Tuesday 23rd September: Daily technical outlook and review

For the readers’ benefit:

Price action confirmation levels: Simplymeans traders will likely wait for price action to confirm a level by consuming an opposing supply or demand area, then entering a trade on a possible retracement, this may occur on the lower timeframes also.

Pending orders: means a level, or area is valid for a touch trade.

EUR/USD:

Weekly Timeframe: The Euro continued its relentless march south last week, and as a result saw prices closing just above a very obvious weekly ‘buy zone’ (1.26591-1.28010) at 1.28234. This zone remains an important one to us, since it has provided support to the market on three previous occasions, the first, on 25/03/13 (1.27497), the second seen on 13/05/13 (1.27953), and finally the third time was on 01/07/13 (1.28049), and as a result we are expecting some sort of a bullish reaction to be seen here soon

Daily Timeframe: At the time of writing, there is very little active buying being seen within the daily demand area at 1.27541-1.28676, if this continues, we could possibly see a break south towards a notable daily support flip level at 1.26859, since both of these levels sit firmly within the aforementioned weekly ‘buy zone’.

4hr Timeframe: Technically, price has not changed much sincethe market opened within 4hr demand (1.28095-1.28353) at 1.28295.  We feel this area of demand is weak due to the touch seen on 17/09/14 at 1.28331, as this move potentially consumed some of the buyers here, so a break south in our opinion is imminent.

With both the daily and weekly timeframes showing relatively strong demand (Weekly: 1.26591-1.28010, Daily: 1.27541-1.28676) our bias for this pair is very much north, and as a result, we have placed a pending buy order just above a strong-looking fresh 4hr demand area (1.27541-1.27904) at 1.27970. A bounce at the very least should be seen here since this remains the overall origin of a huge rally that started on 09/07/13. Assuming our buy order gets filled this week, our first take-profit target will likely be set just under 4hr supply (1.29276-1.28959) at 1.28899. On a side note, this area is as fresh as they come, notice it was not a reaction to anything obvious on this timeframe, and coupled with the 1.29 level lurking within, it remains a strong area for a touch trade, it’s just a shame we’re sitting on heavy higher-timeframe demand!

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: 1.27970 (Stop loss: 1.27477 Take profit level(s): Dependent on how price approaches). Price action confirmation levels:  No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: No price action confirmation sell levels are seen in the current market environment.

GBP/USD:

Weekly Timeframe: Last week saw a beautiful to-the-pip touch around a weekly decision-point supply area at 1.66429-1.65340, which brought prices back down to a weekly resistance flip level seen at 1.62591. This week, we will be watching for lower-timeframe bullish price action around this level. However, if this level gives way, it would likely encourage follow-through selling down to weekly demand seen at 1.58533-1.60157.

Daily Timeframe: The daily timeframe shows price is trading very close to an important daily support flip level at 1.62503, take a look at the past, it’s a thing of beauty (this is essentially the same as the weekly resistance flip level, only seen in more detail on the daily timeframe).

Assuming we see bullish price action around this daily level, the potential to the upside is huge, as we would likely target the 1.66429-1.66057 area. On the other hand, if this level gives way, further selling may very well be seen down to daily demand at 1.60507-1.61044, which sits just above weekly demand at 1.58533-1.60157.

4hr Timeframe: It was reported in the previous analysis that price was (at that time) too close to resistance (1.63) to justify entering long at market around the 4hr demand area at 1.62453-1.62776.  We also said that if price was to close above this level (1.63) without hitting the 1.64 level; we would try to enter long on a possible retrace.

As we can all see, this has indeed happened, and true to our word, we have placed a pending buy order just above the aforementioned 4hr demand area at 1.62858, this order will remain active as long as the 1.64 level does not get hit, since this is essentially where our first take-profit target will be set.

Assuming our order does get filled, we feel price will very likely hit our first take-profit target due to where price is currently located on the higher timeframes (Weekly support: 1.62591, Daily support: 1.62503).

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: 1.62858 (Stop loss: 1.62398 Take profit: Dependent on how price approaches). Price action confirmation levels: No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: No price action confirmation sell levels are seen in the current market environment.

AUD/USD:

Weekly Timeframe: The recent momentum seen over the past two weeks has brought price down to a weekly Quasimodo support level at 0.88189, which should produce a bounce at the very least, since weekly demand is sitting directly below at 0.86591-0.88247.

Daily Timeframe: The daily timeframe however is telling a different story. Monday’s trading sessions saw a bearish close below the 0.88874 level, which has potentially cleared the path south down to a daily Quasimodo support level seen at 0.87556 (located relatively deep within weekly demand at 0.86591-0.88247). With that being said, we cannot be sure this is a continuation break until price successfully retests the 0.88874 level (as resistance), or continues trading to the downside, since it could very well just be a deep fakeout to accumulate liquidity for a push higher. Only time will tell.

