Tuesday 3rd March: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the buyers and sellers are currently seen trading just above a major weekly Quasimodo support level at 1.1109.

Daily Timeframe: Similar to the weekly timeframe, the daily timeframe reveals that price is hovering just above a daily demand area at 1.1045-1.1127. This area, as you can probably see, surrounds the aforementioned weekly Quasimodo support level.

4hr Timeframe: The market opened at 1.1180, and quickly found strong support around the 1.1167 level. The 4hr timeframe shows that for price to hit the aforementioned daily demand area, the sellers will need to take out both 1.1167, and the 1.1150 level seen just below. 1.1150 will likely be supportive since it is not only a mid-level number, but also, a weekly open level seen back on the 25/01/15. With all of the above taken into account, our team has decided it would be best for us to put sells on the back burner for the time being and focus our energy more on buy trades.

The buy zones currently on our watchlist at the moment are 1.1150, and 1.1109. The 1.1150 level is located 20 pips or so above the aforementioned daily demand area, and is a level we intend to watch for confirmed longs (reasons stated above in bold). However, In the event that this number fails, we’ll then shift our attention to the weekly Quasimodo support level seen in pink at 1.1109, which, like 1.1150, will require lower timeframe confirmation before we place our money at risk.

Current buy/sell orders:

Buy orders: 1.1150 [Tentative] (Predicative stop-loss orders seen at: dependent on where one confirms this level) 1.1109 [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).

GBP/USD:

Weekly Timeframe: From the weekly timeframe, we can see that price is trading around a weekly swap area (1.5426-1.5561) at the moment. Active selling from here could effectively bring the GBP down to a weekly swap level coming in at 1.5270.

Daily Timeframe: Yesterday’s action shows that price broke through support at 1.5391, and as a result, hit a small daily swap level seen at 1.5351. This level, in our opinion, remains a key obstacle to a move towards the aforementioned weekly swap level.

4hr Timeframe: Recent action from the 4hr timeframe shows that the market opened 16 pips lower than Friday’s close (1.5430) at 1.5414. This, as you can see, sparked further selling which consequently saw price break below the 4hr ascending channel (1.5343/1.5195), and dive relatively deep into a 4hr demand area coming in at 1.5331-1.5384 (encapsulates the aforementioned daily swap level). As long as one waits for lower timeframe confirmation here, buying within this 4hr demand area is, in our opinion, viable. The reason for requiring confirming price action at this 4hr demand area is simply because by entering long here, we could effectively be buying from weekly sellers (see above).

With that being said, if this 4hr demand area is consumed, the path south will then likely be free down to at least the 1.5300 level, which, if you remember from the weekly timeframe, is only 30 pips above a major weekly swap level at 1.5270.

Current buy/sell orders:

Buy orders: currently watching for lower timeframe confirmation around 4hr demand at 1.5331-1.5384 (Predicative stop-loss orders are seen at: 1.5327).

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

AUD/USD:

Weekly Timeframe: For the past four weeks, price has been trading, or should we say ‘lingering’ above a weekly demand area at 0.7449-0.7678. Should a rally be seen here this week, weekly resistance (as far as we can see) is not expected to come into the market until around the 0.8064 region.

Daily Timeframe: At this point in time, the buyers and sellers continue to range prices between 0.7844, and 0.7619. A convincing break above here could force the market to test a daily supply area seen at 0.8050-0.7994 (seen just below the weekly swap level 0.8064). A break lower on the other hand, would likely attract further selling down towards a daily demand area coming in at 0.7449-0.7598 (located deep within the aforementioned weekly demand area).

4hr Timeframe: Recent events on the 4hr timeframe show that the AUD/USD pair has broken below a 4hr ascending channel (0.7643/0.7827), and hit 4hr demand coming in at 0.7738-0.7764. This area of demand, as you can probably see, boasts additional support from a 4hr Quasimodo support level seen marked in green at 0.7756. Considering that price is currently trading above weekly demand at the moment (see above), we feel (as mentioned in the previous analysis) that this area will likely provide a nice base in which to look for longs. Waiting for lower timeframe confirmation around this 4hr area is recommended. Targets for this trade (if an entry signal is seen that is) are as follows: the round number 0.7800, the daily swap level 0.7844, and finally the 4hr supply area coming in at 0.7905-0.7881. However, let’s not forget that price is trading around weekly demand, which means price could essentially trade much higher!

Current buy/sell orders:

Buy orders: watching for lower timeframe confirmation around 4hr demand at 0.7738-0.7764 (Predicative stop-loss orders seen at: 0.7733).

Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/JPY:

Weekly Timeframe: The weekly timeframe shows that price closed above the upper limits of a symmetrical triangle formation (121.83/117.43) last week, which, if further support is seen here, could potentially push the market north up to a weekly Quasimodo resistance level coming in at 122.18.

Daily Timeframe: Recent developments on the daily timeframe show price trading just below a daily resistance level seen at 120.45. From where we’re standing, this level remains a key obstacle to a move towards a daily supply area visible at 122.61-121.54, which, if you look back to the weekly chart, you’ll notice that this area surrounds the aforementioned weekly Quasimodo support level.

4hr Timeframe: We can see from the 4hr timeframe that price has recently been driven relatively deep into a 4hr supply coming in at 120.36-120.00. This area of supply, along with the one located just above it at 120.73-120.39 will likely provide the market resistance today. As such, we have no interest in buying here, no matter what the weekly timeframe is showing (see above).

With that said, our team has come to a general consensus that buying will not be permitted until price closes above daily resistance at 120.45, which, as you can probably see is located just within the upper 4hr supply area at 120.73-120.39.

