Wednesday 8th April: Daily technical outlook and review.

EUR/USD:

Weekly timeframe perspective: The weekly timeframe shows that the buyers and sellers remain pulling for position just below a major weekly swap level coming in at 1.1096. A break above this barrier could stimulate further upside towards a weekly supply area positioned at 1.1449-1.1278.

Daily timeframe perspective: The rebound seen from just below the 1.1051 high (26/03/15) extended lower yesterday. Assuming that further selling is seen from this point, we’ll likely see prices challenge the daily swap level visible at 1.0716.

4hr timeframe: The recent descent seen on the Euro took out not only the round-number 1.0900, but also a small 4hr decision-point demand area located just below it at 1.0862-1.0887. For those who read our last report on this pair, you may recall us mentioning that if price broke below the aforementioned 4hr decision-point demand area; we’d then begin looking for price to retest it as supply and drop down to 1.0800. This, as you can see did happen, we do hope some of our readers took advantage of this short-term move! Although 1.0800 converges beautifully with a trendline extended from the low 1.0461, it is certainly not somewhere we’d stamp high probability, owing to where price is currently located on the higher timeframes (see above) at the moment. That being said though, price may, and we emphasize the word ‘may’ here, rebound back up to retest the 1.0862-1.0887 area once more.

Selling on the other hand is, shall we say, ‘problematic’. We not only have 1.0800 support to contend with, but even if price pushed below this hurdle, we’re then facing possible supportive pressure from a small 4hr decision-point demand area at 1.0749-1.0772.

Taking all of the above into account, opting to stand on the sidelines here may very well be the best path to take for the time being.

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).

GBP/USD:

Weekly timeframe perspective: The weekly timeframe shows that not only is the GBP in a freakishly steep downtrend at the moment, but price is also seen lodged just below a recently broken weekly Quasimodo line coming in at 1.5007. Therefore, for anyone considering buying this pair medium to long-term may want to consider the above before doing so.

Daily timeframe perspective: From a technical standpoint, we have barely seen any change on this timeframe for quite some time now. The key thing to take away from this chart is that serious selling will only take place once the daily demand zone visible at 1.4643-1.4823 is taken out.

4hr timeframe perspective: The GBP/USD pair, as you can see, retested the 1.4900 handle and sold off, taking out the 4hr decision-point demand area seen at 1.4809-1.4839 along the way. With price now hovering just above 1.4800 (converges beautifully with a trendline extended from the low 1.4634), we’ve decided to liquidate a further 40% of our current short position taken from 1.4969 (see previous report for details).

Given the tug-of-war scenario currently taking place between the weekly and daily timeframes (see above), trading from 1.4800 is not something we’d feel comfortable participating in. Conversely, selling on a break of 1.4800 would not only see us shorting into the 4hr demand at 1.4721-1.4767 seen just below it, but also the overall larger daily demand area sitting at 1.4643-1.4823 as well.

With everything considered, we’re satisfied with how our current trade is performing on this pair, and have no intention on opening any new positions just yet.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders are seen at: N/A).
• Sell orders: 1.4969 [Live] (Predicative stop-loss orders are seen at: 1.5016).

AUD/USD:

Weekly timeframe perspective: Over the past two months or so, the buyers and sellers have been seen pulling for position around a weekly demand area at 0.7449-0.7678, which, as you can see, also boasts long-term trendline convergence from the low 0.4775. We’re not usually one to make predictions here, but with the lower low that formed deep within the weekly demand area last week at 0.7532, coupled with the fact that the Aussie is in a severe downtrend at the moment, it looks as though this area will be taken out sooner or later.

Daily timeframe perspective: Similar to the weekly timeframe, only smaller in size of course, the daily timeframe shows price has been wrestling with a daily demand area at 0.7449-0.7598 (located deep within weekly demand at 0.7449-0.7678) since Wednesday last week, which, if you look back to the weekly chart, you’ll notice is located deep within the aforementioned weekly demand area.

4hr timeframe perspective: During the course of yesterday’s sessions, the AUD/USD pair saw aggressive buyers come into the market from within a 4hr decision-point demand area seen at 0.7569-0.7592 (located just within the aforementioned daily demand area). This move consequently pushed prices up to a small, yet clearly resilient 4hr decision-point supply area at 0.7699-0.7682.

Although the higher-timeframe structure clearly shows that the Aussie is in an overall downtrend at the moment, we must not forget that price is also trading around higher-timeframe demand (see above), thus we cannot dismiss the fact that a push higher could still be in store. That being said, the current location of price on the 4hr timeframe is, as far as we can see, trading in no-man’s-land between the two 4hr areas just mentioned above, giving us very little incentive to risk money trading this pair at this time.

