Tuesday 19th May: Daily technical outlook and review.

EURO

EUR/USD:

Weekly view: The weekly timeframe shows that the buyers and sellers are currently battling for position deep within a weekly supply area seen at 1.1532-1.1278. This has been the most we’ve seen the EUR/USD rally since the market began to plummet back in May 2014. In spite of this, our long-term bias still remains south on this pair and will continue to do so until we see a convincing push above the current weekly supply area.

Daily view: From the daily timeframe, we can see that the Euro sold off yesterday relatively deep from within a daily Harmonic Bat reversal zone at 1.1516/1.1376 (located deep within the aforementioned weekly supply area). In the event that the sellers can continue pushing this market lower from here, it’s possible we could see price retest the daily support level seen at 1.1143.

4hr view: The open 1.1445 saw the Euro almost instantly begin selling off from a 4hr resistance level seen at 1.1443 (positioned relatively deep within the aforementioned daily Harmonic Bat zone), consequently wiping out any gains the market picked up on Friday. After the sellers blew through both the round number 1.1400 and 4hr demand at 1.1322-1.1358, price slam dunked itself into round-number support at 1.1300.

From 1.1300, the buyers really have their work cut out for them. They not only have potential resistance from the recently broken 4hr demand area (now supply) at 1.1322-1.1358, but they also have higher-timeframe selling pressure to contend with from supply on both the weekly and daily timeframes (see above). As a result, it is very difficult for our team to see 1.1300 holding today.

In the case that 1.1300 does give way, it is almost a given in our opinion that the market will test the 4hr demand area seen below at 1.1207-1.1264. However, taking a short on the break/retest of 1.1300 would not exactly give us favorable risk/reward unless we took a position on the very small timeframes with a very tight stop. Therefore, in the absence of clearer price action, we’ve decided to remain on the sidelines for the time being.

Levels to watch/live orders:

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

GBP/USD:

Weekly view: After a deep test of weekly supply at 1.5824-1.5634 was seen last week, the buyers, at the time of writing, appear to be losing momentum at the moment. The past month or so has been the most we’ve seen Cable rally since price began to sharply sell off back in mid-July 2014. Despite this, our long-term bias will remain short on this pair until a convincing close above the current weekly supply area is seen.

Daily view: Friday’s rebound seen from the daily resistance area at 1.5824-1.5734, extended lower during yesterday’s session. This move has, as you can see, placed price within a stone’s throw away from the daily swap area (potential support) at 1.5619-1.5567.

4hr view: Following the market open at 1.5733, the GBP eventually sold off once Europe opened for business, consequently closing price below the round number 1.5700. It was only once the U.S markets got going, did we see price retest this number as resistance and hold firm. Unfortunately, we were unable to pin point an entry here – well done to anyone that did!

If you’re still currently short this pair from around 1.5700, we believe there is further downside in store. The reason for why comes from the price action seen within the green circle. The long buying tail at 1.5632 was likely the work of pro money. A spike south such as this was possibly used to collect unfilled buy orders to continue rallying north from 1.5700, thus once price returns to, or near to this area, there will not likely be much support left until 1.5600.

Everything being equal, we’re relatively content to remain on the sidelines on this pair until either 1.5700 is retested again (potentially a second chance at shorting this number), or the 1.5600 level/4hr demand area at 1.5556-1.5580 is tested.

 

Levels to watch/ live orders:

  • Buys: 1.5600/1.5556-1.5580 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 1.5548).
  • Sells: 1.5700 region [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this area).

AUD/USD:

Weekly view: So far this week, the weekly swap level at 0.8064 appears to be holding the market lower. If the sellers can remain strong here, we might, just might, see price cross swords with the small weekly swap level seen below at 0.7845.

Daily view: The daily timeframe shows that the minor daily swap level coming in at 0.8022 did indeed give way yesterday, as reported it may do in the previous analysis. With this supportive barrier out of the way, the path south opened for price to test the small ‘kink like’ daily demand area at 0.7944-0.7999. This area, coupled with the two daily demand zones (0.7862-0.7927/ 0.7785-0.7850) located just below makes for a lot of wood to chop through should this market intend to continue moving south.

4hr view: The open 0.8033 saw the sellers immediately take control. However, it was only once the European markets opened did we see a test of the large psychological number 0.8000. Clearly, there was very little buying interest here as price continued to break down during London’s morning session. Going into the U.S session, we can see that 0.8000 was respected as resistance, which in turn forced price to collide with a 4hr demand level seen below at 0.7975.

