relatively deep within the aforementioned minor weekly decision-point demand area.

4hr timeframe perspective: Given that the weekly chart is showing price hovering above weekly demand at the moment, and the daily chart, albeit in a phase of consolidation, is not showing any near-term resistance until the upper limits of this daily range (see above), the focal point for today, and possibly into the week, will be on looking for longs.

The 120.00 handle could be a good starting point around the open. In the event that a confirmed entry is seen here, we’ll be looking to target 120.60 and 121.00 However, be mindful of the possibility that price may fake lower to the 119.74 number. This level was where serious buyers came into the market last week, thus there could very well be unfilled buy orders still active around this area. Be that as it may, this does not mean we’re confident enough to place a pending buy order here. Similar to buying at 120.00, we would need to see some sort of buying strength form on the lower timeframes before risking our money. Assuming a confirmed entry is seen, we’ll ultimately be watching for price to take out potential resistance at 120.00 first and foremost.

Current buy/sell orders:

• Buy orders: 120.00 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 119.74 [Tentative – confirmation required] (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 perspective: From last week’s action, we can see that the USD/CAD pair formed a nice-looking bearish engulfing candle around the underside of a weekly Quasimodo resistance level at 1.2765. Should further selling be seen from this point, we may see price attack the weekly swap level coming in at 1.2260.

Daily timeframe perspective: The daily timeframe on the other hand shows that in order for further selling to be seen on the weekly timeframe, the sellers will need to take out immediate daily demand seen at 1.2405-1.2517.

4hr timeframe perspective: The latest coming in from the 4hr timeframe shows price broke below 1.2700 and retested it as resistance. Following the retest, price dropped like a rock, taking out 1.2600 and closing the week (1.2552) just above the 1.2530 level (sits just above the aforementioned daily demand area).

Buying from 1.2530 is tempting we have to admit, only pro money can move the market like that, therefore unfilled buy orders may still be waiting to be filled around this area. However, we have to consider the possibility that price may ignore this level and head for either the 1.2500 handle lurking just below, or, the 4hr demand area at 1.2423-1.2480, which, as you can probably see, are all situated within the aforementioned daily demand area.

Taking all the above into account, and remembering that price saw relatively heavy selling from the weekly Quasimodo resistance level at 1.2765 last week, our team has come to a general consensus that buying from either one of the areas mentioned above will require some very tasty lower timeframe confirmation.

Selling on the other hand, will not be permitted until price takes out the aforementioned 4hr demand area as this will likely suggest to us that most of the major buyers within the aforementioned daily demand area are consumed.

Current buy/sell orders:

• Buy orders: 1.2530 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.2500 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 4hr demand at 1.2423-1.2480 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 1.2417).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/CHF:

Weekly timeframe perspective: The rebound seen two weeks ago from weekly supply at 1.0239-1.0131 clearly attracted selling into the market last week. Price sold off a little over 300 pips down towards a weekly swap (support) level coming in at 0.9663.

Daily timeframe perspective: With regards to the daily timeframe, there is really not much to report other than to remind ourselves that price remains capped between the aforementioned weekly swap (support) level, and a small daily supply area seen at 1.0090-1.0008, which, if you look back to the weekly chart, you’ll notice is actually a reaction to the aforementioned weekly supply area.

4hr timeframe perspective: Recent developments from the 4hr timeframe show price broke below 0.9900 and retested it as resistance. Following the retest, price dropped like a rock, taking out 0.9800 and closing for the week (0.9732) 30 or so pips above the 0.9700 level.

Given that price is currently trading around a weekly swap (support) level (see above) at the moment, selling this market will be put on ice for the time being, and our team’s energy will be focused on longs.

Our first area of interest for the week is the 0.9700 level seen marked with a green circle, which, as you can see, beautifully converges with a trendline support level extended from the low 0.9170. Waiting for lower timeframe confirmation is advised here simply because round numbers, in our experience, are prone to some very nasty fakeouts at times. Assuming we find an entry long here, we’ll be looking to simply trail our position up to 0.9800 to take full profits.

In the event that 0.9700 fails to hold, however, our attention will then shift to the 4hr demand area lurking just below it at 0.9590-0.9636. Our team has decided to set a pending buy order just above this zone at 0.9644 for the following reasons:

1. The violent reaction seen on the 18/03/15 at 0.9625. A move like this suggests to us that there is some very strong demand here.
2. This area hangs just below the aforementioned weekly swap (support) level.
3. Encapsulates the round number 0.9600.

Current buy/sell orders:

• Buy orders: 0.9700 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 0.9644 (Predicative stop-loss orders seen at: 0.9583).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

DOW 30:

Weekly timeframe perspective: The weekly timeframe shows that price closed the week (18117) just above a small weekly resistance level at 18098, which as a result, may see price attack the overall high seen at 18279 sometime this week.

Dilly timeframe perspective: The weekly timeframe may show price has closed above a weekly resistance level, but what it does not show is price has just hit a fresh pocket of daily supply coming in at 18279-18192. It will be interesting to see what the 4hr timeframe makes of all this…

4hr timeframe perspective: From the 4hr timeframe, we can see that the rebound from 17886 clearly attracted buyers into the market on Friday, as price rallied hard and broke above 4hr supply seen at 18164-18111. This has, in our opinion, likely cleared the path north for the market to test a 4hr Quasimodo resistance level coming in at 18241 (located deep within the aforementioned daily supply area). To take advantage of this potential up move, one could either buy at market, effectively buying the breakout, or, as shown by the red arrows, wait for price to drop down towards the origin 17871-17945 (buy orders seen just above at 17957). Due to our conservative trading nature, we definitely favor the latter!

At this point, some may be thinking that by buying here, one would essentially be going against sellers within daily supply (see above). Yes, we agree, this does seem to be the case. However, what gives us confidence to buy is the fact that price has closed above a weekly resistance level and in addition to this, we now have clear direction on the 4hr timeframe (for levels see above). Therefore, our bias for the time being is long.

Current buy/sell orders:

• Buy orders: 17957 (Predicative stop-loss orders seen at: 17859).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly timeframe perspective: Clear buying interest came into the market last week from just above a weekly decision-point demand level at 1136.3. Consequent to this, as you can probably see, price formed quite a nice-looking weekly bullish engulfing pattern. Let’s take a look at what the lower timeframes think…

Daly timeframe perspective: The daily timeframe on the other hand, shows that Friday saw price close above a major daily swap level at 1182.0, and, as far as we can see, has slightly rebounded from just below a daily swap (resistance) level at 1188.3. If the buyers can hold out above 1182.0, and take out 1188.3, it is very possible we’ll see Gold rally towards a daily supply area seen at 1223.1-1213.0.

4hr timeframe perspective: Given that the weekly chart indicates there’s room for further upside, and the daily chart shows price recently closed above a major daily swap level (see above); our team is currently swaying more to the long side at the moment.

However, for us to even consider buying Gold, the buyers will need to prove their selves by closing above1188.3. This, in our opinion, would do two things for us (as per the green arrows):

1. Give us the chance to trade any retest seen of 1188.3.
2. Clear the path north up to at least 4hr supply coming in at 1200.5-1196.4, and potentially the 1205.8 4hr Quasimodo resistance level given enough time.

Taking all into consideration, opting to stand on the sidelines here until more conducive price action is seen may be the best path to take.

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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