Tuesday 10th February: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: Current trading action on the weekly timeframe shows that the buyers and sellers are trading 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 daily timeframe reveals that the market continues to be supported by a small daily demand area visible at 1.1260-1.1318. In the event that strong buyers come into the market here, we could potentially see prices rally towards a daily decision-point supply area seen above at 1.1678-1.1540 (located deep within the aforementioned weekly supply area). A break lower on the other hand would likely open the door to further downside towards a daily demand area sitting at 1.1045-1.1127, which encapsulates the aforementioned weekly Quasimodo support level.

4hr Timeframe: The 4hr timeframe shows that the bulls attempted to trade higher at the open (1.1295), but consequently found 1.1358 resistive enough to allow the sellers back into the market. This saw the Euro sell off down towards 1.1278, which is a minor 4hr swap level located deep within the aforementioned daily demand area.

The bullish reaction seen from 1.1278 looks promising, but the only way to know if the buying seen here was genuine and not just traders liquidating shorts would be for price to push above the 1.1358 high. It would be at this point our team would begin looking for long entries into the market. With regards to selling, it was previously stated that shorting the Euro would only be considered once/if price breaks below and retests 1.1200. We would then be looking to target just above the weekly Quasimodo support level at 1.1109.

Current buy/sell levels:

• 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. Price is seen trading just below a weekly swap level coming in at 1.5270, a significant cut above here could effectively open the gates to further buying up towards a weekly decision-point supply area seen at 1.5784-1.5541.

Daily Timeframe: The rebound seen from the aforementioned weekly swap level on the daily timeframe appears weak. Friday’s positive NFP numbers potentially saved this weekly swap level from complete annihilation. The majority of technical sellers were already likely stopped out here on Thursday (strong bull candle), which potentially did two things:

1. Gave pro money the liquidity i.e. buy stops to short during NFP.
2. Cleared the path north towards a daily swap level seen at 1.5433.

4hr Timeframe: The buyers clearly attempted to trade higher at the open (1.5224) but were forced lower from around the 1.5266 mark. This consequently forced the market south to test the 1.5200 handle.

Technically, little movement has been seen, and as such most of our previous analysis remains the same as yesterdays:

The 4hr chart shows price has broken above (blue arrow) a 4hr supply area at 1.5318-1.5270, which in turn has likely caused three things to happen:

1. Consumed the majority of sellers (stopped out).
2. Trapped breakout buyers.
3. Cleared the path north towards the aforementioned daily swap level.

Taking the above into consideration, we feel that the GBP still has potential. Admittedly, price is trading around a weekly swap level resistance (1.5270) at the moment, but looking at how price reacted to this hurdle does not exactly fill us with confidence to begin looking for shorts at this point in time. This coupled with the 4hr timeframe showing clear direction north (point 3 above), our bias will remain long for the time being.

That being the case, we have placed a pending buy order at 1.5183 just above a 4hr decision-point demand area coming in at 1.5138-1.5178. We believe this area to be where pro money ‘made the decision’ to break above the aforementioned 4hr supply area, therefore we feel that there’s a good chance unfilled buy orders are still lurking here. What is also interesting about this 4hr decision-point demand area is the fact the round number 1.5200 is floating just above it. This will likely be a magnet for price, and with psychological numbers prone to fakeouts, we’re expecting price to do just that – fake below and fill our order before rallying higher as per the green arrows.

Current buy/sell levels:

• Buy orders: 1.5183 (Predicative stop-loss orders are seen at: 1.5133).
• Sell orders: Flat (Predicative stop-loss orders are seen at: N/A).

AUD/USD:

Weekly Timeframe: The AUD/USD pair finished last week defending a weekly demand area seen at 0.7449-0.7678. However, judging from the recently closed weekly candle (indecision), it was clear that both the buyers and sellers were hesitant around this zone.

