Wednesday 29th October: Daily technical outlook and review.

EUR/USD:

Weekly Timeframe: The weekly timeframe shows that the buying interest seen off of a minor weekly demand area coming in at 1.24996-1.26262, has forced price to test a huge weekly support flip level seen at 1.27541. Will this level be enough to stop the buyers?

Daily Timeframe: As expected, price is seen reacting off of a daily resistance flip level coming in at 1.27500 (located just below the weekly support flip level mentioned above at 1.27541). A break above this level would likely attract further buying up to around the 1.29001-1.28453 area, a small daily supply zone. However, in the event active sellers come into the market here, we see very little on this timeframe that would stop prices from trading back down to where price came from, a small daily support level seen at 1.26213.

4hr Timeframe: As already mentioned in the previous analysis, the 4hr demand area at 1.26236-1.26469 has likely already been consumed (blue arrow – 1.26125). Below this area – other than the 1.26 level, most of the demand to the left has also likely been consumed as well (check out the demand consumption tails around the green trend line), which leaves the path clear down to around a 4hr Quasimodo support level seen at 1.25699 (active buy orders are seen just above at 1.25744).

It was also mentioned that price was seen trading around a small 4hr decision-point supply area at 1.27387-1.27109, and that we should be prepared for a fakeout above to the 1.27500 daily level. As we can all see this has happened.  However, we would not be comfortable selling until the 1.26835 level is consumed, as this seems to be the last logical demand level that could stop price from declining.  Therefore, upon a break below of this level, we would then be looking to short on a retrace somewhere, targeting at least the round-number level 1.26, as in our view, much the same as the green trendline; most of the demand has already been consumed on approach shown with a pink trend line.

Buy/sell levels:

• Buy orders: 1.25744 (Predicative stop-loss orders seen at: 1.25593).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

GBP/USD:

Weekly Timeframe: For the past few weeks price has been trading around a weekly demand area coming in at 1.58533-1.60157. There has been some buying interest seen here, but nothing to get excited about. A break below here would likely attract further selling down to a weekly resistance flip level seen at 1.57166.

Daily Timeframe: The daily timeframe shows just why the buying interest on the weekly timeframe is not anything to get excited about. Price has been consolidating between a minor daily support flip level seen at 1.61609 and a combined daily demand/Quasimodo support area coming in at 1.58533-1.59914/1.58934 since the 03/10/2014 (located deep within the aforementioned weekly demand area). It is only until one of these areas sees a positive close; we will then have some idea on future direction. That being said though, it was only yesterday we saw price attempting to trade above the 1.61609 level, was this just another fakeout above the consolidation limit, or was it indeed a continuation move for higher prices?

4hr Timeframe: The 4hr timeframe shows that the move above the small 4hr decision-point supply area at 1.61297-1.61066 seen yesterday was not a fakeout. It was a continuation move to allow price to trade up to a small 4hr Quasimodo resistance level seen at 1.61782 (seen just above the daily 1.61609 level), which would have made for a lovely short!

We feel there is a good chance lower prices could be seen from here. With that being said though, we would only be interested sellers once price breaks below the 1.60781 level, as this would likely clear the path down to around 1.6. A break below would also inform us that the wick seen above the 1.61609 daily level (see daily timeframe) was very likely a fakeout. With the above taken into consideration, we have decided to remain flat on this pair, and wait for further developments.

Buy/sell levels:

• Buy orders: N/A (Predicative stop-loss orders seen at: N/A).

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

AUD/USD:

Weekly Timeframe: A little bit of energy is finally being seen around the weekly demand area coming in at 0.86591-0.88247. Buying interest has come into the market and pushed price up to around a weekly support flip level seen at 0.88874. A break above here could potentially signal a new uptrend may be on the cards.

Daily Timeframe: The daily timeframe remains to be indecisive, as price is still seen ranging between a daily demand area at 0.86318-0.87183, and a daily decision-point supply area coming in at 0.88961-0.88302 (located nicely around the aforementioned weekly support flip level). In our opinion, there is no clear direction on this timeframe until either one of these areas sees a break. Therefore, going long around the aforementioned weekly demand area may not be the best path to take until the daily decision-point supply area mentioned above is consumed, which is currently being tested at the time of writing.

