The chart 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:
Regarding the last weekly forecast, it was reported that a deeper push down into weekly demand at (1.34770 – 1.36837) was likely. This deeper push was seen last week, but do still be on your guard for active buyers within this demand area even though it’s not fresh.
Price still remains capped between the demand area just mentioned and supply at 1.42470 – 1.38580.
The Daily timeframe shows the buy orders around the low 1.36432 were consumed on Friday, closing the market near the daily lows at 1.36321. The break of this low may have given us a possible direction for this week, allowing price to drop down to the next demand area at 1.34770 – 1.35557.
However, look at the daily USDX chart (above), notice the difference between the daily Euro chart? There’s no positive close above supply (80.65 – 80.49) on the USDX, whilst the Euro closed below a support (low – 1.36432). So, any traders thinking of selling this breakout may be best to hold fire for a day or two to see what unfolds, as a retracement may yet happen. The USDX is a great tool to add to your trading arsenal to determine a genuine break to a fakeout.
Price has completely consumed the 4hr demand area at 1.36696-1.36432, just below daily demand at 1.36727 – 1.37313. This break below the 4hr demand area confirms that the lower black circle was indeed not a fakeout of the daily demand area just mentioned; it was consumption, on this timeframe. Likewise, the two brown circles above 4hr supply at ( 1.37309 – 1.38690) were likely fakeouts.
Price has reacted off of broken 4hr demand (1.36696-1.36432) now acting as supply, and has a clear path down to a new demand area at 1.35623 – 1.35984 which was not clearly seen on the daily timeframe (shown on chart 2).
- Areas to watch for buy orders: 1.35623 – 1.35984, 1.36000.
- Areas to watch for sell orders: 1.36696-1.36432.
Most likely scenario: Depending on how the correlation between the USDX and the Euro plays out, price will likely use the demand/supply flip area at 1.36696-1.36432 to push prices down to a recently-seen 4hr demand area at 1.35623 – 1.35984 with the round number just above at 1.36000, as it appears there’s little buyers/demand left to stop price. Nonetheless, do not expect anything much today as both the Brits and the Americans have bank holidays.
Price is still currently trading between the weekly supply area at 1.76290 – 1.70490 and the top of the consolidation area, which is resistance now acting support at 1.67980.
Sellers were clearly more active last week seen in the medium-sized wick, though, could not maintain a close below the previous weekly candle’s close. No confirmation as to whether price is simply faking out above the long-term consolidation area at 1.67980 – 1.42273, or attempting a continuation move, only time will tell.
Let’s see what information the lower timeframes can give us.
The low 1.67622 provided a great area to go long a while back, and is currently supporting the market. Price attempted to test the newly-formed daily supply area at 1.69963 – 1.69514, but fell short at 1.69210.
Price is currently capped between supply at 1.69963 – 1.69514 and the low at 1.67622. We saw pro money consume the buy orders at the low just mentioned, so there is little to stop price from dropping to the daily S/R flip level sometime this week at 1.66630, which will be the most likely course price will take on this timeframe, as price is yet to reach the daily supply area above at 1.69963 – 1.69514.
This timeframe shows a much clearer view of price action. As per Friday’s analysis it was expected that price would likely react at the minor demand area at 1.68317 – 1.68427, this did not happen, and the area got consumed resulting in price being capped between a newly-formed supply at 1.68752 – 1.68558 and demand at 1.67835 – 1.68062, incorporating the round number 1.68000 within.
- Areas to watch for buy orders: 1.67835 – 1.68062.
- Areas to watch for sell orders: 1.68752 – 1.68558.
- Most likely scenario: Price will likely remain trading within where price is presently capped (Supply: 1.68752 – 1.68558, Demand: 1.67835 – 1.68062) as low volume is expected today due to both the UK and U.S being on holiday.
Wow! Would you look at that reaction off of the weekly S/R flip area at 0.93718, absolutely beautiful. The last weekly analysis reported a weak bullish close above the previous week’s candle body around 3 pips or so. Presently, the buyers are showing little interest as little to no reaction was seen on the timeframe.
This section is definitely worth remembering from the last weekly forecast:
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 trading. The demand – fakeout zone below is more reasonable at 0.86601 – 0.88258.
Well, as for the supply area 0.94468 – 0.93758 being weak, it certainly did not show any weakness yet! Strong sellers really took over the market last week. Buyers were seen at around the daily demand area (0.92054 – 0.92649), keeping price capped between both of these areas.
A break below this demand area could force price to test the daily S/R flip level below at 0.91446.
A break above daily supply (levels above) could still see price testing fresh daily supply at 0.95434 – 0.94862 as reported in the weekly forecast completed on the 12th May.
No break was seen on Friday between where price is currently capped (Supply: 0.92745 – 0.92570 Demand: 0.92037 – 0.92203 [including the round number 0.92000 just below]), which is deep within daily demand at 0.92054 – 0.92649, appearing weak due to the amount of deep touches seen.
If a break lower happens, price has very little to stop it from reaching the 4hr decision point (demand) at 0.91542 – 0.91741with the daily S/R flip level just below at 0.91446.
Likewise, if a break above happens, there’s little in the way to stop buyers pushing price up to the minor demand/supply flip area at 0.93345 – 0.93186.
- Areas to watch for buy orders: 0.92037 – 0.92203, 0.92000.
- Areas to watch for sell orders: 0.92745 – 0.92570
- Most likely scenario: As already mentioned, the U.K and the U.S are on holiday today, so price will likely trade within where price is currently capped (Supply: 0.92745 – 0.92570 Demand: 0.92037 – 0.92203).
Much the same as the last weekly analysis, another close below the weekly trendline was seen, and again, no close below the weekly S/R flip level (101.328). Last week price attempted to close below, but the buyers remained too strong for the sellers, resulting in a neat tail left behind.
It appears from this timeframe a fakeout has occurred; notice how the tail marked with a gold circle did not break the low 100.754 to the left marked with a black circle. Price closed at 101.915 with a small reaction seen at the broken weekly trendline acting as temporary resistance. At the time of writing, even with the fakeout below, price still remains capped between daily supply at 104.842 – 104.174 and daily demand at 101.207 – 101.754.
Price action shows more information on this timeframe. Price did partly as expected; a rally to at least the round number 102.000 was seen, with weekly trendline confluence. Price, however, did not retrace back to the fakeout area below at 100.927/101.000 before rallying, instead minor demand at 101.335 – 101.472 supported price for the rally.
Take a look at the two brown circles, these areas are likely where pro money retraced price to fill left-over buy orders, thus consuming most of the demand (buyers) at the base and just above minor demand (101.335 – 101.472), so in the future price should slide through here with ease trading deeper within this area.
- Areas to watch for buy orders: 101.335 – 101.472.
- Areas to watch for sell orders: 102.365 – 102.128, 102.000
- Most likely scenario: Price will not likely see much volatility today due to the bank holidays today (as already mentioned). Trading will likely occur within where price is currently capped (Supply: 102.365 – 102.128, Demand: 101.335 – 101.472).