Our team has made a note of the two 4hr areas mentioned above with alerts set at each of them, should price visit either one today, we’ll start analyzing the lower timeframe behavior to see if it’s worth trading.

Current buy/sell orders:

• Buy orders: 0.7569-0.7592 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.7565).
• Sell orders: 0.7699-0.7682 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.7713).

USD/JPY:

Weekly timeframe perspective: The weekly chart shows that the buyers and sellers are currently battling for position within a small weekly decision-point demand area at 118.22-119.40. A strong move north from here could take us all the way to the weekly Quasimodo resistance level seen at 122.18. Conversely, a break below here could attract further downside towards the low 116.86, or even the major weekly swap level seen just below it at 115.50.

Daily timeframe perspective: The daily timeframe shows that price is currently trading within a minor daily supply area seen at 121.18-120.08. A convincing push above this barrier could very well force price to shake hands with the aforementioned weekly Quasimodo resistance level seen just above it.

4hr timeframe perspective: The USD/JPY pair rallied again yesterday, breaking above not only the 4hr supply area seen at 119.90-119.63, but also the 4hr Quasimodo resistance line at 120.21 (located within the aforementioned minor daily supply area) as well. With the weekly timeframe reminding us of the fact that this pair is currently in a strong uptrend, and at the same time, is also positioned within a small weekly demand zone, our team’s bias is swaying more to the long side.

Therefore, if the buyers can hold out above 120.21 today, and lower timeframe buying confirmation is seen, we’ll then look to trade long up to at least 120.60, and potentially the 4hr supply area positioned just above it at 121.18-120.92 (both areas are located within the aforementioned minor daily supply area). Should 120.21 fail to hold, however, we’ll then shift our attention to the small 4hr decision-point demand area below at 119.84-120.05, which, as you can probably see, also encapsulates the 120.00 round-number support.

Current buy/sell orders:

• Buy orders: 120.21 [tentative – confirmation required] (Predicative stop-loss orders seen at: Dependent on where one confirms this level) 119.84-120.05 [tentative – confirmation required] (Predicative stop-loss orders seen at: 119.80).
• Sell orders: Flat (Predicative stop-loss orders are seen at: N/A).

USD/CAD:

Weekly timeframe perspective: For over two months now, price has been seen teasing the underside of a weekly Quasimodo resistance level coming in at 1.2765. A close above this level could spark further buying interest up to another weekly Quasimodo resistance level seen at 1.3014.

Daily timeframe perspective: From the daily picture, we can see that this pair is clearly beginning to chisel out a consolidation zone between the daily demand area at 1.2350-1.2468, and a daily supply area seen at 1.2833-1.2742 (encapsulates the aforementioned weekly Quasimodo resistance level). The current location of price is around the lower limit of this range, so any traders looking to short medium/long term may want to make a note of this.

4hr timeframe perspective: Recent developments on the 4hr timeframe show that the buyers managed to close above 1.2500 yesterday, but were unfortunately unable to maintain a position above this number. This move has very likely cleared out any traders who were looking to fade this level, which in turn has likely opened up the gates for prices to challenge a 4hr decision-point supply area coming in at 1.2572-1.2553. Nonetheless, given that there is somewhat of a tug-of-war going on between the weekly and daily timeframe structures (see above) at the moment, trading the 4hr timeframes will, in our opinion, have to be done so with caution.

With that in mind, our main focus for today will be on 1.2500. In the event that we see buying strength entering the market here on the lower timeframes, we’ll enter and look to ride this train up the 4hr decision-point supply area just mentioned above. As a closing point, this 4hr supply area has also been noted down as a zone of importance. The reason being is it was here where well-funded traders were likely active during the NFP data release on Friday, meaning there may very well be unfilled sell orders still remaining. Place it on your watchlist guys!

Current buy/sell orders:

• Buy orders: 1.2500 [Tentative – confirmation required] (Predicative stop-loss orders seen at: Dependent on where one confirms this level).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).

USD/CHF:

Weekly timeframe perspective: The current situation on the weekly timeframe shows price is now retesting the 0.9663 weekly swap (resistance) level. In the event that the sellers can hold the market lower here, we might, just might, see price challenge the weekly decision-point demand area below at 0.9170-0.9343.

Daily timeframe perspective: Current daily candle action shows price testing the lower limits of a daily supply area at 0.9755-0.9662 (located just above the aforementioned weekly swap [resistance] level). Should this area be taken out, the path north would then likely be clear for the market to challenge a small daily decision-point supply area at 1.0090-1.0008.

4hr timeframe perspective: The USD/CHF pair rallied during the course of yesterday’s sessions, consequently breaking above and retesting the 0.9600 handle. This move, as you can see, clearly attracted further buyers into the market, forcing prices up to a small 4hr supply area seen at 0.9672-0.9643 (located just within the aforementioned daily supply area).

