Monday 6th April: Weekly technical outlook and review.

EUR/USD:

Weekly timeframe perspective: The Euro pair may well have ended the week closing positively at 1.0966, but let’s not forget that price has been and still is trading only a stone’s throw away from a major weekly swap (resistance) level coming in at 1.1096. In the event that price manages to get above this barrier this week, further upside will likely be seen towards a weekly supply area positioned at 1.1449-1.1278.

Daily timeframe perspective: Looking at the daily timeframe, we can see that last week’s rebound from the daily swap level visible at 1.0716 rocketed prices higher not only on Thursday, but Friday as well. This, as you can see, saw price come very close to attacking the high 1.1051 – a break above this little beauty would likely see price shake hands with the aforementioned weekly swap level!

4hr timeframe perspective: The March NFP number came in way below expectations, thus forcing the EUR/USD pair northbound in yesterday’s session. This burst of buying energy took out both1.0900 and 1.1000, which in turn, saw price smash into, and slightly rebound, from a 4hr resistance zone coming in at 1.1051-1.1011 (located just below the weekly swap level mentioned above at 1.1096).

So, with all of the above taken into account, what do we see happening this week? Well, to begin with, today’s volatility will very likely be extremely low, since banks across the UK, Europe, Australia and New Zealand are closed in observance of Easter Monday. Ultimately though, our team is not expecting much more buying to be seen this week, since the Euro is, as we’re sure you can all see, in one monstrous downtrend at the moment. On top of that, let’s not forget that price is also trading just below the aforementioned weekly swap (resistance) level.

Therefore, one could either look to join in selling from the 4hr resistance zone, or wait to see if price fakes above here towards the weekly swap (resistance) level lurking just above in red. Due to our conservative trading nature, we favor the latter. Once, or indeed if price breaks above this 4hr zone, and the approach is clean, we’ll likely place a pending sell order just below the weekly swap (resistance) level at 1.1087, with a stop placed above the 4hr decision-point supply area seen marked with a green arrow to the left at 1.1143-1.1114.

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: Similar to the Euro, the GBP/USD pair ended the week positively, closing at 1.4914, which as you can see, printed a nice-looking bullish pin bar candle in the process. However, let’s all not go pushing the buy buttons just yet, as the GBP is still in a freakishly steep downtrend at the moment, and also remains trading just below a recently broken weekly Quasimodo line coming in at 1.5007. Let’s take a look to see what we can find on the lower timeframes…

Daily timeframe perspective: From this timeframe, we can see that in order for further selling to be seen on the weekly timeframe, the bears will need to sharpen their claws and begin digging, as there’s a long-term daily demand zone blocking their path seen at 1.4643-1.4823.

4hr timeframe perspective: The 4hr timeframe shows that price was essentially range bound for most of last week between 1.4866, and a 4hr demand area seen at 1.4721-1.4767 (located within the aforementioned daily demand area). Friday’s NFP-induced rally soon put a stop to that mind you, as price not only broke out above this 4hr range, but also above a small 4hr supply area seen just above it at 1.4919-1.4896.

Given the points made above, what do we see happening on Cable this week? Well, we’re pretty much discounting today since most major banks are closed for Easter. Tomorrow onwards, however, we’re expecting to see a short-term move higher take place. Here’s why:

• Price is trading from a daily demand area (see above) at the moment.
• Price has yet to hit/retest the weekly Quasimodo resistance level seen above in red at 1.5007.
• Apart from a small 4hr Quasimodo resistance level seen at 1.4953, the path north now appears to be clear up to a 4hr resistance zone at 1.5008-1.4975, which, as you can see, not only contains the large psychological number 1.5000, but also, the weekly Quasimodo resistance level is seen tucked deep within.

Now, before rallying, price may drop to retest the topside of the recently broken 4hr range, this is something we have to be prepared for. Although we believe a rally higher will take place, we have no interest in buying, sounds weird, we know! What we’re interested in, however, is selling at the aforementioned 4hr resistance zone for reasons stated above in bold at point three, and the fact that the overall trend is south. Therefore, we have placed an alert at the aforementioned 4hr Quasimodo resistance level, if price manages to get above here this week; we’ll begin preparing to enter short.

It will be interesting to see how this plays out.

Current buy/sell orders:

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

AUD/USD:

Weekly timeframe perspective: Over the past two months or so, the buyers and sellers have been seen pulling for position around a weekly demand area at 0.7449-0.7678, which, as you can see, also boasts long-term trendline convergence from the low 0.4775. We’re not usually one to make predictions here, but with the lower low formed deep within the weekly demand area last week at 0.7532, coupled with the fact that the Aussie is in a severe downtrend at the moment, it looks as though this area will be taken out sooner or later.

