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
U.S Dollar index for correlation purposes:
Taking into consideration the last weekly technical forecast, it was reported that price may reach a near-term weekly demand area (1) at 1.34770 – 1.36837. A small reaction was seen last week at the upper limit of this demand area, resulting in price being capped between supply at 1.42470 – 1.38580, and the demand area that was just mentioned above. The market closed at 1.36951 closing below 11 prior weekly candles.
Does last week’s price action seal the deal for the bears? A deeper push south into demand is very likely, but be aware, even though this demand area is not fresh, active buyers may still be waiting deeper within the demand area, so a retracement may be seen sometime this week. So be on your guard! (Levels above).
Friday’s forecast saw a daily demand area (1.36727 – 1.37313) be consumed with a spike down, taking out most of the buyers’ stops and triggering breakout sellers’ orders who were attempting to sell beneath the zone. The reaction we have seen so far may be due to the buyers’ sell stops getting triggered, allowing the fresh buyers at the low 1.36432 to take advantage of this available liquidity (Sell stops – Breakout sells) to buy into. Also, bear in mind, we have over a week’s worth of selling from above, this is the perfect opportunity for pro money to liquidate some their sell positions (They need sell orders to achieve this as they will need to buy back their position).
Notice how on the USDX above, fresh supply at 80.65 – 80.49 is holding price down nicely, conversely on the Euro we have seen a spike below the daily demand area (levels above) at the same time. This means we may see a retracement on the Euro very soon due to the USDX not breaking supply as the Euro did the demand area.
A spike above 4hr supply at 1.37309 – 1.36890 marked with a brown circle was seen, despite that, just above there’s a 4hr demand/supply flip area marked number (3) at 1.37487 – 1.37374 meaning the wick above could easily have been a fakeout to this supply to move prices lower. If a positive close above the supply area (1.37309 – 1.36890) happens, this likely means the black circled area below was a fakeout of the daily demand zone (1.36727 – 1.37313) as discussed during Friday’s analysis. This coming week we should have more answers as to where the probable direction is.
- Areas to watch for buy orders: 1.36434 – 1.36696.
- Areas to watch for sell orders: 1.37309 – 1.36890.
- Most likely scenario: In light of the recent wick above 4hr supply (1.37309 – 1.36890) on Friday, price still remains capped between the supply area just mentioned and a demand area at 1.36434 – 1.36696. There’s not much reported data due out today, so do not expect anything drastic. Price will likely meander within where price is capped testing either supply or demand. If we do happen to see a positive break of either area, all the better, as we will have a more confirmed direction.
Considering the bearish reaction seen two weeks ago with buyers failing to reach the weekly supply area at 1.76290 – 1.70490, more bearish price action was seen with last week’s candle closing below the previous week’s close at 1.68153. Price is now seen trading at support which was prior long-term resistance to the weekly consolidation zone (1.67980 – 1.42273). Over the next coming weeks, it will become more apparent as to whether current price action is merely a fakeout above the consolidation area (levels above) similar to back in 2009 (first touch) or a continuation move higher.
Lower-timeframe analysis may provide more details.
This timeframe shows price dropped from a daily supply area at 1.70410 – 1.68880 and has seen a ‘standard’ reaction thus far. The low 1.67622 provided support to the market along with daily trendline confluence. A newly-formed supply area at 1.69963 – 1.69514 has been spotted within current daily supply (levels above).
The low just mentioned (1.67622) has cleared out the majority of buyers around this area with a sneaky spike down. A per this timeframe, price may rally up to the newly-formed supply area (levels above) to collect liquidity for a further push down to the S/R flip level at 1.66630.
Very similar to the Euro, the Pound has reacted at a recent demand area (1.67622) whilst the USDX reacted to a recent supply area at 80.65 – 80.49. For added confidence with your trading, look for the Pound to be in some sort of demand area and the USD to be in a supply zone.
Price completely consumed the demand/supply flip area at 1.68260 – 1.68072 shown in the chart below.
From price consuming this supply area mentioned above, a new demand area has been created at 1.67835 – 1.68062 incorporating the round number 1.68000 within as shown on the chart below. It is doubtful this area will carry much weight, as momentum from the base was very weak. Near-term supply remains at 1.68824 – 1.68714, and is a zone which may be weak due to a spike consuming sellers was seen recently.
- Areas to watch for buy orders: 1.67835 – 1.68062, 1.68000.
- Areas to watch for sell orders: 1.68824 – 1.68714.
- Most likely scenario: A quick recap is in order – The weekly timeframe has seen a break above long-term consolidation (1.67980 – 1.42273) and we are now seeing a retest. The daily timeframe shows support in the market around the low of 1.67622 with trendline confluence. Fresh supply is seen above at 1.69963 – 1.69514. The 4hr timeframe shows a minor demand area at 1.67835 – 1.68062 with a logical-fresh demand area below at 1.67236, near-term supply is seen at 1.68824 – 1.68714 which has seen a touch already so it’s not a fresh zone.
