Thursday 12th February: Several high-impacting news events will likely cause volatility in the markets today – remain vigilant.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers continue to trade between a weekly supply area coming in at 1.1678-1.1458, and a weekly Quasimodo support level seen at 1.1109.

Daily Timeframe: The volatility on the Euro seems to have stagnated over the past three days. As a consequence, this has forced price to remain trading within a small, yet clearly supportive daily demand area visible at 1.1260-1.1318. With a relatively heavy round of news scheduled for today, we’ll hopefully have more to discuss in tomorrow’s analysis…

4hr Timeframe: Technically, price action has not seen much change since the 4hr timeframe shows that buying and selling is still confined to a small 4hr range (1.1343/1.1269 – located within the small daily demand area mentioned above at 1.1260-1.1318).

Buy trades will only be considered once/if price breaks above the current 4hr range and retests it as support. Confirmation from the lower timeframes will be required, and the first target would likely be set just below the 1.1400 handle at 1.1396. With regards to sells, it was previously stated that our team would only be comfortable shorting the Euro if price breaks below and retests 1.1200, since selling on the break of the aforementioned 4hr range may cause unnecessary stress especially with both the 4hr decision-point demand area at 1.1222-1.1253, and the 1.1200 number looming just 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: The situation on the weekly timeframe remains relatively unchanged, seeing that price is still trading just below the weekly swap level coming in at 1.5270. A significant cut above here could effectively open the gates for price to challenge a weekly decision-point supply area seen at 1.5784-1.5541.

Daily Timeframe: The trading action seen on the daily timeframe shows price has been teasing the 1.5270 weekly swap level for the past three days now, which in our opinion looks poised to break higher judging from the lack of selling interest seen here.

4hr Timeframe: Recent developments on sterling show price rallied up to just below the 1.5300 level, which as you can see converges beautifully with a downtrend line taken from the high 1.5681. The buyers were clearly unable to contend with the selling opposition around this psychological threshold, since price aggressively sold off. This brought the pair down to a relatively fresh 4hr demand area seen at 1.5195-1.5227, which at the time of writing seems to be holding the market higher for the time being.

In our opinion, a decision clearly needs to be made here. In the event that strong buying takes place from this area, we will likely see the GBP attack the 1.5300 region again, and if price manages to cut above and successfully retest this level, our team will be relatively confident higher prices are on the horizon, since at that point most of the remaining selling opposition will have likely been cleared around the weekly swap level (1.5270).

A break below the 4hr area on the other hand would likely confirm selling strength from the aforementioned weekly swap level and at the same time potentially force price down towards a 4hr decision-point demand area coming in just below it at 1.5138-1.5178.

Given the points made above, our team has decided to sit this one out until more favorable price action is seen.

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: The weekly timeframe shows that the Aussie is currently trading, or should we say ‘consolidating’ above a major weekly demand area (0.7449-0.7678) at the moment.

Daily Timeframe: Yesterday’s trading action shows that the Aussie sold off, once again pushing price below the daily Quasimodo support area seen at 0.7699-0.7834. Assuming that most of the buyers are consumed around this area, we feel there’s a good chance that price will continue driving south until reaching the daily demand area coming in at 0.7449-0.7598 (located deep within the aforementioned weekly demand area).

4hr Timeframe: The recent decent caused price to take out a 4hr demand area seen at 0.7732-0.7751, and hit the 0.7700 level. Entering long from here may not be the best path to take especially with potential resistance looming just above from the recently broken 4hr demand area. Likewise, if price breaks and retests 0.7700, shorting this would likely cause unnecessary stress since you would effectively be selling into not only a weekly demand area (levels above), but also a 4hr demand base seen just below at 0.7625-0.7675. Therefore, in the absence of clearer price action, we’ve opted to remain flat for the time being.

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: The USD continues to strengthen against the YEN as further buying is currently being seen on the weekly timeframe. Providing that the buyers can continue with this tempo, we see very little reason why price will not hit the weekly Quasimodo resistance level at 122.18 sometime in the near future.

Daily Timeframe: Yesterday’s action reveals that price broke above a daily supply area coming in at 119.95-119.14. This move has likely opened the gates for further upside towards a drop-base-drop daily supply area seen above at 122.61-121.54, which if you look back to the weekly timeframe, you’ll see it beautifully encapsulates the aforementioned weekly Quasimodo resistance level.

4hr Timeframe: The recent ascent saw price smash through the 120.00 threshold and rally up to a 4hr supply area coming in at 120.63-120.39. This 4hr supply area remains a key obstacle to a move towards 121.00.

Selling from this area of 4hr supply without confirmation would be considered a risky trade in our book, especially with potential support looming just below at 120.00, and also not forgetting that the higher-timeframe picture is suggesting further upside may well be in store (see above).

With that being said, even though the higher-timeframe picture is indicating further buying will likely take place, we still cannot justify buying into the aforementioned 4hr supply. Ultimately, our team would like to see price break above this 4hr supply area which in turn should clear the path north up to at least 121.00. It would be at this point, we’d keep a close eye on the psychological level 120.00 and the 4hr decision-point demand area at 119.63-119.77 for (if a retracement is seen) confirmed buying opportunities.

