Thursday 26th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that ever since price rebounded from the weekly Quasimodo support level at 1.1109 (26/01/15), the market has been seen hesitating below a weekly supply area coming in at 1.1678-1.1458. A break above here could very well clear the path north up to a major weekly swap level seen at 1.1758.

Daily Timeframe: Since the 12/02/15, the EUR/USD pair has been seen consolidating between a small daily demand area visible at 1.1260-1.1318, and a daily swap level sitting at 1.1411. This daily swap level, in our opinion, remains a key obstacle to a move higher into the aforementioned weekly supply.

4hr Timeframe: The latest coming from the Euro shows that price was sluggish during yesterday’s sessions. That being said though, price did manage to break above the 1.1350 mark, which, as you can probably see, is being retested as support at this very moment. Assuming that the buyers can hold out above this level, we feel there is a very good chance a rally higher could be seen. For anyone considering buying from 1.1350, please keep in mind that price is still trading around the underside of weekly supply (see above) at the moment, so strict trade management is a MUST.

Our team’s main focus for today will be watching for confirmed shorts around two areas. The first, the higher of the two comes in at 1.1497-1.1462. we still has a pending sell order set just below here at 1.1457 since this zone remains relatively fresh, and is located just within the limits of the aforementioned weekly supply area. Nevertheless, before price can reach this area, we may see a reaction at what we like to call a 4hr ‘sell zone’ seen at 1.1448-1.1411 (tentative sell orders are seen just below at 1.1406), which, as you can see, is neatly positioned around the aforementioned daily swap level.

Current buy/sell orders:

• Buy orders: 1.1278 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: 1.1406 [Tentative] (Predicative stop-loss orders seen at: 1.1450) 1.1457 (Predicative stop-loss orders seen at: 1.1503).

GBP/USD:

Weekly Timeframe: The weekly timeframe shows that price is currently trading just below a major weekly supply area coming in at 1.5784-1.5567.

Daily Timeframe: Following Tuesday’s retest of the daily swap level support at 1.5426, price saw follow-through buying yesterday, which, as you can see, just missed the daily supply area visible at 1.5619-1.5548 (located just within the aforementioned weekly supply area) by a few pips.

4hr Timeframe: Recent developments from the 4hr timeframe suggest that further buying may indeed be seen on the GBP/USD pair today. We say this because price is currently showing buying interest around the 1.5500 handle at the moment. In the event that a further push higher is seen, and price breaks above the 1.5537 minor high, we can very likely expect price to challenge a nice-looking 4hr Quasimodo resistance level seen at 1.5584 (located relatively deep within the aforementioned daily supply area).

Therefore, given that price is trading around higher-timeframe resistance, we feel relatively confident setting a pending sell order at 1.5580, seen just below the aforementioned 4hr Quasimodo resistance level.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: 1.5580 (Predicative stop-loss orders are seen at: 1.5623).

AUD/USD:

Weekly Timeframe: The weekly timeframe shows price remains trading just above a weekly demand area coming in at 0.7449-0.7678. Should a rally higher be seen from here, weekly resistance is not expected to come into the market until around the 0.8064 region.

Daily Timeframe: Yesterday saw the Aussie breakout of a three-week long range (0.7844 and 0.7691) which has likely done two things:

1. Cleared the path north for the market to test a small daily supply area at 0.8050-0.7994.
2. Confirmed that buying strength is present around the weekly demand area mentioned above at 0.7449-0.7678.

4hr Timeframe: The recent ascent on the AUD has seen price drive deep into a 4hr supply area coming in at 0.7905-0.7881. From this, we see three possible scenarios that could happen today:

1. Price breaks above this 4hr supply and continues rallying towards another 4hr supply area coming in at 0.8024-0.7980 (located deep within the aforementioned daily supply).
2. Price spikes above current 4hr supply, and retraces down towards the daily swap level at 0.7844. It would be here that we’d begin watching for lower timeframe buying confirmation around the 0.7848 mark.
3. Price sells off from 4hr supply, and drops down to the aforementioned daily swap level. Under those circumstances, price would need to take out the low 0.7867 (seen clearer on the 30 minute timeframe) for us to even consider selling at this zone, and even then we would not be 100 percent confident. So, for now, we believe it best to leave sells on the back burner for the time being.

Current buy/sell orders:

• Buy orders: 0.7848 [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).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows that price has recently closed just above the upper limits of a symmetrical triangle formation (121.83/117.43). Assuming that the buyers can hold out above this barrier, further upside could be seen up to a weekly Quasimodo resistance level coming in at 122.18.

Daily Timeframe: The daily timeframe reveals that price is currently being supported by a daily decision-point demand area coming in at 118.32-119.09. This support barrier does not look very stable in our opinion due to the recent attempts to break below here seen on the 16/02/15, 17/02/15, and on the 20/02/15. In the event that price does indeed close below here, we’ll then likely see renewed selling interest down to a daily demand area positioned at 116.86-117.54.

4hr Timeframe: Yesterday saw the USD/JPY break below 4hr demand at 118.73-118.95. Shortly after this however, price found support around the 118.61 mark and rallied north to test 119.00.