Daily timeframe perspective: From the daily picture, we can see that the Aussie pair appears to have begun forming a consolidation zone between a daily decision-point supply area seen at 0.8024-0.7883, and a daily demand area visible at 0.7449-0.7598 (located within the aforementioned weekly demand area). That being said, recent actions on this pair show that price has been wrestling with the lower limits of this range since Wednesday last week. Assuming a rally higher takes place from here this week; look for resistive pressure to come into the market at either the down trend line extended from the high 0.8294, or the upper limit of the daily range.

4hr timeframe perspective: Friday’s trading action shows that price strongly broke out to the upside, consequently taking out the high 0.7662, and then aggressively rebounding from a small 4hr decision-point supply area seen just above here at 0.7699-0.7682 into the close.

In view of the higher-timeframe structure, we know that price is trading around overall demand (see above) at the moment, so a move higher could still be on the cards. That said, we’re not expecting much from Monday’s trading due to the Easter holidays, the most we’ll likely see is a continuation move south down to 0.7600, or potentially the 4hr decision-point demand area seen just below it at 0.7569-0.7592. Trading long from either of the above areas will, for us anyway, require lower timeframe confirmation. The reasons for why is (as already mentioned above) simply because both the overall trend is pointing south, and demand on the higher timeframes is not, shall we say, ‘portraying strength’ at this time. As a closing point, be careful trading today guys as volume is expected to be very low. If you do trade, we would advise keeping your positions very small, and only shooting for small intraday targets.

Current buy/sell orders:

• Buy orders: 0.7600 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 0.7569-0.7592 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.7565).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly timeframe perspective: The USD/JPY pair ended the week closing (118.91) deep within a small weekly decision-point demand area at 118.22-119.40, consequently forming a bearish pin bar candle in the process. In the event that price breaks below this area this week, we may see price attack the low 116.86, or even the major weekly swap level seen just below it at 115.50.

Daily timeframe perspective: From the daily picture, we can see that resistive pressure came into the market last week from the underside of a daily supply area seen at 121.18-120.08. The selling from here brought prices down as far as 118.71 – forty or so pips above a daily support level coming at 118.32 (located deep within the aforementioned weekly decision-point demand area).

Should price push below this level this week, we’ll be then shifting our attention to focus on the daily demand area positioned at 116.86-117.54.

4hr timeframe perspective: Friday’s trading sessions were full of energy. Negative NFP data forced the USD/JPY pair to take a dive, consequently consuming not only the 119.42 4hr Quasimodo support level, but also 119.00 as well, which, as you can see, was retested as resistance into the close.

Even though this pair is in a strong uptrend at the moment, more and more things are pointing to a further decline here. We not only have weak-looking price action seen within the weekly decision-point demand area at 118.22-119.40, we also have the daily timeframe telling us that there’s room for potential selling down to at least the daily support at 118.32, and to top it all, the 4hr timeframe is showing that price has likely taken out the last 4hr ‘supportive structure’ (119.00) above the aforementioned daily support level seen below marked in green.

Taking all of the above into consideration, assuming that the sellers can hold out below 119.00 today, it is very likely this could be the start of a further decline in value down to the daily support level this week. As good as this looks, selling today is not something we’d be comfortable doing since liquidity will very likely be extremely low due to the Easter holidays. We’re personally going to hold fire here, and maybe reevaluate our thinking depending on where price opens on Tuesday when liquidity should be back to normal.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 119.00 [tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

USD/CAD:

Weekly timeframe perspective: The USD/CAD pair ended the week defending a weekly Quasimodo resistance level coming in at 1.2765, consequently forcing the market to close near its lows (1.2428) at 1.2483. Some may read this move as the start of things to come; we’re still not convinced though, since price has been seen teasing the underside of this weekly Quasimodo resistance level for over two months now with little meaning being registered here in that time. It will be interesting to see what the lower timeframes have on offer…

Daily timeframe perspective: From the daily picture, we can see that this pair is clearly beginning to chisel out a consolidation zone between a daily demand area at 1.2405-1.2517, and a daily supply area seen at 1.2833-1.2747 (encapsulates the aforementioned weekly Quasimodo resistance level). That being said, recent actions on this pair show that price is currently testing the lower limits of this range, which, as you can probably guess, will need to be consumed In order for further selling to be seen on the weekly timeframe.

4hr timeframe perspective: Friday’s trading action shows that following a retest of 4hr demand at 1.2562-1.2582, an NFP-induced sell off took place. This move cleanly took out the 1.2500 handle, and collided into 4hr demand at 1.2408-1.2450, where a short-covering ascent was seen into the close.

Given that there is somewhat of a tug of war going on between the weekly and daily timeframe structures at the moment, trading the 4hr timeframe will have to be done so with caution.

