U.S dollar index: for correlation purposes.
A Quick note: The charts levels and zones will be color coded for the readers’ benefit as follows:
Weekly TF = Black
Daily TF = Gold
4hr TF = Brown
Nothing changed drastically from the last weekly timeframe analysis; nonetheless this serves as a good reminder. Price is still currently trading around the base of a weekly supply area at 1.42445 – 1.38589. Within this supply, there’s a round number 1.40000 whichhas provided the market support and resistance right back until 1995 as per this timeframe, it is a thing of beauty! The rising wedge has not been broken and remains the same.
Take note of this week’s closed candle, we saw a little more action compared to the previous 2 weeks. Price engulfed these previous 2 week candles, and closed above the high of the 14/04/14 – 18/04/14 weekly candle. Does this mean higher prices next week?
A quick note of the demand zones:
- This demand 1.34857 – 1. 36909 has seen a touch, so some buyers have been consumed, but may remain strong, lower timeframe analysis will give a better clue.
- Similarly demand area 2 (1.32929 – 1.34919) is much the same as demand area 1.
- Here is a very strong looking demand area at 1.30876 – 1.32431, as said last week, if price were to get below demand areas 1 and 2, area 3 would provide a nice entry long but with a huge stop!
There was not much action this week, even with the mighty NFP announcement on Friday. Price remains within a range between the previous 52-week/Monthly highs (1.38934/1.39060) as supply, and an S/R flip area at 1.37974 acting as demand. It is doubtful a break will be seen of this consolidation on Monday due to the Brits being on vacation, and no high-impact news due.
On the other hand, if we do see a break south, where would price likely travel to for liquidity? The S/R flip area below (level mentioned above) there is a nice-looking gold demand area at 1.37190 – 1.36727 which is also the previous monthly lows.
Looking north, we have the huge round number 1.40000 which price could visit if a break above occurs. Keeping this in mind, do not forget we may visit the upper supply area at 1.42443 – 1.41146 deep within weekly supply as shown below on chart number 2, do keep an eye on this zone this week.
Check out the correlation with the daily Euro chart below and the USDX daily chart above. The Euro is in supply on the weekly (levels mentioned above), and the USDX is at weekly support at 79.12, both charts show S/R flip levels and both see the same reactions, coincidence? Using this index is a good way to add confluence to a trade.
NFP results were positive, but prices reacted bearishly, why was this? This was professional money in action here. What we see may have been a hunt for liquidity to push prices north. Well-funded traders cannot just buy or sell like retail traders can; they need traders to sell to them when they want to buy, and vice-versa when they want to sell. With the positive news out, general traders think, BUY! BUY! The number of actual buy orders in the market would have been unimaginable at that point; well-informed traders know this, so they sold into these buys looking for bigger liquidity to push prices north.
Liquidity was found near the bottom of the range at 1.38122 as per Friday’s analysis; however fell short around 20 pips or so, clearly there was enough sellers to buy into at that point.
As already seen on the Daily chart above we are caught within a small range, and with the U.K on vacation today, plus low-impacting news, do not expect any big movements. Price may test the Previous 52-week/Monthly highs (levels mentioned above) and consolidate around this area until Tuesday. If price manages to drop lower look for buyers to be waiting around Friday’s low (1.38122). This is where professional money were last active
- Areas to watch for buy orders: 1.38122
- Areas to watch for sell orders:1.38934/1.39060
- Most likely scenario: Price will likely range for most of the day as low volume is expected, look for orders to come in around the range limits, but proceed with caution.
This pair has seen change on this timeframe. Weekly consolidation remains at 1.67922 – 1.42334. Take a look at last week’s closed candle, this is the strongest close above seen at this price level for a while now. Could this still just be a fake out or a continuation?
The S/R flip level at 1.64651 is worth keeping a note of, even though it may seem a long way off for now.
Supply is seen at 1.76290 – 1.70420 but has already had a first touch with an accurate spike to the base. Could price be heading here after breaking out of the long-term consolidation?