4hr Timeframe: The 4hr timeframe shows that ever since the 15/10/2014, price has been consolidating between a 4hr supply area seen at 0.88591-0.88275, and a combined 4hr demand/round number area at 0.86744-0.87235/0.87 (tentative buy orders are seen just above at 0.87297). Both of these areas are supported by the daily range mentioned above.

However, only recently a break above this 4hr range was seen. Could this just be a fakeout to stop out as many sellers as possible, or is it a continuation break? In our opinion the only way for this to be a confirmed fakeout would be to see price break below the 0.87878 level marked in blue. In the event this does happen, a potential selling opportunity may present itself, targeting the lower limits of the 4hr range (0.86744-0.87235/0.87), but until then, it’s back to sitting on our hands.

Buy/sell levels:

• Buy orders: 0.87297 – Tentative (Predicative stop-loss orders seen at: 0.86483).

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

USD/JPY:

Weekly Timeframe: The week before last showed price reacting off of a weekly resistance flip level seen at 105.432. Last week however saw further buying coming into the market, which pushed price back up to a major weekly supply area coming in at 110.652-108.123. Could this be pro money coming back to collect the last of the unfilled sell orders before a more aggressive sell off is seen? Let’s see what the lower timeframes have to say.

Daily Timeframe: At the time of writing price seems to be stalling around a minor daily support flip level seen at 108.241. In the event of a break, a move higher up to a major daily resistance flip level coming in at 108.575 may well be seen.

4hr Timeframe: It was mentioned in yesterday’s analysis that price had found temporary support around a small 4hr decision-point demand area at 107.419-107.627, and that if price were to close above (consume) the 108 level, there would be very little in the way to stop price from reaching the 4hr Quasimodo resistance level at 108.524 (active sell orders are seen just below at 108.478), which is conveniently located just below the major daily resistance flip level mentioned above at 108.575.

As we can all see this has happened, and price has already retested the 108 level as support (seen on the much lower timeframes). In the event price comes back for a second retest, a potential short-term buying opportunity may present itself around the 108.037 level targeting 108.478.

If price does indeed reach the aforementioned 4hr Quasimodo resistance level, this could likely be the start of a nice down-trending market, as we mustn’t forget that price is also trading around a monster weekly supply area seen at 110.652-108.123, which will likely add fuel to any decline seen.

Buy/sell levels:

• Buy orders: 108.037 (Predicative stop-loss orders seen at: 107.911).
• Sell orders: 108.478 (Predicative stop-loss orders seen at: 108.787).

EUR/GBP:

Weekly Timeframe: The weekly timeframe shows that price remains trading around the base of a weekly demand area seen at 0.76931-0.78623. Considering just the weekly timeframe for a moment, price has not exactly been showing much in the way of buying strength. Could it be ‘game over’ for this demand area?

Daily Timeframe: Indecision is being seen on the daily timeframe, as price is still seen ranging within a daily decision-point demand area seen at 0.78468.0.78986. Let’s see what we can find on the 4hr timeframe.

4hr Timeframe: Recent developments on the 4hr timeframe show that active buying has certainly been seen on this pair, and rightly so, since the path north is likely clear up to around the 4hr supply area seen at 0.79409-0.79204.

The reason why we believe the path north is clear is simply because of the way price approached the fresh 4hr demand area at 0.78468-0.78595 (located deep within the daily decision-point demand area at 0.78468.0.78986). Notice that each time price made a lower low, we then saw a return to collect any unfilled sell orders that may have been left behind (marked with blue arrows). This does two things, it allows pro money to keep pushing price south using the unfilled sell orders, but at the same time it also clears the path north for any future buying. Be that as it may, there still seems to be some selling interest around the round-number level 0.79 at the moment. This may not be a bad thing, since we feel there are still some very big buy orders (0.78601) above the aforementioned fresh 4hr demand area, and this could just be the catalyst that price needs to sell into these buy orders for an overall rally higher.

Buy/sell levels:

• Buy orders: 0.78601 (Predicative stop-loss orders seen at: 0.78444).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

USD/CAD:

Weekly Timeframe: The weekly timeframe shows that active selling is coming into the market, which may have been fuelled from when price likely stopped out any traders who attempted to fade (and buy the breakout) around the medium-term weekly high at 1.12775.