Daily Timeframe: As you can see, price action is little bit of a mess on the daily timeframe, due to the buyers and sellers continuing to battle for position within a daily Quasimodo support area at 0.7699-0.7834. On top of that, Tuesday last week saw price spike lower, likely stopping out a huge amount of traders attempting to fade this daily area. Considering that price is trading from weekly demand (see above) at the moment, we currently believe this ‘spike’ to be a fakeout into the aforementioned weekly demand area which could see higher prices ensue this week.

4hr Timeframe: The market opened 22 pips lower than Friday’s close (0.7782) at 0.7760, consequently forcing price to hit a small, yet clearly reactive 4hr demand area at 0.7732-0.7751, which you may have already noticed converges beautifully with an ascending 4hr channel support taken from the low 0.7732. From here, price rallied and closed above the 0.7800 handle, and is at the time of writing seen retesting it as support. Buying into this retest will only be permissible if lower timeframe confirmation is seen. This will enable us to get a tight stop and comfortably target the 4hr swap level seen above at 0.7856.

Current buy/sell levels:

• Buy orders: watching for lower timeframe confirmation around 0.7800 (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: With regards to the weekly timeframe, as long as price continues to trade above the weekly swap level at 115.50, our overall bias on the USD/JPY pair will remain long. To the upside, we do not see any ‘heavy’ resistance coming into the market until the price reaches 122.18.

Daily Timeframe: The daily timeframe on the other hand shows price is currently trading around daily supply at 119.95-119.14. This area of supply remains a key obstacle to a move towards a drop-base-drop daily supply area seen above at 122.61-121.54, which if you look back to the weekly timeframe, it beautifully encapsulates the aforementioned weekly Quasimodo resistance level.

4hr Timeframe: Trading opened at 119.00, and saw the sellers take overall control. This forced the market down towards a minor 4hr swap area seen at 118.48-118.33. This area appears to be holding price higher for the moment, which in itself could entice further upside potentially pushing the market north towards 119.00 once again. A break below this 4hr swap area on the other hand would likely encourage further downside towards the 118.00 level.

Given the points made above, our team has come to a general consensus that buying will only be considered once/if price closes above the 118.76 high on the 30 minute timeframe. This would potentially clear the path north up to 119.00. Conversely, selling on the break and retest of the aforementioned 4hr swap area is something we would only be comfortable with if we manage to get an extremely tight entry with a stop of around 5-10 pips, since the profit target is only around 30 pips or so.

Current buy/sell levels:

• 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: Selling interest was clearly present last week around a major weekly Quasimodo resistance level seen at 1.2765. Assuming that the sellers can continue with this tempo, we feel there is a very good chance that price will hit the weekly swap level coming in at 1.2260 sometime soon.

Daily Timeframe: The daily timeframe on the other hand shows that from Tuesday onwards (last week), the buyers and sellers have been seen pulling for position around a daily decision-point demand area at 1.2378-1.2468. As you can probably see, this area of demand also remains a key obstacle to a move towards the aforementioned weekly swap level.

4hr Timeframe: Since trading opened at 1.2530, very little movement has been seen. As a consequence, most of our previous analysis remains the same…

The USD/CAD pair has been bouncing between a 4hr swap level at 1.2379 (lower limit of the aforementioned daily decision-point demand area), and a 4hr supply area coming in at 1.2643-1.2574.

A break above the aforementioned 4hr supply area would likely force the market to test 1.2700. Selling from here with lower timeframe confirmation is something we’d be interested in taking part in, since let’s not forget that the market is currently being held south at the moment by a major weekly Quasimodo resistance level (see above).

Buying on the other hand would only be considered once/if price breaks below the aforementioned 4hr swap level, and hits the 1.2300 handle. This level – coupled with the weekly swap level lurking just below it at 1.2260 forms an awesome barrier of support to look for confirmed longs into the market.

