Wednesday 3rd December: Daily technical outlook and review.



Weekly Timeframe: For the past four weeks now price has been trading in between a major combined weekly demand/Quasimodo support area at 1.22403-1.24420/1.22866, and a weekly support swap level coming in at 1.25816.

Daily Timeframe: The daily timeframe shows that price is ranging between smaller daily supply and demand zones (1.26386-1.25459/1.22877-1.23809) within the aforementioned larger weekly areas. A breakout above would likely confirm buying strength from the aforementioned weekly demand/Quasimodo support area, and in the same way, a breakout below would likely inform us that this weekly area is vulnerable, and strength is being seen from the aforementioned weekly support swap level.

4hr Timeframe: The 4hr timeframe shows that the break seen above the resistance channel on Monday was clearly a 2-bar reversal pattern. Since our previous analysis, the Euro dropped like a rock. The 1.24422 level gave way without a fight, as did 1.24.

That being the case, if further selling continues to be seen throughout today’s sessions, it is very likely prices will hit a combined 4hr demand/round number area coming in at 1.22942-1.23491/1.23 (located within both the weekly and daily demand areas – see above). We’re itching to set a pending buy order here, but in doing so risk/reward considerations would argue that price is too close to potential resistance at 1.24, so we’ll have to wait for lower-timeframe confirmation around the 1.23516 area.

On a side note, this level is extra attractive due to the support level seen marked with two green arrows at around 1.23638. This level no doubt contains tons of buy orders with sell stops set just below at 123544, which gives pro money all the more reason to break this level into the 4hr demand below, as this will give them the added liquidity in the form of sell stops for their buys to rally prices higher.

Buy/sell levels:

  • Buy orders: 1.23516 [Tentative] (Predicative stop-loss orders seen at: 1.22893).
  • Sell orders: Flat (Predicative stop-loss orders seen at: N/A).


Weekly Timeframe: How quick things can change! It was only yesterday that the weekly timeframe was showing serious buying interest, and as we can all see this does not seem to be the case now. Buyers are once again being forced back down from a weekly support swap level at 1.57166 into the weekly demand area coming in at 1.54260-1.56110.

Daily Timeframe: It is seen clearly on the daily timeframe that there are two troublesome resistive areas for the buyers to overcome before higher prices can ensure from the daily decision-point demand area at 1.55602-1.56802 (seen within the aforementioned weekly demand area). The first, obviously being the 1.57166 weekly level which was already mentioned above, and secondly, a firm-looking daily supply area seen at 1.59438-1.58338. Let’s see what the 4hr-timeframe picture looks like.

4hr Timeframe: It seems – as per the 4hr timeframe that selling interest entered the market around the 1.57500 area, and forced anyone who bought around 1.57 to very likely cover their position.

At the time of writing, price is once again trading around a 4hr support area seen at 1.55917-1.56299 (located within both the weekly and daily demand areas mentioned above). We will be watching price action on the lower timeframes for entries within this area, as entering at market here puts us at risk of being stopped out from fakeouts like the one seen recently around the open.

Assuming that this area fails, prices will then almost immediately be trading around a long-term 4hr support swap level at 1.55737, which if broken could spell disaster for the buyers as we see very little active demand below.


Buy/sell levels:

  • Buy orders: Currently watching for lower-timeframe confirmation around 1.55917/1.56299 (Predicative stop-loss orders seen at: Dependent on where one confirms the level).
  • Sell orders: Flat (Predicative stop-loss orders seen at: N/A).


Weekly Timeframe: The weekly timeframe shows that price has just recently hit a major weekly demand area coming in at 0.80646-0.84601, and at the time of writing very little buying interest is being seen. Let’s see what the lower-timeframes have to say about this.

Daily Timeframe: The buying activity recently seen around a daily demand area at 0.83147-0.84336 (located within the aforementioned weekly demand area) was recently brought to a halt as selling opposition came into the market around a minor daily support swap level seen at 0.85396.

4hr Timeframe: Following on from the previous report, the buyers and sellers clearly had a mini battle around the 0.85 area which ended in the sellers being victorious. The momentum south that followed brought prices down to a minor 4hr demand area at 0.84153-0.84367 (located within both the weekly and daily demand areas – see above), where it was mentioned yesterday that we would be watching how price behaves on the lower timeframes around the 0.84339 mark, as this could prove a nice base from which to enter long from.