Daily Timeframe: Ouch! It is very clear that yesterday was one for the bears! A full-bodied bearish candle has been seen digging very deep into the daily decision-point demand area at 1.10807-1.11719.  A break below this area would likely attract further selling down towards 1.10980, a daily resistance flip level.

4hr Timeframe: As we can all see price has closed below the combined 4hr demand/round number area at 1.11837-1.12186/1.12. Where could price trade to next? We see very little stopping price from dropping down to around the 1.11 area (active buy orders are seen just above at 1.11255), since the path south appears to be relatively clear.

However, before price reaches that low, there is always the possibility that the big guys may not have the liquidity to sell into the market. This would mean a rally up to either the round-number level at 1.12 (tentative sell orders are seen just below at 1.11952), or the 4hr supply area just above at 1.12543-1.12335 may well be seen (active sell orders are seen just below at 1.12286).

Buy/sell levels:

• Buy orders: 1.11255 (Predicative stop-loss orders seen at: 1.10777).
• Sell orders: 1.11952 [Tentative] (Predicative stop-loss orders seen at: 1.12091) 1.12286 (Predicative stop-loss orders seen at: 1.12582).

USD/CHF:

Weekly Timeframe: The weekly timeframe currently shows that price is capped between a weekly supply area coming in at 0.98378-0.95895, and a weekly resistance flip level seen at 0.94546.

Daily Timeframe: Likewise, the daily timeframe also shows price is currently capped between a daily supply area at 0.95613-0.94675, and a daily decision-point demand area seen at 0.93522-0.93970. It is only until one of these areas sees a break, will we then likely have some idea regarding future direction.

4hr Timeframe: The 4hr timeframe shows that price has closed below a 4hr demand area at 0.94713-0.94955, and in our view it appears that the sellers used the round-number level 0.95 to possibly fuel this move.

This selling momentum did not last too long though, as the market found the 0.94553 level to be supportive enough to allow buyers back into play. At first glance, this small 4hr support flip level does not look much, but when you see that it is literally a pip or two above the weekly resistance flip level at 0.94546, one will likely see this level in a different light!

However, buying blindly here with no confirmation would not be a wise move in our opinion, as price could still potentially drop down to the 0.94 level (tentative buy orders are seen just above at 0.94042), and all this would look like on the weekly timeframe is a small fakeout! That being said though, we would be very interested in buying this market if price were to break above the 0.95101 level marked in red. The reason is simply because if price breaks above that level, the path north is likely clear up to at least 0.96, since most of the supply to the far left has likely already been consumed (check out the supply consumption wicks around both the green and pink trendlines).

Buy/sell levels:

• Buy orders: 0.94042 (Predicative stop-loss orders seen at: 0.93909).
• Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

XAU/USD (GOLD):

Weekly Timeframe: The rebound from the weekly support flip level at 1244.08 appears to be extending lower at the moment. Assuming this selling continues, there is a possibility that price could trade back down towards a weekly demand area coming in at 1156.70-1195.45.

Daily Timeframe: The daily timeframe shows that price has retested the 1235.54 level as resistance, which may be all the sellers need to fuel a further decline. The path south appears to be relatively clear down to around the 1206.49 level, since most of the demand to the left of current price has already likely been consumed by the two buying tails seen at 1221.78/1217.25. Let’s see what the 4hr timeframe has to say.

4hr Timeframe: The 4hr timeframe shows that price still remains consolidating between a 4hr demand area at 1221.78-1227.37, and a 4hr supply area seen at 1235.99-1232.15 (located around the 1235.54 daily level).  Ideally what we want to see is price close below the 4hr demand area, as this will likely encourage follow-through selling down to 1204.66, a 4hr support flip level, which coincidentally lines up nicely with the daily level seen at 1206.49.  The reason we believe price can drop so far is simply because there is very little demand that we can see that has not already been consumed (green trendline).

Therefore, until either the 4hr demand area or the 4hr supply area is consumed, we have no clear direction in our opinion, and as a result we have chosen to stay flat on gold for the time being.

Buy/sell levels:

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