The charts levels and zones will be color coded for the benefit of readers as follows:
Weekly TF = Black. Daily TF = Gold. 4hr TF = Brown
Price reacted beautifully off of supply (2) at 1.37941 – 1.37712 and broke through demand (3) at 1.37374 – 1.37487. The Euro has responded nicely to a small 4hr demand area marked with a check sign at 1.36973 – 1.37035 coupled with a round number (1.37000) providing additional support. The reason this area was not highlighted during the last analysis was because of the two tails just before the demand area was formed, these tails indicated price was able get below the level at that time, portraying selling strength, and was not worth the risk, but on this occasion it was proved wrong.
- Areas to watch for buy orders: N/A
- Areas to watch for sell orders: N/A
- Most likely scenario: For buyers to move price successfully from this current area of demand, they need to consume oncoming supply. Previous demand area (3) 1.37374 – 1.37487 which is now acting supply, needs to be consumed before price can rally any further, just because we are seeing buying strength, it does not mean it will continue. Our best bet is to WAIT! Not to initiate any long trades until some or all of the first supply area (mentioned above) is consumed as we do not want to get caught out with a possible fake out below to an even higher- timeframe weekly demand (shown on Monday’s weekly analysis) at 1.34470 – 1.36837. If we see a positive break north of the first supply/demand flip area (3) (levels above), then start looking for buying opportunities. If price breaks below demand at 1.36973 – 1.37035 then watch how price reacts at or around the weekly demand base-line area just below (levels mentioned above).
Taking into account the last analysis, which reported price may fake near-term demand at 1.68333 – 1.68513 to stop out any traders buying there. This fakeout did occur and a reaction was seen at the demand area just below at 1.68072 – 1.68260 as expected.
With all that being considered, we have just reacted off of a very strong 4hr supply area at 1.70410 – 1.69840 as well as being surrounded by a daily supply area at 1.70410 – 1.68880, and only 30-40 pips away from a weekly supply area at 1.76290 – 1.70490 (as shown on Monday’s weekly analysis), so sell orders are most viable for now.
Price is currently capped between demand at 1.68072 – 1.68260 and acting supply at the round number 1.69000.
- Areas to watch for buy orders: 1.68072 – 1.68260, 1.68000, and 1.67202.
- Areas to watch for sell orders: 1.69000.
- Most likely scenario: Price will likely trade in between temporary consolidation (demand: 1.68072 – 1.68260 supply: 1.69000) for a while, especially within the lower-volume sessions today until a decision is made to break. Range traders may see lower timeframe opportunities trading the limits, but caution is advised. A break below is more likely, if sellers manage to consume buyers at the round number 1.68000 below the demand area just mentioned, we then could see a nice drop due to previous price action to the left. Take a look at the small bold trendline, this area of price action indicates consumed demand, so in theory price should be able to drop freely here, until we see the demand area at around the low of 1.67202.
A beautiful reaction has been seen at the base of a 4hr minor demand zone (0.93186 – 0.93345). Price still remains capped between supply at 0.94253 – 0.94040 and demand at 0.93186 – 0.93345.
Again, as recommended in the last analysis, we are currently within a weak daily supply area at 0.94468 – 0.93758 due to a spike consuming sellers seen on the 10/04/14, it may be a good idea to be cautious executing short orders unless absolutely confident in your methodology.
- Areas to watch for buy orders: 0.93186 – 0.93345
- Areas to watch for sell orders: 0.94253 – 0.94040
- Most likely scenario: Similar to yesterday, price will likely be confined between supply at 0.94253 – 0.94040 and demand at 0.93186 – 0.93345 during the lower-volume sessions. Once volatility picks up, we will likely see an attempt to break either supply or demand (levels above) which will provide more information on where price may be heading next. According to the daily timeframe analysis, current daily supply appears weak and going short should be initiated with caution, however, 4hr supply at 0.94253 – 0.94040 looks like a great area for a bounce trade, with the minor demand area (levels above) set as a near-term target.
The USD/JPY pair is seen as being bullish, contrary to the last analysis where a retracement was expected from the S/R flip level (102.128).
A new demand area has formed at 101.851 – 102.048 which incorporates the round number 102.000.
Part of the last analysis mentioned price breaking the S/R flip level (level above) north, which recently happened. As a result a price void was entered into (a price void is an area where there is room for profit until the nest S/D area – in this case it is supply). A reaction off of the newly formed demand area (levels above) is currently taking place, notice how price faked through the S/R flip level to get to demand, taking stops (sell stops) from traders attempting to buy there, thus giving pro money liquidity to buy into. However, it is too early to tell today if this is a true fakeout at the time of writing.
- Areas to watch for buy orders: 101.851 – 102.048.
- Areas to watch for sell orders: 102.365, 103.055 – 102.742.
- Most likely scenario: Price will likely become calm around the new current demand area at 101.851 – 102.048 accumulating more buy orders. Once the more volatile sessions open up today, price will likely attack sellers waiting at the high (102.365), if a break is successful, we can be pretty sure price may reach upper supply area 2 at 103.055 – 102.742.