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 market is currently being held lower by a long-term weekly Quasimodo resistance level seen at 1.2765. 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 market is presently being held higher by a daily decision-point demand area at 1.2378-1.2468. 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: The USD/CAD pair rallied yesterday which saw the market break above a 4hr supply area seen at 1.2643-1.2574. This move consequently forced price up to just below the 1.2700 region, where at which point selling interest was seen. Assuming that further selling ensues from here, price will likely come into contact with a small 4hr decision-point demand area visible at 1.2570-1.2600. In the event that this area provides support, more buyers may enter the market which could see price attack, and potentially break above 1.2700.

Conversely, if price breaks below this small 4hr decision-point demand area and successfully retests it as supply, this would be our cue to begin watching the lower timeframes for confirmed shorts down towards a 4hr demand area coming in at 1.2429-1.2469 (located around the aforementioned daily decision-point demand area).

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/CHF:

Weekly Timeframe: Trading action on the weekly timeframe shows that price is currently retesting the weekly swap level at 0.9204 as support. 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, the daily timeframe shows price retesting the weekly swap level at 0.9204. The daily timeframe however shows us that very little buying strength is being seen here at the moment, which could lead to price breaking below this weekly level and opening the gates for prices to challenge a daily decision-point demand area coming in at 0.8933-0.9018.

4hr Timeframe: As you can see, the USD/CHF pair is continuing to range 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. With the way price is behaving at present, our team has no interest whatsoever in trading this pair.

However, we believe in being prepared, and as such, a break below and retest of the weekly swap level at 0.9204 could provide a nice selling opportunity down towards a 4hr decision-point demand area coming in at 0.8984-0.9054 (located just above the aforementioned daily decision-point demand area). Conversely, a break above the aforementioned 4hr swap level would likely attract further upside towards the weekly swap level seen at 0.9382. It would be at this point we’d feel comfortable looking for confirmed sell trades around the 0.9380 mark.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.9380 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

DOW 30:

Weekly Timeframe: Last week shows price rebounded strongly from the ignored weekly Quasimodo level coming in at 17135. 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.

Daily Timeframe: Yesterday was clearly a good day for anyone long the DOW, as price rallied north and closed above a daily swap level seen at 17896. As a result, this has likely opened the door for more upside towards a small daily supply area coming in at 18098-18045.

4hr Timeframe: For anyone who read our last report on the DOW, you may recall us mentioning to watch for lower timeframe buying confirmation around three levels of interest. As we can all see, price reacted just wonderfully to the first level at 17781. Unfortunately though, we were not at our desks to take advantage of this move, and what makes it even worse is that there was a picture-perfect fakeout seen below the low 17777 on the 30 minute timeframe, that had ‘trade me long written all over it’. We do hope some of our readers took advantage of this beauty.

Our team still believes that further upside is likely, at least up until the small 4hr supply area coming in at 18047-18014. However, judging by the rather large wick seen above the 4hr supply area at 17934-17855, we feel a lot more sellers got stopped out here, and as such pro money may sell into this available liquidity for quick profits down to around a small 4hr swap level seen at 17887 (tentative buy orders are seen just above at 17893) before rallying higher towards 18047-18014.

Current buy/sell orders:

• Buy orders: 17893 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that Gold has dipped below the weekly swap level seen at 1222.2, which may have opened the gates for further downside towards a weekly demand area coming in at 1166.8-1195.0.

Daily Timeframe: Yesterday’s trading action on the daily timeframe saw Gold sell off and close below a significant daily decision-point demand area at 1224.9-1235.7. This in turn forced the market down towards another daily decision-point demand area coming in at 1204.4-1216.5.

4hr Timeframe: The recent descent saw Gold take out a 4hr demand area seen at 1224.9-1232.1, and attack the swing low seen from the 12/01/15 at 1217.3. In the event that this swing low gives way, price will likely continue drilling south towards a 4hr demand area seen at 1204.4-1210.6, which if you look on the daily timeframe, you’ll see it is located deep within the daily decision-point demand area mentioned above at 1204.4-1216.5.

Let’s quickly recap here so that we’re all on the same page. The weekly chart is currently indicating room for price to move south following the break of 1222.2, meanwhile on the daily chart, we can see price is trading around the base of a daily decision-point demand area (for levels see above) at the moment. So, where does this leave us on the 4hr timeframe? Well, just because the weekly chart has broken a support level, it does not necessarily mean price will automatically continue south. This is especially true when we have supporting demand coming in from the daily timeframe (as just mentioned above). Therefore, we believe if price is going to decline in value, it will only likely do so down towards the 4hr demand area at 1204.4-1210.6, and if price holds here, and shows strength, we feel there is a good chance a fakeout below the weekly support level may be in process. That being the case, our team will expect Gold to increase in value, and as such we’ll be keeping a close eye on the lower timeframes for any confirmed buy trades around the 1211.7 mark as shown by the green arrows.

Current buy/sell orders:

• Buy orders: 1211.7 [Tentative] (Predicative stop-loss orders seen at: 1203.4).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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