Current buy/sell levels:

• Buy orders: watching for lower timeframe confirmation around 1.2300/1.2260 (Predicative stop-loss orders seen at: dependent on where one confirms this level).
• Sell orders: watching for lower timeframe confirmation around 1.2700 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

USD/CHF:

Weekly Timeframe: The 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 at the moment, which in effect could lead to price breaking below this weekly level, and as such opening the gates for prices to challenge a daily decision-point demand area coming in at 0.8933-0.9018.

4hr Timeframe: Trading opened at 0.9261, and saw very little control being commanded from either side of the market. Current action shows that price is still seen ranging 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 levels:

• 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 saw the market decline in value. There was clearly strong selling opposition present around the daily swap level at 17896. Provided that the sellers can continue with this intensity today, we could potentially see the market decline further down towards a fresh daily decision-point demand area coming in at 17561-17655.

4hr Timeframe: The DOW opened 39 points lower than Friday’s close (17841) at 17802, consequently forcing price below a minor 4hr swap level at 17781 into another minor 4hr swap level seen at 17688.

Overall, we believe the DOW is heading north. The reason for this is simply because price is showing strength on the weekly timeframe (see above) at the moment, and that the 4hr timeframe saw price break above a respected 4hr supply area at 17934-17855 on Friday, which has likely cleared the path north (blue arrow) towards a small 4hr supply area seen at 18047-18014. Admittedly, price still has to contend with selling pressure seen from the daily timeframe (see above); and this is why any long trades taken will require strong corresponding lower timeframe confirmation.

With the above in mind, we are presently watching two areas for confirmed buying opportunities:

1. The small 4hr swap level at 17688 (tentative buy orders are seen just above at 17695), this may be a minor level, but it has been able to recently hold price higher which gives this line weight in our opinion.
2. The 4hr decision-point demand area at 17561-17617 (tentative buy orders are seen just above at 17625). This area is by far the favorite of the two since it has the added benefit of being located deep within the daily decision-point demand area mentioned above at 17561-17655.

Overall targets for both areas would be the 4hr supply area mentioned above at 18047-18014.

Current buy/sell levels:

• Buy orders: 17695 (Predicative stop-loss orders seen at: dependent on where one confirms this level) 17625 [Tentative] (Predicative stop-loss orders seen at: 17548).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold):

Weekly Timeframe: Last week saw Gold decrease in value as price closed below a relatively important weekly swap level seen at 1251.5. Consequent to price breaking lower here, one should refrain from getting too excited since potential weekly support is seen coming in just below at 1222.2.

Daily Timeframe: Friday saw a rather aggressive sell off which consequently forced price down towards a daily decision-point demand area seen at 1224.9-1235.7 (sitting just above weekly support at 1222.2). We believe this zone to be significant (even with price showing little buying interest yesterday) since this is likely where pro money made the ‘decision’ to break above the weekly swap level at 1251.5.

4hr Timeframe: Trading opened positively at 1235.7, and as you can see price did indeed push higher from the 4hr decision-point demand area at 1224.9-1232.1 (located deep within the aforementioned daily decision-point demand area). For anyone who follows our analysis on a regular basis, you may recall us mentioning that we were watching for lower timeframe buying confirmation around this 4hr area. As of yet though, no confirmation signal has been seen. Hopefully in the upcoming sessions, further development will offer us more information.

Also, traders may benefit from keeping in mind that just because this 4hr area saw a reaction, it does not necessarily mean it will continue higher just yet. As mentioned in the previous analysis, we reported that if traders were considering entering long here they will NEED to be prepared for price to fake lower down into the weekly support level coming in just below it at 1222.2 marked in green. This is the primary reason for requiring lower timeframe confirmation here, as there is nothing worse than price filling your order, stopping you out, and then turning in your desired direction!

Current buy/sell levels:

• Buy orders: currently watching for lower timeframe confirmation around the 4hr decision-point demand area at 1224.9-1232.1 (Predicative stop-loss orders seen at: dependent on where one confirms this area).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

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