Selling from 119.00 does indeed seem a viable strategy, as the path appears to be clear down to at least 4hr demand at 118.32-118.54 (located deep within the daily decision-point demand area at 118.32-119.09). Nevertheless, by selling here you would effectively be selling into potential support from the weekly symmetrical triangle (see above).

Buying on the other hand would only be considered if price closed above and retested 119.00, as this would likely confirm buying strength from both the weekly triangle upper limit and the daily decision-point demand area (see above for levels).

Therefore, given the points made above, opting to stand on the side lines for the moment may very well 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).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that price is still is being held lower by a weekly Quasimodo resistance level at 1.2765. If further selling is seen from here, price will likely hit the weekly swap level coming in at 1.2260.

Daily Timeframe: The daily picture shows that support is currently being seen from a weak-looking daily decision-point demand area at 1.2378-1.2468. The reasons for why we believe this area to be fragile is simply because on two occasions price has broken below this zone (03/02/15 – 17/02/15), and has, as a result likely weakened any buying pressure here. In addition to this, we also noticed that each time price hit this area, the market was not strong enough to form a higher high.

4hr Timeframe: Following the recent close below 1.2509, price dropped like a rock down to the 4hr Quasimodo support level at 1.2419, where, at the time of writing a little buying interest is being seen.

Buying from this level would (for us) need supporting lower timeframe confirmation, since let’s not forget that both the weekly and daily timeframes are not exactly in bull mode at the moment (see above). Assuming we find an entry long here, our plan is to take quick profits around the 1.2500 handle.

Current buy/sell orders:

• Buy orders: currently watching for lower timeframe confirmation around the 1.2419 area (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: Flat).

USD/CHF:

Weekly Timeframe: The weekly timeframe shows that the buyers have recently pushed price back up to the weekly swap level coming in at 0.9529. In the event a break above this hurdle is seen, this would likely open the doors for further buying towards a weekly swap level at 0.9746.

Daily Timeframe: For the past two days now, volatility seems to have diminished, consequently leaving price lingering just below a small daily swap area visible at 0.9529-0.9568.

4hr Timeframe: Technically, very little has changed since we last analyzed this pair. The buyers and sellers still remain trading between minor support and resistance coming in at 0.9466 and 0.9517. In the event that 0.9466 gives way today, further downside towards a minor 4hr swap level at 0.9450 will likely be seen. Buying from here is not something our team is willing to risk money on, since we would effectively be buying into higher-timeframe resistance (see above). That being the case, buy trades (at this point in time) will only be considered if price closes above the daily swap area coming in at 0.9529-0.9568.

Given the location of price on the higher timeframes, selling this pair is, in our opinion, more favorable at the moment for the simple reason that we would potentially be selling in line with the higher timeframes (see above). However, our team has come to a general consensus that shorting this market will only be permitted when or indeed if, price breaks and retests 0.9450, since we would then have a clear profit target down towards the weekly swap level at 0.9382.

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).

DOW 30:

Weekly Timeframe: The weekly timeframe shows that further buying was seen last week which consequently saw price close (18130) above the 18098 high. If the buyers can maintain their position above this number, this will likely suggest a more bullish bias going forward.

Daily Timeframe: Although the DOW advanced to a fresh high of 18241 yesterday, price was still unable to close above Tuesday’s daily close, which in itself could suggest a decline in value may well be seen today.

4hr Timeframe: Yesterday’s sideways action likely implies that the recent upward momentum may be diminishing. This is not exactly what we wanted to see, considering we still have a live buy order in the market at 18109.

So, with the above taken into consideration, the plan is to keep our stop set at breakeven until price either breaks out above the 18241 high, where in which case we’ll move the stop into profit, or, price breaks below the minor low seen at 18176. It would be at this point, we’d likely look at taking partial profits as price could potentially drop all the way down to the 18148 4hr swap level .

Current buy/sell orders:

• Buy orders: 18109 [Live] (Predicative stop-loss orders seen at: presently set at breakeven).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: The weekly timeframe shows that Gold has recently hit a weekly demand area coming in at 1166.8-1195.0. Assuming that there are active buyers here, price could very well rally back up to test 1222.2.

Daily Timeframe: From the daily timeframe, we can see that there was some buying interest seen yesterday around the daily swap level at 1200.0. In the event that further buying comes into the market today, we see very little daily resistance on the horizon until price reaches the 1222.2 weekly swap level.

4hr Timeframe: The 4hr timeframe shows that Gold recently rallied higher from the 4hr decision-point demand area at 1186.6-1194.3. However, as you can probably see, there was clearly active sellers waiting around the 1211.5 hurdle, which consequently forced price back down to a small 4hr swap level seen at 1202.8.

Given that both the weekly and daily timeframes are trading around support at the moment, our team will be primarily looking for longs today. We’re currently watching the 1202.8 4hr swap level, as this could very well be a nice base in which to look for a bounce trade back up to 1211.5. Be that as it may, lower timeframe confirmation will be required (for us) here, since price could just as easily break below this level and trade down to a 4hr demand area coming in at 1190.0-1197.2.

Current buy/sell orders:

• Buy orders: watching for lower timeframe confirmation around the 4hr swap level at 1202.8 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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