Taking into account that both the weekly and daily timeframes are trading around overall supply (see above) at present, our bias for the time being is south. Selling from the current 4hr supply area has potential, but also has many obstacles (0.9700/ 0.9555-0.9577) to overcome to attain a worthwhile risk/reward. Because of this, and the fact that price could also fake above this area to the round number 0.9700, we’ll only be trading here if lower timeframe confirmation from the 5/15 minute scale is seen (the lower the timeframe, the tighter the stop, the better the risk/reward).

With regards to buying this market, our team has come to a general consensus that a buy position will only be permitted once, or indeed if we see a sustained move above 0.9700.

Current buy/sell orders:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).
• Sell orders: 0.9672-0.9643 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 0.9680).

DOW Jones 30 (US 30):

Weekly timeframe perspective: From the weekly timeframe, we can see that the DOW is in an incredibly strong uptrend at the moment, and has been for the past six years! That being said though, price seems to of hit a barrier of resistance coming in around the 18098 region, it will be interesting to see what the lower timeframes make of this…

Daily timeframe perspective: Price action on the daily timeframe is currently being supported by a small, yet clearly resilient, daily decision-point demand area at 17561-17655. Considering the size of this daily area, we have seen this barrier defended not once, not twice, but THREE times now. On top of that, this area also converges just beautifully with a trend support line extended from the low 15849.

4hr timeframe perspective: The 4hr timeframe shows that there are clearly active sellers trading around the 4hr supply area at 18009-17939. While this may be true, there are also active buyers seen defending the 17870 level just below it.

Everything being equal, we know that from the higher timeframes (see above in bold) prices will very likely eventually push north. That said, if the buyers can hold out above 17870 today, we may see price challenge, and possibly engulf the aforementioned 4hr supply area. This move would likely open the gates for intraday buying up to the 18098 weekly level, which we would take part in as long there was supporting lower timeframe confirmation. For us to be confident that the overall trend is continuing, however, we’d need to see a sustained move above this weekly level on the 4hr timeframe before seriously committing to longs.

Conversely, in the case that 17870 fails to support the DOW, selling down to the 17811 (highs that were just recently broken) may be a possibility if a lower time retest is seen of 17870. If 17811 also gives way, we’ll then be looking to short any retest down the 4hr demand area at 17546-17633 (located deep within the aforementioned daily decision-point demand area). Waiting for lower timeframe confirmation is highly recommended here guys!

So traders, all eyes on the 17870 level today!

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).

XAU/USD (Gold):

Weekly timeframe perspective: From the weekly timeframe, we can see that price has just recently pierced the top of a small weekly decision-point supply area at 1223.1-1202.6. This move has likely cleared the path north for further upside towards a weekly swap level coming in at 1251.0.

Daily timeframe perspective: It should come as no surprise when we tell you that the recent move on the weekly timeframe has also broken above a daily supply area at 1223.1-1213.0. The reason being is this daily area is located deep within the aforementioned weekly decision-point supply area. This recent push higher, as per the daily timeframe, has potentially cleared the path north up to daily supply at 1236.6-1227.7, which is, as far as we can see, now effectively a key obstacle to a move towards the aforementioned weekly decision-point supply area.

4hr timeframe perspective: Following the break above the 4hr resistance zone at 1223.1-1219.0, the Gold market sold off and has just recently attacked a minor 4hr swap level coming in at 1208.4. This was one of the levels we mentioned in the previous report to keep an eye on for lower timeframe buying confirmation. Here is a quick recap of why one may want to keep this level, and possibly the 4hr decision-point demand area below at 1191.3-1194.1 in mind today…

Under the above circumstances, we have seen three supply areas engulfed (see above in bold) with room above for prices to move higher. This can be seen not only on the weekly timeframe, but the daily and 4hr timeframes as well. So, with a potential resistive-free area on the horizon, we currently have our eye on the following levels:

• The small 4hr flip level at 1208.4. Lower timeframe confirmation is a must here – nothing worse than getting stopped out on a fakeout, is there?
• The small 4hr decision-point demand area at 1191.3-1194.1, which also boasts trendline convergence from the low 1142.5. Depending on the way price approaches this zone, we may consider setting a pending buy order here when, or indeed if the time comes.

The ideal take-profit target for any trades taken from these levels is the lower limit of the daily supply area at 1236.6-1227.7. It will be up to the individual trader whether to close his/her full position at this point, or leave some on the table to see if price moves further run.

Current buy/sell orders:

• Buy orders: 1208.4 [Tentative – confirmation required] (Predicative stop-loss orders seen at: dependent on where one confirms this level). 1191.3-1194.1 [Tentative – confirmation required] (Predicative stop-loss orders seen at: 1190.2).

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

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