The way price approached 0.7975 is interesting. Check out the clear supply consumption wicks seen at 0.8015/0.8009/0.7975 (pink line). This, to us, indicates that the sellers were likely consumed, theoretically leaving the path north clear towards the 4hr supply area seen at 0.8066-0.8044 (located just below the aforementioned weekly swap level).

In support of a long trade from 0.7975, we can see price is trading within daily demand at 0.7944-0.7999. Against this this 4hr level, nonetheless, there’s immediate resistance seen just above at 0.8000, and let’s also not forget that selling strength from the weekly swap level at 0.8064 could force this level to give way. Therefore, with all of this taken into consideration, our team has come to a general consensus that if price can close above and retest 0.8000 today, we’ll happily take a long (with lower timeframe confirming price action) position up to the aforementioned 4hr supply area. With regards to shorts, however, we’ve decided that no selling will take place until we see the mid-level number 0.7950 consumed.

AUSSIE

Levels to watch/ live orders:

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

USD/JPY:

Weekly view: For two months, the weekly timeframe has barely seen any change. The buyers and sellers continue to battle for position within a weekly demand area coming in at 118.22-119.40. Our long-term bias will remain north on this pair as long as price continues to trade above the weekly swap level seen below this area at 115.50.

Daily view: From the daily scale, we can see that a clear consolidation zone has been chiseled out within the aforementioned weekly demand area between daily support seen at 118.62 (located deep within the aforementioned weekly demand area), and a daily Quasimodo resistance level coming in at 120.35. Recent movements over the past two weeks, however, has seen price BEGIN to form what we like to call a mini consolidation zone within the larger range (120.16/119.01). As you can see, price closed just below the upper limits of this mini zone yesterday, so for any traders considering buying right now, you may want to take a note of this.

4hr view: The open 119.25 saw the buyers take aggressive action. This buying continued throughout yesterday’s sessions, resulting in price driving itself deep into 4hr supply at 120.03-119.84, consequently testing the 120.00 handle within. As such, 120.00 will be a key level for our traders today.

Should a close above this number be seen, this could set the stage for a continuation move north towards the 4hr Quasimodo resistance line at 120.27. Just to be clear though, we have no intention of trading long should 120.00 be consumed today. What we are interested in, however, is the 4hr Quasimodo resistance line just mentioned. This level – coupled with the daily Quasimodo resistance level seen just above it at 120.35, and the 4hr downtrend line extended from the high 120.83 make this an incredibly confluent area to short from. That being said though, let’s not forget that price is still currently dancing within weekly demand at 118.22-119.40, so waiting for lower timeframe confirming price action around this area is a must.

YEN

Levels to watch/ live orders:

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

USD/CAD:

Weekly view: Contrary to the bearish price action we’ve recently been seeing around the weekly swap area at 1.2034-1.1870 over the past few weeks, relatively strong buyers came into the market from here yesterday.

Daily view: Over the past three or so weeks, price has been seen bouncing off of a daily demand area at 1.1931-1.2045, which converges beautifully with a Harmonic Bat support zone completing just below it at 1.1921. It was only once price spiked below this daily demand zone and hit the Harmonic completion point did we see the bulls begin to gain some strength last week, which. As you can see, was further confirmed during yesterday’s session as price broke above the high 1.2162.

4hr view: The 4hr timeframe shows that the market opened at 1.1998, and aggressively took off north leaving the sellers very little choice other than to cover their positions. This advance took out 1.2100, and only saw any noteworthy selling interest come into the market once price collided with a 4hr supply area seen at 1.2180-1.2165.

Although price is trading from higher-timeframe demand (see above) at the moment, the 4hr timeframe suggests that buying right now may not be the best path to take. Entering long when price is rebounding from 4hr supply is not something we would be comfortable taking part in –this is not to say we would recommend selling from here either, since you’d effectively be selling into potential higher-timeframe opposition.

Therefore, the only alternative we see if one wants to enter long into this market and trade in line with higher-timeframe demand, is to wait for price to retest either the 1.2133 4hr swap level, or the round number 1.2100 (waiting for lower timeframe conformation at either level is strongly recommended).

CAD

Levels to watch/live orders:

  • Buys: 1.2133 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.2100 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level).
  • Sells: Flat (Predicative stop-loss orders seen at: N/A).

