Thursday 19th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows price still remains trading between weekly supply coming in at 1.1678-1.1458, and a weekly Quasimodo support level visible at 1.1109. Nevertheless, much of the recent trading action has been seen taking place just below the aforementioned weekly supply area.

Daily Timeframe: The situation on the daily timeframe remains relatively unchanged, as the buyers and sellers continue to trade between a daily demand area seen at 1.1260-1.1318 and a daily swap level sitting at 1.1411.

4hr Timeframe: The latest coming from the 4hr timeframe shows price is now range bound between1.1411 (the daily swap level), and 1.1336 (located a little above the daily demand area at 1.1260-1.1318). For anyone considering trading within this band, tentative buys are seen at 1.1341 and sells at 1.1406. However, we would not recommend trading these levels without the use of confirming price action from the lower timeframes, and easy-to-reach targets.

A break below this 4hr range would likely force the market to test a small 4hr demand area at 1.1304-1.1318 (located just within the aforementioned daily demand area). Buying with corresponding lower timeframe confirmation around the 1.1321 mark is feasible as long as one remains aware that they are effectively buying not too far from weekly supply at 1.1678-1.1458.

Conversely, a break higher would likely attract further buying towards the 4hr supply area seen at 1.1497-1.1462. We’ve placed a pending sell order just below here at 1.1457 and a stop just above at 1.1503, since this area remains relatively fresh, and is located just within the limits of the aforementioned weekly supply area.

Current buy/sell orders:

• Buy orders: 1.1341 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.1321 [Tentative] (Predicative stop-loss orders seen at: 1.1295).
• Sell orders: 1.1406 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.1457 (Predicative stop-loss orders seen at: 1.1503).

GBP/USD:

Weekly Timeframe: Last week saw the GBP strongly close above a weekly swap level seen at 1.5270. Assuming that the buyers can hold out above this barrier, price could potentially test the weekly supply area seen above at 1.5784-1.5541 sometime in the near future.

Daily Timeframe: Following the indecision candle printed on Tuesday, yesterday’s action saw the market rocket north forcing price to once again trade around a daily swap level at 1.5433. A convincing close above this hurdle would likely see increased buying interest up to a small daily supply area coming in at 1.5619-1.5548 (located just within the aforementioned weekly supply area).

4hr Timeframe: As you can see, the 1.5351 barrier was clearly a level that the market respected. Price was aggressively bought from here, which in turn took out the 1.5400 handle and viciously spiked above the aforementioned daily swap level. If we manage to close above this daily level, we’ll become buyers at that point up to at least 1.5500, which if you look back to the weekly chart, you’ll notice that this round number is a key obstacle to a move towards the aforementioned weekly supply area.

Selling on the other hand from the daily swap level is something our team has little interest participating in for the simple reason that potential support is looming just below at 1.5400.

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: Back-to-back weekly indecision candles have recently been seen above weekly demand coming in at 0.7449-0.7678. Assuming that the buyers begin showing strength here, a rally higher could well be seen up towards a weekly swap level visible at 0.8064.

Daily Timeframe: The daily picture shows that for the past two weeks, the AUD/USD pair has been ranging between two daily swap levels (0.7844 and 0.7691). However, recent movement reveals that the majority of trading is now taking place below the upper resistance band of this range – the 0.7844 level.

4hr Timeframe: (Technically, very little change has been seen on this commodity pair).

Although the Aussie has found support around the 4hr swap area at 0.7794-0.7768, it has still failed to clear immediate resistance seen above at 0.7844 (daily swap level). Because of this, we feel that this market cannot be bought at this point in time.

In the event price hits the aforementioned daily swap level sometime soon, our team would then 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 we remain wary owing to the fact that price is hovering above a weekly demand area (see above) at the moment. First take-profit target for any shorts taken from here will likely be the recently broken 4hr supply area mentioned above at 0.7794-0.7768.

With all the above in mind, traders should also be prepared for the possibility that price may fake above this level up to a small fresh 4hr supply area at 0.7905-0.7881 (upper green arrows). In the event that this occurs, we’d be comfortable setting a pending sell order around the 0.7876 (half the normal position) mark, with a small stop placed above at 0.7910. The reasons for why are as follows:

• This area of supply is fresh – effectively remains untouched.
• The 4hr supply area could provide a nice zone for pro money to fake above the daily swap level to bring prices lower.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.7840 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 0.7876 [half the normal position] (Predicative stop-loss orders seen at: 0.7910).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers continue to pull for position around the upper limits of a symmetrical triangle formation (121.83/117.43).

Daily Timeframe: The latest from the daily timeframe reveals that price is currently being held higher by a daily decision-point demand area at 118.32-119.09. A break below this boundary could very well see price drop towards the daily demand area coming in at 116.86-117.54.

4hr Timeframe: The USD/JPY pair sold off yesterday which in turn took out the 119.00 handle and tested a 4hr demand area coming in at 118.32-118.54 (located deep within the aforementioned daily decision-point demand area).

Given the points made above, our team has come to a general consensus that shorting this pair will only be considered once or indeed if price manages to close below the aforementioned 4hr demand area, since the path south would then likely be clear down to at least 117.86. With regards to buying, the team remains wary here for the following reasons:

• Price is currently seen reacting from the upper limits of the weekly symmetrical triangle (see above).
• Price action around the daily decision-point demand area (see above) is not exactly showing much in the way of buying strength at present. What is more, this daily area was also slightly breached on the17/02/14, thus some of the buy orders may have already been consumed.