The only little niggle we have concerning a long trade from here at the moment is the recent selling pressure seen on the daily timeframe from 0.85396. However, on the plus side, price is currently in weekly demand and on the 4hr timeframe has also potentially cleared out some of the selling opposition around 0.85385 with the candle wick seen at 0.85413. Therefore, with this mind, we’re still 80% confident in any lower-timeframe buy setup we see around the aforementioned 4hr demand area.

It seems we may have already missed a nice long setup yesterday seen at 14.45pm GMT on the 15-minute timeframe. Notice how price rallied, consumed some of the sellers beforehand, then dropped down and faked below the low 0.84346, here was a nice buy signal for us. All is not lost though, there could very well be other opportunities around the corner, and this is where one learns the skill of patience.


Buy/sell levels:

  • Buy orders: 0.84399 [Tentative] (Predicative stop-loss orders seen at: 0.84115).
  • Sell orders: Flat (Predicative stop-loss orders seen at: N/A).


Weekly Timeframe: Further buying is indeed being seen on the USD/JPY pair. This comes after price positively closing above a major weekly supply area at 117.931-116.799 last week. Does this mean we could possibly be seeing further buying up to a weekly Quasimodo resistance level seen at 122.180? Let’s take a look on the lower timeframes to see how price is structured.

Daily Timeframe: Even though the USD has been absolutely slaughtering the Yen lately, we are still seeing price in a supply area (119.820-118.700) on the daily timeframe. It will be very interesting to see what the 4hr timeframe picture looks like with this recent buying pressure.

4hr Timeframe: In the previous report, we mentioned that for us to become interested buyers on this pair, we would need to see a positive close above 119, and as we can all see, this has indeed happened.

Let’s just quickly recap here. We are seeing positive buying action on the weekly timeframe with no significant resistance on the horizon, and assuming the buyers can hold above 119 on the 4hr timeframe; this is in our view is confirmation of buying strength. The only grumble we have is that price is currently in daily supply (levels above) at the moment.

Given the points made above, we are favoring longs for the time being, and will be watching for price to retest 119 where we’ll attempt to enter long with lower-timeframe confirmation around 119.057.


Buy/sell levels:

  • Buy orders: 119.057 [Tentative] (Predicative stop-loss orders seen at: 118.755).
  • Sell orders: Flat (Predicative stop-loss orders seen at: N/A).


Weekly Timeframe: The weekly timeframe currently shows that price is stalling, with no real decision being made by either the buyers or sellers yet, as price is currently dancing just below a major weekly supply area coming in at 1.18061-1.14739.

Daily Timeframe: The daily timeframe represents what we believe to be a nice-looking three-drive pattern – 1st drive is seen at 1.12696, second at 1.13842, and finally the third being the reaction seen at the aforementioned weekly supply area at 1.14655. For further a sell off to be seen, a stacked area of daily demand will need to be consumed beforehand (1.11211-1.11813/1.11896-1.12416). It will be interesting to see what the 4hr timeframe shows.

4hr Timeframe: A potential short trade may be setting up on the Loonie at the moment. Notice how price recently consumed a 4hr decision-point demand area seen at 1.13243-1.13413, this was our cue to begin looking for sells down to at least 1.13, and given enough time, the 1.12382 level (located around the first area of stacked daily demand at 1.11896-1.12416).

So, where are we looking to enter short? We really like the 4hr fakeout area above at 1.14474-1.14290, since pro money will likely see this as a perfect area to fake into past the 114 round-number level. One can only imagine how many buy stops are/were located just above this psychological number – perfect for pro money to sell into!

Reasons for shorting with a pending sell order at 1.14266:

  1. Trading around the base of a major weekly supply area at 1.18061-1.14739.
  2. Three-drive approaching pattern spotted on the daily timeframe.
  3. Nice fakeout zone at 1.14474-1.14290 that sits just above 1.14.


Buy/sell levels:

  • Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
  • Sell orders: 1.14266 (Predicative stop-loss orders seen at: 1.14603).

DAX 30:

Weekly Timeframe: The weekly timeframe shows that the buyers have well and truly been in control for the past two weeks now. This has consequently forced price up to an all-time high seen at 10048, where at the time of writing, a little selling interest has been seen. A break above here would likely attract further buying, resulting in the DAX continuing on its (near) three-year uptrend.

Daily Timeframe: The daily resistance zone (10048-10007) which sits around the 10048 level mentioned on the weekly timeframe saw a bearish reaction during yesterday’s trading session. However, it was not enough to push prices below the previous day’s low at 9893, so we are still unsure as to whether this was genuine selling, or simply traders liquidating some of their long positions here.