USD/CHF:

Weekly view: Following last week’s strong close below the weekly demand area at 0.9343-0.9180, relatively strong buying interest has so far been seen this week.

Daily view: (Slightly revised). From this angle, we can see that price is, in our opinion, trading mid-range between daily supply at 0.9411-0.9336, and daily demand coming in at 0.8982-0.9088 (surrounds a weekly swap level seen at 0.9018).

4hr view: The open 0.9147 saw the USD/CAD pair rally during yesterday’s sessions. This rally found some downward pressure to contend with early on at 0.9200, but eventually broke above it and continued on its way north. Price is, at the time of writing, trading just below a very fresh 4hr supply area coming in at 0.9296-0.9267. Usually, we would announce that we’re going to be looking for shorts in and around this area. However, with both the round number 0.9300 and a 4hr Gartley reversal zone at 0.9322/0.9298 sitting just above, it is very hard to deny that fakeout could be seen above the 4hr supply zone. On top of that, the 4hr Gartley reversal zone coincides beautifully with the current 4hr trend and is located just below the aforementioned daily supply area – not a bad place to be looking for shorts!

Therefore, with everything taken into consideration, our prime focus for today will be the 4hr Gartley reversal zone. Lower timeframe confirmation is still required for us to short here, since price could just as easily fake higher towards the extreme 4hr supply seen marked with a pink circle at 0.9357-0.9336.

SWISS

Levels to watch/ live orders:

  • Buys: Flat (Predicative stop-loss orders seen at: N/A).
  • Sells: 0.9322/0.9298 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.9328).

US 30:

Weekly view: From the weekly angle, we can see that price continues to show strength. As far as we’re concerned, as long as the DOW keeps itself above the 18098 hurdle, our long-term bias will remain long.

Daily view: The most recently closed daily candle shows price traded to new highs yesterday at 18322, closing above the previous high 18279. If the buyers can maintain strength above the prior high, it’s likely we’ll see further buying on the DOW today. It will be interesting to see what the 4hr scale has to say about this…

4hr view: The DOW index opened at 18249, and saw price respect the minor 4hr support at 18229 during both the European/London morning sessions. It was only once the U.S traders began placing orders did we see further buying, which consequently took out the 4hr supply area seen at 18279-18250.

Similar to the daily timeframe – if the buyers can hold out (which it looks as though they area at the time of writing) above the aforementioned 4hr supply today, we’ll likely see the DOW push north. We have no plans to enter long here until the following has been fulfilled:

  1. A successful retest of the recently broken 4hr supply zone.
  2. Lower timeframe confirming price action is a must on this retest – this could be a trendline break, an engulf of supply or even a candlestick reversal pattern that you like etc…
  3. Time of day is crucial here too. Most big moves will occur in the London/U.S sessions. Therefore, we will not consider a position unless it signals within these time zones.

DOW 30

Levels to watch/live orders:

  • Buys: 18279-18250 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 18243).
  • Sells: Flat (Predicative stop-loss orders seen at: N/A).

XAU/USD (Gold)

Weekly view: Following the close above the weekly supply at 1223.1-1202.6 last week, the buyers already attempted to trade higher this week, but, as you can see, are failing miserably at the moment. Overall, we still believe that the long-term trend on Gold is still firmly south, and will remain that way in our opinion until price closes above the weekly trendline resistance extended from the high 1488.0.

Daily view: The recently closed daily candle printed an average-looking bearish daily pin-bar candle off of a fresh daily supply area coming in at 1236.6-1226.9. In the event that the sellers can continue shorting this market, it’s likely we’ll see price shake hands the daily swap area seen below at 1215.0-1204.5 very soon.

4hr view: The 4hr timeframe shows that the Gold markets opened at 1223.5, and eventually advanced north towards a 4hr supply area seen at 1236.6-1230.6 (positioned deep within the aforementioned daily supply area). The reaction seen from this zone was not strong in our opinion as price held firm at a minor 4hr demand area seen in green at 1221.5-1223.5. However, the recent price action seen between these two zones suggests further downside may take place during the more liquid sessions today. The rationale behind this approach comes from seeing price spike this 4hr demand area with little to no follow-through buying. That being the case, if this 4hr demand zone is taken out and respected as supply today, we intend to look for confirmed (lower timeframe) sells here, targeting the 4hr demand area seen below at 1216.3-1210.9 first and foremost.

Gold

Levels to watch/live orders:

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

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