Therefore, we have humbly decided to take a step back here, and patiently watch how price develops in upcoming sessions.

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 continues to hold the market lower. In the event that further selling is seen from here, we feel there’s 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 be supportive, and as such, it 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: (Most of our analysis remains unchanged as the market moved very little yesterday) The USD/CAD pair, as you can see rallied from the 4hr swap level seen at 1.2379, but once again found the 4hr supply area seen at 1.2489-1.2449 too strong to overcome. In the event that 1.2379 is breached, this would likely pave the way south towards a potential buy zone colored in green, which comprises of the 1.2300 round number level, and the weekly swap level mentioned above at 1.2260. Does this mean if price closes below 1.2379, we then have to wait for price to hit the aforementioned green zone before looking to trade? Absolutely not. In the event a close lower does occur, our team plans to wait and see if price retests this level as resistance, and if so, begin looking for lower timeframe selling confirmation to short down towards the 1.2300 level. It would be at this point we’d exit our shorts, and look for longs.

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: Following the retest of the weekly swap level at 0.9204 last week, price recently broke above a weekly swap level coming in at 0.9382. In the event that the market closes the week above this boundary, this, in our opinion, would likely suggest a more bullish bias going forward.

Daily Timeframe: Yesterday’s trading action saw price close above the weekly swap level at 0.9382. As long as the buyers can hold out above this hurdle, we feel that there’s a good chance price will hit the daily swap level seen at 0.9468 sometime soon.

4hr Timeframe: Much the same as the daily timeframe. Price has closed above the weekly swap level and has very likely cleared the path north for the market to test the aforementioned daily swap level. Selling at this level is something our team is unsure of owing to the fact that a major weekly swap level has just been breached (see above). Therefore, if price hits this level, our team will watch how price action behaves here on the lower timeframes before selling. If a positive sell signal is seen, we’ll look to trade a small position down to around the 0.9384 level.

However, before we see price hit the daily swap level, traders need to be prepared for the possibility that price may retest the weekly swap level as support. It would be here that we’d begin watching the lower timeframes for buying confirmation around the 0.9384 mark. If this does occur, our first take-profit target (dependent on how price approaches of course) will be set at around 0.9463.

Current buy/sell orders:

• Buy orders: 0.9384 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: 0.9468 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

DOW 30:

Weekly Timeframe: Following the strong rebound from the ignored weekly Quasimodo level coming in at 17135, further extension was seen last week forcing price to close near its highs at 18010. In the event that further buying ensues, 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 price still remains trading around a small daily supply area at 18098-18045. If further downside is seen from here, price will likely retest the daily swap level coming in just below at 17896.

4hr Timeframe: After a lackluster performance on the DOW yesterday, price is still seen lingering around the 4hr supply area at 18047-18014. This may be a good time to recap so that we’re all on the same page. The weekly chart shows price is largely bullish, but is close to testing the overall high. Meanwhile, the daily chart reveals that price is currently trading around a daily supply at the moment (see above for levels). So, where does this leave us on the 4hr timeframe? It was reported in yesterday’s analysis that the buyers spiked above the aforementioned 4hr supply, and this, could have potentially opened the doors to new highs – we still believe this to be the case. The reason for this is simple. With the current 4hr supply area likely consumed (the recent spike), take a look above this area to the left, can you see how supply may also 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 likely taken out. Therefore, if strong buyers come into the market, these small areas of 4hr supply will likely not stand much of a chance.

For the time being, we are not interested in selling due to the above. With regards to buying however, we currently see two options. Firstly, wait for price to close above and retest this 4hr supply area as demand, and then consider entering long with lower timeframe confirmation. Secondly, if price sees a retracement back down to the aforementioned 4hr swap area, one could then begin looking for confirmed buys since we already have a signal (the break above 4hr supply) that price likely wants to trade higher.

Current buy/sell orders:

• Buy orders: intend to watch for lower timeframe confirmation around the 4hr swap area at 17952-17911 if price retraces this far (Predicative stop-loss orders seen at: 17885).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows price has recently dipped below the weekly swap level at 1222.2, which as you can see clearly attracted further selling down to just above a weekly demand area coming in at 1166.8-1195.0.

Daily Timeframe: Yesterday’s action saw price spike below a daily decision-point demand area at 1204.4-1216.5 forming a beautiful buying tail in the process. This move likely stopped out most, if not all of the buyers here, and has likely opened the gates for further downside towards a daily swap level seen at 1182.0 (located relatively deep within the aforementioned weekly demand area).

4hr Timeframe: Following on from our previous report, we believe we can now safely assume that the majority of buyers are consumed around the 4hr demand area at 1204.4-1210.6, as let’s not forget it was located deep within the recently broken daily decision-point demand area (see above). With that, the path south is now likely clear on the 4hr timeframe down to at least the 4hr decision-point demand area coming in at 1186.6-1194.3, which as you can probably see is a key obstacle to a move towards the 1182.0 daily swap level.

The previous analysis stated that we were looking for confirmed shorts around 1217.3, and this is still the case, but now, since price has traded very close to weekly demand (see above), one needs to be extra careful selling here. The reason we still believe a sell opportunity is present at 1217.3 is simply because the 4hr decision-point demand area at 1186.6-1194.3 represents the upper limit of the weekly demand area which has yet to be hit.

So, to summarize, we are still going to be watching 1217.3 for sells today, and targeting the aforementioned 4hr decision-point demand area as per the green arrows.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 1217.3 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).

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