4hr Timeframe: Yesterday’s trading sessions saw price aggressively close below the 0.89 level. This move potentially cleared the way down to a very obvious 4hr support flip level at 0.88223 (where we will be watching for price action confirmation to buy). That being said though, we cannot ignore the fact that price may retrace here and retest the 0.89 level as resistance before continuing south.

The reason we did not consider setting a pending buy order above the 4hr support flip level (0.88223) was simply because the daily timeframe is suggesting prices could move lower past the weekly Quasimodo support level (0.88189) deeper into weekly demand (0.86591-0.88247) at the moment, so being patient is probably the way we have to go.

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: 0.88262 (Stop loss: Dependent on price action after the level has been confirmed, Take profit levels(s): Dependent on approaching price action after the level has been confirmed).

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: No price action confirmation sell levels are seen in the current market environment.

USD/JPY:

Weekly Timeframe: Price is currently trading relatively deep within a weekly supply area at 110.652-108.123. We will now be primarily looking for selling opportunities. However, in the event a buy trade presents itself, extreme caution will be taken regarding trade management, and risk.

Daily Timeframe: Last week, price successfully closed above a major daily support flip level at 108.421. The next area of interest is coming in at 110.390 (a daily Quasimodo resistance level), where we highly expect active sellers to enter the market.

With that being said though, we should all be prepared for price to retest the 108.421 (as support) level before higher prices are seen, as it should now offer plenty of support since it was previous resistance, but as already mentioned above, extreme caution should be taken if planning to go long here, since active sellers could come into the market at any time!

4hr Timeframe: Technically, not much has changed since the market opened (109.028). Buyers and sellers continue to trade within a tight range (109.176/108.655) around the 109 level.

With not having enough historical data on the 4hr timeframe to see what price action is like within the weekly supply area at 110.652-108.123, we’re forced to rely on only the 4hr and daily timeframes.

Be that as it may, if selling interest comes into the market here, we could possibly see prices trade down to the daily support flip level at 108.421. Nonetheless, if a successful break (above) and retest is seen off of the 109 level, this would likely seal the deal that higher prices are yet to come up to at least the 110 level, which is if you remember very close to the daily Quasimodo resistance level at 110.390, and also still remains very deep within weekly supply at 110.652-108.123, where we will definitely be looking to get short!

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: No price action confirmation sell levels are seen in the current market environment.

EUR/GBP:

Weekly Timeframe: The EUR/GBP pair is now trading around serious weekly demand at 0.76931-0.78623 thanks to a 200 pip decline in value seen last week; this was likely fueled by the recent events surrounding Scotland. Overall, our bias for this pair is very much long, with the expectation of prices eventually trading back up to at least the weekly supply area at 0.81571-0.80635.

Daily Timeframe: Last week shows price reacted beautifully off of daily demand (part of a stacked demand formation) at 0.77894-0.78271 forming a bullish pin-bar candle. However,  the only way to find out if this buying was legit, and not just traders liquidating their short positions, would be a follow-through to the upside, and on this timeframe we see very little stopping price from rallying all the way up to daily supply at 0.80084-0.79702.

4hr Timeframe: The 4hr timeframe shows a different story however. A bearish pin-bar candle (0.78777/0.78665) that formed off of a 4hr supply area (0.78963-0.78777)  just before the market closed last week, has so far seen very little follow-through selling. The reasoning for this could well be because price is currently located in higher-timeframe demand (Weekly: 0.76931-0.78623, Daily: 0.77894-0.78271).

Anyone who has sold around this 4hr supply area may want to consider being extra aggressive with trade management here, since a push higher is likely. With that being said, for us to even consider buying this market, a break above the pink level at 0.79133 would have to happen, this way we can be pretty confident most of the selling opposition has been consumed, making any long entry taken from there on less stressful.

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: 0.79882 (Stop loss: 0.80103 Take profit: Dependent on how price approaches).  Price action confirmation levels: No price action confirmation sell levels seen in the current market environment.

USD/CAD:

Weekly Timeframe: It seems after price consumed the weekly supply area at 1.10522-1.09996, the pair sold off sharply down to just above a weekly decision-point level at 1.08774, can we expect higher prices up to the weekly Quasimodo resistance level (1.11252) from here?

Daily Timeframe: The daily timeframe has been showing very bullish price action over the last few weeks. It appears most of the sellers have been consumed around the high 1.10768, which has potentially cleared the path north up to at least the 1.11910 level (Quasimodo daily resistance).

The daily demand area seen at 1.08390-1.08771 is very interesting to us, as we believe somewhere around here was where the overall decision was made to push prices above the high 1.10768, indicating there may be unfilled buy orders left there. Assuming price touches this area sometime this week; we will very likely be looking for buying opportunities on the 4hr timeframe.