1hr Timeframe: We mentioned in the previous analysis that price was ranging between a 1hr supply area at 10002-9988, and a 1hr demand area coming in at 9867-9903.

With that being said, once the index opened, a push higher was seen consequently breaking the upper limits of this range. For anyone who follows our analysis on a regular basis, you may recall us mentioning to be wary of a breakout north, as all price would effectively be doing is trading into higher-timeframe supply (see above). And as we can all see this is exactly what happened.

At this point in time we are quite content with trading this small hourly range (buys seen at 9908, and sells at 9983). Nonetheless, as we have just seen, fakeouts do happen, and this is the reason why we prefer to watch the lower timeframes for confirmation when trading in consolidated areas such as this. In the event that price breaks lower, this could very well be an early signal that a short-term shift in sentiment may be changing, due to prices likely being free to decline as far as the 1hr demand area seen at 9786-9820. The reason why price could potentially drop thus far is because to the left marked with a green trendline we see very little active demand.


Buy/sell levels:

  • Buy orders: 9908 [Tentative] (Predicative stop-loss orders seen at: 9864).
  • Sell orders: 9983 [Tentative] (Predicative stop-loss orders seen at: 10011).

DOW 30:

Weekly Timeframe: The DOW has been trading beautifully within a nice-looking trending channel for over five years now. The recently closed weekly candle shows that the upward momentum may be fading, as price failed to make a higher high which as a result formed a weekly inside candle. Let’s take a look on the lower timeframes to see what we can find.

Daily Timeframe: Yesterday’s trading action shows that the sellers seemingly lost steam after (almost) hitting a daily decision-point demand level seen at 17689, as the market rallied 133 points (this figure includes pre/aftermarket trading hours). It will be interesting to see what the 1hr chart shows.

1hr Timeframe: The 1hr timeframe shows that the market never filled our pending buy order at 17735, which is a shame because price shot straight to our take-profit target!

A small break above a1hr supply area at 17896-17864 was recently seen (marked with a blue arrow). Could this be an early signal that the market is going to continue on its relentless march north? Or was it simply a small fakeout to gather liquidity for a drop lower? This is a very difficult question to answer at this point in time. However, in our opinion, if price declines and breaks below the 1hr decision-point demand area seen at 17826-17842, then it was 90% likely a fakeout, which could result in further selling being seen. Yet, if the buyers hold the market here, this could be a fantastic area to enter long using lower-timeframe confirmation, since there’s nothing worse than either getting stopped out to-the-pip, only to see the market move in the desired direction, or the market blowing straight through your order.

Given the points made above, we have decided to sit on the sidelines for the time being and wait for further price action to unfold.


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).


Weekly Timeframe: Serious buying has recently been seen in the Gold markets, prices skyrocketed north from a weekly decision-point demand level coming in at 1136.30 towards a weekly swap level seen at 1202.91. Assuming that the buyers can overcome any selling opposition around here, price will likely continue to rally until it reaches another weekly swap level seen at 1244.08. It will be interesting to see what the lower timeframes show.

Daily Timeframe: The daily timeframe shows that selling was indeed seen yesterday from just below a daily supply area coming in at 1235.51-1222.37. In our humble opinion, we see very little support that could stop further selling being seen down towards at least 1182.01, a major daily swap level.

4hr Timeframe: It was reported yesterday that Gold needed to make a decision, as the market was trading in ‘multi-timeframe’ supply (weekly, daily [see above] and 4hr supply at 1226.52-1220.97).

That decision may have already been made for the simple reason that price aggressively closed below a 4hr resistance swap level seen at 1202.83, which informed us that selling strength has potentially entered the market.

For anyone who read our previous report on gold, you may recall us mentioning that if a close lower was seen, then that would be our cue to look for selling opportunities on the retest of 1202.83 around the 1201.84 mark. We took a short position yesterday at 1197.83 around 4pm GMT on the 15 minute-timeframe. The reasoning behind our trade is simply because once price hit 1202.83 at around 13.30pm GMT, the market then proceeded to drop and likely consume some of the buying opposition around 1195.02. Following this, price then took around an hour to rally back up to 1202.83, and faked above the high seen to the left at 1203.03, this was our entry signal to short with confirmation.

First take-profit target for the trade are 1182.01.


Buy/sell levels:

  • Buy orders: Flat (Predicative stop-loss orders seen at: N/A)
  • Sell orders: 1197.83 [Live] (Predicative stop-loss orders seen at: 1204.90).

Source:: Wednesday 3rd December: Daily technical outlook and review.

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