Selling at the current 4hr supply area is considered a risky trade in our book. A more conservative approach to trading this zone, and one that we intend to follow, would be to wait for prices to close below the 120.00 handle. If, however, price respects this level as support today, we can very likely assume higher prices will be seen.

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 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 reveals 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 buyers were not strong enough to form a higher high.

4hr Timeframe: The 4hr timeframe shows that the market has just recently closed above the 1.2509 4hr swap level, and has likely opened the gates for price to challenge the 1.2600 handle. To take advantage of this move, one could either buy at market, effectively buying the breakout, or, wait for price to retest 1.2509 as support, and buy with lower timeframe confirmation. Due to our conservative trading nature, we, if we chose to buy that is, would have to favor the latter here.

This all sounds very good, but there are a few things one may want to take into consideration before buying:

Minor lows to the left coming in at 1.2537/1.2550 are levels that may become troublesome resistance.

The higher-timeframe picture is not exactly what we’d call ‘bullish’ at the moment (see both the weekly and daily sections above).

Given the points made above, we’re humbly opting to stand on the sidelines here as trading when unsure is never good practice!

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: Last week saw price close just (by a pip) above a weekly swap level at 0.9529, which has clearly attracted further buying. In the event that the buyers can continue with this tempo, price will very likely hit another weekly swap level coming in at 0.9746 sometime in the near future.

Daily Timeframe: The daily timeframe on the other hand, shows price is currently trading within a rather large daily swap area at 0.9552-0.9656. This area, in our opinion, remains a key obstacle to a move towards a daily Quasimodo resistance level at 0.9740 (located six pips below the weekly swap level at 0.9746).

4hr Timeframe: Recent developments show that the market opened at 0.9529, and closed above a small 4hr resistance level at 0.9541. Shortly after, this level was retested as support and price rallied higher towards the 0.9600 handle, where selling interest is currently being seen.

Given that the daily timeframe is showing price trading in supply at the moment, selling this market may be valid. However, with price trading so very near to potential support (0.9541) at the moment, we remain dubious. That said, if price manages to close below 0.9541 today, our team’s main focus will be on the short side, at least until down towards 0.9450. For anyone considering the same, please do remain aware that the weekly timeframe has just recently closed above a major weekly swap level (see above in bold), so any sell trades taken should only be done so with strict trade management.

Conversely, a close above 0.9600 would essentially be our cue to begin watching for price to retest this number as support. If support is indeed seen, we’d then look to enter long with lower timeframe confirmation up to at least a 4hr swap level seen at 0.9650, as we would then be trading in line with the weekly timeframe.

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 further buying is currently being seen on the DOW. The 18098 high, which was recently broken should, in our opinion, provide a supportive base for this index should price retrace.

Daily Timeframe: Yesterday’s trading action shows that the DOW advanced to a fresh high of 18279. Price was bought quite heavily from a small, yet clearly resilient daily decision-point demand area at 18056-18130, which, if you look back to the weekly chart, you’ll see that this area is neatly positioned around the 18098 high (see above – weekly timeframe).

4hr Timeframe: The latest coming from the 4hr timeframe shows that price has beautifully respected the 4hr swap level sitting at 18148, and broke above the 18242 high. For those who read our last couple of reports on the DOW, you may recall us mentioning that we had (and still do have) a live buy position in the market at 18109. Ultimately, we’re looking for price to respect the recently broken high 18242 as support. This would likely spark further buying interest, and at the same time give us the confidence to move our stop into profit, which is still sitting at breakeven. In the event that 18242 fails to hold today, we’ll take most of our position off the table, and let the rest run freely to either stop us out at breakeven, or move further into profit.

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: From the weekly timeframe, we can see that price is currently capped between a weekly swap level coming in at 1222.2, and weekly demand area seen at 1166.8-1195.0.

Daily Timeframe: The latest coming from the daily timeframe shows price (similar to the weekly timeframe) capped between a small daily swap level at 1200.0 and the aforementioned weekly swap level. A break above here would likely force the market to test a small daily supply area seen at 1236.6-1227.7. On the other hand, should a break lower be seen, price will possibly drop down and retest the lower limits of the daily ascending channel (1255.2 – 21/10/14, 1131.4 – 07/11/14).

4hr Timeframe: The action on the 4hr timeframe shows that price is currently range bound between a 4hr decision-point supply area coming in at 1225.2-1217.7 (encapsulates the weekly swap level mentioned above at 1222.2), and 4hr demand area seen at 1200.9-1205.2. For anyone wishing to trade this range (tentative buys are seen at 1206.1, sells at 1217.0), we would recommend waiting for a confirmation signal, since fakeouts are so very common in consolidative environments.

A break above this 4hr range would likely pave the way north for further upside towards a small 4hr supply area positioned at 1233.8-1230.0 (tentative sell orders seen just below at 1229.3). Buying the breakout is not really something we’d be comfortable with doing. However, selling with confirmation at this small 4hr supply area is very attractive, considering that it’s located within daily supply at 1236.6-1227.7.

Conversely, a break below this 4hr range would likely force price to test a 4hr demand area seen at 1190.0-1197.2 (tentative buy orders are seen just above at 1198.1). Like above, we have no interest in selling the breakout here, but buying at this 4hr demand area with confirmation definitely interests us, seeing as it located just within weekly demand at 1166.8-1195.0.

Current buy/sell orders:

Buy orders: 1206.1 [Tentative] (Predicative stop-loss orders seen at: 1200.0) 1198.1 [Tentative] (Predicative stop-loss orders seen at: 1189.3).

Sell orders: 1217.0 [Tentative] (Predicative stop-loss orders seen at: 1226.0) 1229.3 [Tentative] (Predicative stop-loss orders seen at: 1234.6).

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