Taking all of this into consideration, we are likely to see higher prices this week, however do not discount the possibility of a retrace before this happens. Today’s action will likely not be too volatile due to weak data, so price will likely trade between supply at 1.68824 – 1.68714 and demand at 1.67835 – 1.68062.
Technically, not much has changed with this pair over the previous week. Price is currently trading around resistance at 0.93718 (weekly S/R flip level). Last week, a close above the prior week’s close by around 3 pips or so! Depicting what some traders call an ‘indecision candle’.
We still have to consider where would be the likely profit targets for pro money. It is doubtful it would be above to supply as the R:R is not big enough from where price is currently. The demand – fakeout zone below is more reasonable at 0.86601 – 0.88258.
This timeframe resembles ‘frustrating’ price action moving in and around weak daily supply (0.94468 – 0.93758) totaling about 80 pips range movement for the entire week!
Very similar to last week’s weekly forecast, Current daily supply (levels above) is very weak due to a spike through the zone consuming sellers made on 10/04/14. If a break is seen above, the likely area to be hit next is fresh daily supply just above at 0.95434 – 0.94862.
Taking into account we are currently at a weekly resistance level at 0.93718 (S/R flip level) and the bigger profit target is below, it makes logical sense for pro money to fakeout above the week daily supply area to the fresh supply orders above (levels above) to collect liquidity for a possible drop down. Remember, pro money cannot move the market if they have no one to buy and sell to, hence the need for stop runs/fakeouts etc…
On this timeframe, more information can be seen regarding what areas are actually containing price. The minor demand area at 0.93186 – 0.93345 has proved to be an area the market respects, similar to the supply area above at 0.94253 – 0.94040 which are both still currently capping price either side.
- Areas to watch for buy orders: 0.93186 – 0.93345, 0.92570 – 0.92745.
- Areas to watch for sell orders: 0.94253 – 0.94040, 0. 95434 – 0.94862.
- Most likely scenario: Price still remains capped either side of the market by a supply area at 0.94253 – 0.94040 and a demand zone at 0.93186 – 0.93345. These two areas are presently proving to be nice short-term opportunities. However, a break of either area is imminent. If, today a break above is seen, watch the fresh daily supply area above at 0.95434 – 0.94862 for a possible bearish reaction. Likewise, if a break below happens, look for likely buyers to come into the market at the demand area highlighted below at 0.92570 – 0.92745 as mentioned in last Monday’s weekly outlook.
Nonetheless, a break is highly unlikely today due to minimal market news being released; trading the limits between where price is capped could provide short-term returns, if entering on the lower timeframes.
A close below the weekly trendline has been seen, but as of yet, no close below the S/R flip level at 101.328. As per this timeframe, if we see a positive close below the S/R flip level (level above); be prepared for the possibility price may drop to a major weekly demand area at 96.564 – 98.231.
With the close below the weekly trendline, and price very deep within a daily demand area at 101.207 – 101.754, a break to the downside is looking very possible at the moment, but always remain aware of possible fakeouts!
Following a possible break below the demand area mentioned above, the next area of demand seen on this timeframe is 99.571 – 100.132 incorporating the huge round number: 100.000 which always attracts a lot of attention.
At the time of writing, price still remains capped between supply above at 104.842 – 104.174 and a weak-looking demand area at 101.207 – 101.754.
On this timeframe (chart 2) a buffer trendline has been added to show clearly where the break south occurred. Friday’s price action was quite disappointing as a bigger reaction was expected due to being at the weekly S/R flip level (101.328). A clear break of the 4hr demand area at 101.536 happened in the process of price dropping to the weekly S/R flip level. Price will have to make a decision soon as we are currently seeing serious weakness concerning the bulls.
Even though weakness is seen, do be prepared for a possible fakeout as mentioned above when analyzing the daily timeframe. To facilitate a fakeout the low at 100.927 with a round number (101.000) above for extra support marked with a black circle (chart 1), seems an ideal area to assist pro money with a possible fakeout just below the daily demand area at 100.927/101.000
- Areas to watch for buy orders: 101.328, 101.927, and 101.000.
- Areas to watch for sell orders: 102.000, 102.129 – 102.365.
- Most likely scenario: Price will likely not be too active today as not much high-impacting data is being released today. A push down may be seen to further test the buying strength at the weekly S/R flip area (101.328) Price may make an attempt up to the round number 102.000 as the supply/fakeout zone is seen just above at 102.129 – 102.365. If in the unlikely event a break of the daily demand area (101.207 – 101.754) is seen today, be prepared for buyers to come into the market at around the 100.927/101.000 area.