Today’s trading will likely bring price up to retest 1.2500, selling from here could be a possibility as long as one waits for lower timeframe confirmation. In the event that we see a close above this round number, however, be it today, or tomorrow, we’re going to be looking for price to retest this level as support, as the path north will then likely be clear up to the 4hr decision-point supply area coming in at 1.2572-1.2553. This is also an area we currently have noted down, simply because it was here where well-funded traders were very active when the NFP data was released on Friday, which means there may very well be unfilled sell orders still remaining

Trading volume is expected to be very low today. If you do trade, we would advise keeping your positions very small, and only shooting for small intraday targets

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 1.2500 [tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

USD/CHF:

Weekly timeframe perspective: Last week’s action ended with price respecting the 0.9663 weekly swap level as resistance, consequently forcing the market to close near its lows (0.9479) at 0.9512. In the event that further selling is seen this week, we might, just might, see prices challenge the weekly decision-point demand area at 0.9170-0.9343.

Daily Timeframe perspective: As you can see from the daily chart, Tuesday closed above the aforementioned weekly swap level and attempted to challenge the daily decision-point supply area seen at 0.9904-0.9771, falling short by only a few pips. This saw the USD/CHF pair sell off, and eventually test a daily decision-point demand area at 0.9449-0.9534. This area, as you can probably see, remains a key obstacle to a move down towards the daily demand area coming in at 0.9170-0.9246, which, if you look back to the weekly chart, you’ll notice is located deep within the aforementioned weekly decision-point demand area.

4hr timeframe perspective: Friday’s sessions show that price retested the 0.9600 handle as resistance, and then aggressively sold off. This NFP-induced sell off saw the market slam dunk itself into 4hr demand seen at 0.9449-0.9500 (located deep within the aforementioned daily decision-point demand area), where a little buying interest from here was seen into the close.

Buying from this 4hr demand area looks fantastic if you only watch the 4hr and daily timeframes, but when you include the weekly timeframe in the mix, you could potentially be buying from very ambitious sellers (see above).This, however, does not mean that we cannot look to buy from this current area of 4hr demand, all it means is seriously attractive lower timeframe confirmation will be needed beforehand.

In the event that price does eventually take off from this 4hr demand area, be it today, or tomorrow, we’ll be looking to close out any longs we have around the 4hr decision-point supply area at 0.9608-0.9583, and look to enter short at market prices. The reason we believe this 4hr area of supply will see a reaction is because at that point, we would not only be trading in line with the weekly timeframe, but also around an area of 4hr supply that was formed during the NFP sell off, so unfilled sell orders may still reside here.

Trading volume is expected to be very low today. If you do trade, we would advise keeping your positions very small, and only shooting for small intraday targets

Current buy/sell orders:

• Buy orders: 0.9449-0.9500 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.9439).
• Sell orders: 0.9608-0.9583 (Predicative stop-loss orders seen at: 0.9618).

XAU/USD (Gold):

Weekly timeframe perspective: The weekly timeframe shows that the market ended the week closing around the underside of a small weekly decision-point supply area (1223.1-1202.6) at 1202.7. Could this possibly mean that the sellers have been weakened here? Let’s take a look on the lower timeframes to see what we can find…

Daily timeframe perspective: From this angle, we can see that support came into the market on Wednesday from a major daily swap level seen at 1182.0, which is, from a technical standpoint, the reason why the market rallied on Thursday. This surge of buying brought prices up to within a stone’s throw away from hitting the daily supply area seen at 1223.1-1213.0 (located deep within the weekly decision-point supply area at 1223.1-1202.6). For us to have confidence in the weekly decision-point supply area mentioned above, a close below the aforementioned daily swap level would need to be seen.

4hr timeframe perspective: Friday’s sessions saw price grind lower from 1208.5 down to just above the 4hr decision-point demand area seen at 1191.3-1194.1, which, as you can see, also boasts trendline convergence from the low 1142.5.

Given that price is still in an overall downtrend, and is confined to weekly supply on the weekly timeframe (see above), our team naturally favors shorts at the moment. However, the only obvious resistance we see on the 4hr timeframe at the moment is positioned quite high at 1223.1-1219.0. In that case, could one look to buy this pair? We believe so. Let’s not forget though, that by buying Gold we will be effectively trading against weekly supply, but, here’s the kicker – take another look at the daily chart, can you see how there is still ROOM to move north at least until the daily supply area seen at 1223.1-1213, this is potentially tradable.

That being the case, the only two places that we would consider areas worthy of buying from on the 4hr scale would be the aforementioned 4hr decision-point demand area, which has yet to be hit, and the 4hr demand area seen below it at 1180.7-1187.3. Any longs taken from either zone will need to have extremely attractive lower timeframe confirmation – remember guys we’re only looking to trail any long trades up to the lower base aforementioned daily supply area, no further!

Trading volume is expected to be very low today. If you do trade, we would advise keeping your positions very small, and only shooting for small intraday targets.

Current buy/sell orders:

• Buy orders: 1191.3-1194.1 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 1190.2) 1180.7-1187.3 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 1179.7).

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

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