4hr Timeframe: The market opened at 1.09645, and from there on, the sellers took control. However, it was not long before they were quickly brought a stop as the 1.09253 level seemed to be supportive enough to allow buyers to come into the market. A rally shortly followed up to the 1.1 level where we are currently watching price action to confirm this is a valid area to sell off of.

A break above this level would likely attract further buying up to the 1.10307 level (Quasimodo resistance). On the other hand, we have to be prepared for selling here, since price could very well see a decline into the higher-timeframe demand areas (Weekly: 1.08774, Daily: 1.08390-1.08771) already mentioned above before higher prices are seen, as we believe these areas have yet to see a confirmed touch.

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: 1.09964 (Stop loss: Dependent on price action after the level has been confirmed, Take profit levels(s): Dependent on approaching price action after the level has been confirmed).

USD/CHF:

Weekly Timeframe: At the time of writing, the weekly timeframe shows price is trading deep within weekly supply at 0.94546-0.93081. Should this pair see a sell off, we can likely expect active buyers to come into the market around a notable weekly resistance flip level at 0.90927.

Daily Timeframe: The recent push deeper into daily supply at 0.94546-0.93702 only tells us that both this supply area, and the weekly supply area at 0.94546-0.93081 are likely beginning to weaken. With that being said, no decision (in our opinion) has yet to be made regarding future direction. Assuming a breakout above the daily supply area is seen, we can safely assume higher prices will likely follow (weekly supply [levels above] would also be consumed as well). On the other hand, if selling interest comes into the market here, and consumes the daily decision-point level below at 0.93020, this then suggests to us further selling may be seen down to around the daily demand area at 0.91251-0.91738, thus confirming selling strength from the aforementioned weekly supply area.

4hr Timeframe: Ever since the market opened at 0.94010, technically not much has changed. The selling pressure around the 0.94 level is not exactly convincing, and suggests to us a small rally may be seen up to the 4hr supply area at 0.94546-0.94291. This is where things will become interesting. We have set a price action confirmation trigger level just below at 0.94241, since this level may have already been weakened by the touch seen on the 17/09/14 at 0.94320. If the sellers do confirm this area, tighten your seatbelts because a serious decline in value may be seen, as we mustn’t forget that price is trading within higher-timeframe supply areas at the moment (Weekly: 0.94546-0.93081, Daily: 0.94546-0.93702).

However, if there are no willing sellers around this area, a close above would mean both the weekly and daily supply areas have been consumed as well, potentially clearing the path for much higher prices.

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: No price action confirmation buy levels are seen in the current market environment.

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment. Price action confirmation levels: 0.94241 (Stop loss: Dependent on price action after the level has been confirmed, Take profit levels(s): Dependent on approaching price action after the level has been confirmed).

XAU/USD (GOLD):

Weekly Timeframe: Price closed below the weekly decision-point level (1244.08) on the 08/09/14, with price seen retesting it as an area of resistance a week later. Could this be all the sellers need to push prices down to weekly demand at 1156.70-1194.45?

Daily Timeframe: The daily timeframe shows that before the sellers can reach weekly demand at 1156.70-1194.45, they have to contend with potential buying opposition from around a daily support flip level seen at 1211.67. A break below here would likely attract further selling down to a daily Quasimodo support level at 1187.13 located just within the aforementioned weekly demand area. However, we cannot discount the possibility that buying interest may also come into the market here, in which case, price will likely trade up to daily supply at 1241.95-1235.34, as this remains a fresh area.

4hr Timeframe: The buyers have indeed begun to show some interest around a 4hr support flip level at 1211.12 (essentially the same as the daily flip level [1211.67], only on this timeframe we were able to tidy it up and line it perfectly with the wicks/tails to the left), and as such, our price action confirmation buy level is now active at 1212.43.

For us to even consider buying this market, we would need to see the buyers break above a 4hr supply area seen at 1228.46-1223.28. This will give us added confidence the majority of the selling opposition has been cleared. With that being said, a close below this level is definitely not out of the question, since the weekly timeframe still shows room to move south down to weekly demand at 1156.70-1194.45. The next key level to watch below on the 4hr timeframe comes in at 1194.38, a 4hr Quasimodo support level.  This level, like the daily Quasimodo support level (1187.13) is located within the aforementioned weekly demand area.

Pending orders/Price action confirmation levels:

• Areas to watch for buy orders: Pending orders: No pending buy orders are seen in the current market environment. Price action confirmation levels: 1212.43 (Active-awaiting confirmation)(Stop loss: Dependent on price action after the level has been confirmed, Take profit levels(s): Dependent on approaching price action after the level has been confirmed).

• Areas to watch for sell orders: Pending orders: No pending sell orders are seen in the current market environment.  Price action confirmation levels: No price action confirmation sell levels are seen in the current market environment.