There’s not much detail on the chart below for good reason. We saw a reaction at the bottom of the range (1.37894) breaking the lows creating a fakeout. This spike down, no doubt stopped a lot of traders out who were playing the lower limits. There was clearly news around this time as the spike down gave well-funded traders much needed sell orders (stops from traders going long) to buy into. As a result we’ve seen fakeouts at both upper and lower limits of the consolidation (1.37894 – 1.38500).
So what next?
Here is a quick reminder of the higher time frames; maybe this will keep traders on the correct side of the market.
Below is a chart used a few days ago, but is still very much in play. We reacted well off of a minor S/R flip level at 1.37974, so do we favor long trades, if the opportunity arises for a break and retest?
Below is a chart used in the weekly forecast, and is a big reminder that we are still in Weekly supply at 1.42445 – 1.38589. Weekly TF normally overrides the Daily TF analysis.
With all this taken on board, Shorts would be the most logical option; however, trading long is still possible with the right entry and using clear money management.
- Areas to watch for buy orders: it’s advisable to let price action play out.
- Areas to watch for sell orders:it’s advisable to let price action play out.
- Most likely scenario: Price needs to decide on direction here, this consolidation is proving troublesome for both buyers and sellers.
Price action has been slow moving on this timeframe for the past 9 days shown on the chart in yellow. Now we are seeing some movement north, but where’s price heading?
Remember the weekly forecast on Monday? A historical Daily supply area at 1.70372 – 1.68747 that stuck out like a sore thumb. Price is currently within this supply area now.
A quick look at the 4hr chart below shows how price action unfolded in more detail. Resistance at 1.68500 has been broken and has now become support, buyers and sellers are currently battling it out within daily supply as mentioned on the above chart.
- Areas to watch for buy orders: 1.68500
- Areas to watch for sell orders: 1.70372 – 1.68747
- Most likely scenario: Price has made its move, a retracement will likely be seen now we are in a decent supply area (1.70372 – 1.68747)
This week, the Aussie Dollar has been moving at a slow pace, no attempt has been made to attack supply at the minor S/R flip area (0.93124). A small demand area was created at 0.92261 – 0.92505 and has seen a small reaction to it. Even though a reaction happened, the demand area does not look stable, because of this prices may drop lower into the demand/origin looking for more buyers if price decides it wants to go north, as we are still around a Daily demand zone (0.92037 – 0.92825).
- Areas to watch for buy orders: 0.92299
- Areas to watch for sell orders: 0.93124
- Most likely scenario: Price will likely test either supply at the minor S/R flip area (0.93124) before maybe dropping down to the demand/origin at 0.92299.
The market clearly likes this demand zone at 101.847 – 102.026, as a second reaction is currently happening now. This also could be due to the fact that within this demand area there’s a round number (102.000)., which seems to be a magnet for price at times.
The previous weekly high at 102.781 proved to be a strong area for sellers; this is definitely an area to note down for future selling opportunities when price returns in the future.
The last analysis reported price may react at demand (102.312 – 102.351) after an expected short bounce at the highest demand area at 102.464 – 102.510.
The spike through the lowest of the two demand areas cleared out buyers giving a clue that lower prices were in order. Do bear in mind, now demand has been consumed, this area becomes supply. Any traders long at the 4hr demand area for a second test may want to note down this possible speed bump as a first target, conversely shorts may be an option at this area for a quick trade south.
Concerning this situation with the USD/JPY just proves how important it is to take note of higher time frame levels/areas. We see price react to the pip at the 4hr demand area (levels reported above).
- Areas to watch for buy orders: 102.026
- Areas to watch for sell orders: 102.312
- Most likely scenario: Price will likely drop once again to the 102.026 demand area, then rally to 102.312. This could just as well happen the other way though, so as always be prepared for anything!