Last week’s forecast reported that if price was to go north, we would likely hit supply at 1.70372 – 1.68747 take a look back in history and see how beautiful this zone is (2009). We did in fact see this scenario play out; the reaction seen so far though has not shown much bearish conviction yet on this timeframe, so we may be in for higher prices up to weekly supply above (Levels mentioned above). Nonetheless, looking at the USDX Daily chart which is in demand (79.23 – 79.41) right now, and the GBP being in supply, may give added weight to a possible bearish reaction here.
If price does indeed drop from supply, the most likely area where buyers are waiting is at the minor S/R flip level at 1.66630 as this was the last price level where strong buyers came into the market.
Price reacted beautifully at demand (1.68069 – 1.68280) as reported in Friday’s analysis. Similar to the Euro, a drop was seen even though there was positive NFP results announced, before eventually rallying.
The market will probably not see much movement today with the low volume expected, but always be prepared. Buying pressure is still seen at demand where we saw a reaction during NFP (levels mentioned above). Selling pressure is seen at 4hr supply (1.70432 – 1.69811) within Daily supply (levels mentioned above).
Be aware, we are currently in higher timeframe supply, so keep this in mind when placing trades.
- Areas to watch for buy orders: 1.68069 – 1.68280
- Areas to watch for sell orders: 1.70432 – 1.69811
- Most likely scenario: Price will likely range for most of the day, keep the above levels noted down, as they say, when you fail to plan, plan to fail.
Price is currently trading in between supply at 0.97399 – 0.95684 and demand at 0.86601 – 0.88258. A mild reaction has been seen at the S/R flip level (0.93718) but as of now the bears do not seem interested in taking price lower, so higher prices may be seen this week.
A demand/fake-out zone is an area to keep noted for possible long entries in the future (levels mentioned above) as price faked out below a major support level at 0.88454 and created a fantastic looking demand area.
Last week saw little action concerning this pair, price remained within demand at 0.92037 – 0.92825 for the entire week.
Near-term supply is seen at 0.93777 – 0.94466, do keep in mind though this area has been consumed with a deep spike (Shown with a circle), so be wary of entering short there. If prices are intent on going north this week, keep an eye on supply above at 0.95419 – 0.94893 as this remains an untouched area and may be where sellers are lurking.
Near-term demand is seen at the S/R flip area below current demand at 0.91446, this could prove a nice area to push prices higher during the week.
During the NFP announcement, price did as expected, a second test of the demand area at 0.92029 – 0.92299, but this time price went deeper than before consuming lots of buyers in the process.
The consolidation has expanded now due to the news spike down. At present price is trading in between supply at 0.93124 which is near to the previous weekly high at 0.93167, and demand that was used on Friday (level mentioned above) which is near the previous weekly low at 0.92037.
Price will likely remain in this range today, so this could be a good opportunity for range traders to play the limits here.
- Areas to watch for buy orders: 0.92029 – 0.92299
- Areas to watch for sell orders: 0.93124
- Most likely scenario: Price will likely stay within the range, hitting the limits either side.
The weekly long-term trend is currently up. Nothing drastic has changed over the past week on this timeframe.
Supply at 110.607 – 108.204 is a fantastic area for shorting opportunities in the future. This may seem a long way off, but it’s still a zone to be aware of in the future.
There has been no breach of near-term demand (S/R flip level – with trendline confluence) at 101.328 and is presently providing support to the market.
Price has not moved much at all last week, and is still trading within the daily range mentioned last week with supply seen at 104.831 – 104.121 and demand at 101.236 – 101.769.
Traders who enjoy the freedom of trading the higher timeframes may wish to trade the limits of this range that has formed, however do be cautious with your stops as consolidations such as these are common for fakeouts. Trend traders will do best to sit tight and wait for the break and retest to enter.
Amid the NFP chaos, price broke out of the consolidation between demand at 101.847 – 102.026 and supply at 102.781 as expected. This break turned out to be a fakeout which disorientated and stopped out a lot of traders who had their stops above the high (102.781). Price faked out right into a nice-looking supply area at 103.067 – 102.734.
Essentially the supply area just mentioned and demand at 101.847 – 102.026, we now have a new range/consolidation formed thanks to the NFP spikes as shown below.
- Areas to watch for buy orders: 101.847 – 102.026
- Areas to watch for sell orders: 103.067 – 102.734
- Most likely scenario: Price will likely stay within the range, hitting the limits either side.