EUR/USD:
The single currency briefly dipped below 1.2350 and clocked a low of 1.2342ish on the back of Wednesday’s less-than-stellar Eurozone CPI. As you can see on the H4 timeframe, though, the pair quickly recovered (leaving nearby H4 demand at 1.2324-1.2339 unchallenged) and managed to strike a session high of 1.2397 going into the close.
According to the daily timeframe, yesterday’s movement registered its second consecutive daily indecision candle, as the unit hovers just south of a daily Quasimodo resistance level priced in at 1.2446. In view of weekly structure, however, the buyers and sellers remain battling for position within the walls of a weekly supply zone seen at 1.2569-1.2287 that has managed to cap upside activity since late January.
Potential trading zones:
Similar to Tuesday’s outlook, the team believes a fakeout of 1.24 up to February’s opening level at 1.2417 could be in store. A H4 bearish pin-bar formation, as drawn on the H4 chart, would be considered a reasonably strong sell signal, with an initial downside target objective set at the aforementioned H4 demand. Should price fail to print a bearish signal, be prepared for the euro to head higher and test the daily Quasimodo resistance mentioned above at 1.2446.
Data points to consider today: US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
GBP/USD:
Sterling suffered dramatic losses in excess of 100 pips on Wednesday following a considerably weaker-than-expected UK CPI. This move slightly undermined May BoE hike prospects and threatens Sterling’s seasonal bull run (the currency has rallied every April for the past 13 years).
After a brief spell below 1.42, the H4 candles attempted a recovery. The underside of a recently broken H4 demand base at 1.4236-1.4261 (now labeled as a resistance area), however, proved too much for the bulls this time as price retreated back to 1.42 into the day’s close.
On the daily timeframe, price action extended its downside move from 1.4393-1.4297: a daily resistance area. Further selling in this market could eventually bring the unit down to as far south as the daily Quasimodo support at 1.4012, which happens to intersect nicely with a daily trend line support taken from the low 1.3061. Turning over to the weekly timeframe, we can see that weekly price looks poised to test the recently broken long-term weekly trend line resistance taken from the high 1.5930.
Potential trading zones:
According to the weekly and daily charts, further downside may be on the horizon, at least until we witness a retest of the aforementioned weekly trend line.
Intraday, we’re likely to witness a break of 1.42. A decisive H4 close beyond this number will, as far as we can see, open up downside to H4 demand plotted at 1.4120-1.4139, which fuses beautifully with the noted weekly trend line! Therefore, not only could this area be a suitable downside target for short positions beneath 1.42, it could also be an area for potential longs.
Data points to consider today: UK retail sales m/m; MPC member Cunliffe speaks; US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
AUD/USD:
In recent sessions, the H4 candles sunk below March’s opening level at 0.7763, hitting a new low for the week of 0.7745, before reversing direction and touching into 0.7797. The surge higher, as you can probably see, formed a bullish engulfing candle on the daily timeframe, and has also positioned the H4 candles just south of a H4 resistance area at 0.7813/0.78 (61.8% H4 Fib resistance/round number).
The team continues to place emphasis on 0.7813/0.78 as an important area of resistance, as the zone houses the 2018 yearly opening level seen on the weekly timeframe at 0.7801.
Potential trading zones:
As 0.7813/0.78 has already rejected price once already (Friday 13th) orders within this zone may be weak. In addition to this, the team has noted concern over the recently formed daily bullish engulfing candle. Given these cautionary points, traders might want to consider waiting for additional candle confirmation in the shape of a H4 full or near-full-bodied bearish formation is advised before pulling the trigger. Should the area hold, the initial take-profit target can be seen at March’s opening level mentioned above at 0.7763.
Data points to consider today: Australian job’s data; US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
USD/JPY:
Although H4 price recently lifted higher from 107, the USD/JPY remains particularly lifeless, ranging no more than 40 pips on Wednesday. Further buying in this market will eventually see the unit collide with H4 mid-level resistance pegged at 107.50, which is shadowed closely by a minor H4 Quasimodo resistance at 107.72.
Turning over to weekly structure, resistance at 107.45 is currently in play. This level, as you can see, boasts a reasonably robust history and therefore could eventually force price action lower. In the event price reaches higher, however, the next port of call can be seen in the shape of a weekly supply zone at 110.48-108.68. Daily price, on the other hand, continues to jostle with resistance at 107.32. A violation of this line will likely place daily resistance at 108.52 in the spotlight, whereas a rejection to the downside has daily demand at 105.63-106.23 to target.
Potential trading zones:
Having seen weekly price associating itself with notable resistance at 107.45, as well as daily price with 107.32, entering into medium-term long positions is not something our team would label high probability. In addition to this, the overall trend firmly remains in a southerly position (see weekly chart).
Intraday levels to keep an eyeball on fall in at 107.50: a H4 mid-level resistance which held firm following the week’s opening gap higher and sits just five pips above the current weekly resistance. We would also remind traders to keep tabs on the minor H4 Quasimodo resistance seen just above it at 107.72. Both levels, in our opinion, have the ability to bounce price lower, despite housing limited H4 technical confluence.
Data points to consider today: US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
USD/CAD:
The Bank of Canada left interest rates unchanged at 1.25% on Wednesday, as expected. The bank reiterated its cautious approach and data-dependency, and trimmed growth forecasts for Q1. In the post-meeting press conference, Governor Poloz warned that rates may need to remain below the neutral range, which lent further weakness to CAD.
H4 price exploded higher following BoC movement, ripping through orders at 1.26 and only showing signs of stabilization after shaking hands with a H4 mid-level resistance at 1.2650. Judging by the reaction to this number (a reasonably sized H4 bearish candle), a retest of 1.26 is likely on the cards today.
Over on the bigger picture, daily resistance at 1.2627 continues to hold ground, despite suffering a breach to the upside during yesterday’s advance. A decisive break of this line will likely call for a move towards daily supply priced in at 1.2819-1.2747. On the other side of the spectrum, though, weekly price firmly rejected a rather interesting base of support yesterday at 1.2579: the 2018 yearly opening level.
Potential trading zones:
As weekly price shows room to extend gains from 1.2579 up to weekly supply at 1.2939-1.2815, entering long above the current daily resistance at 1.2627 is certainly an option on medium-term positions.
Intraday, however, the team has noted to keep a watchful eye on 1.26 for a potential retest play. A break above 1.2650 will place 1.27 in view as the next upside target for longs, followed then by the underside of daily supply at 1.2747 (which is where medium-term longs will also likely be targeting as their first upside objective).
Data points to consider today: US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
USD/CHF:
Among the worst performers on Wednesday, the Swiss Franc continues to trade on the back foot. The USD/CHF market rose for a second consecutive day, following a to-the-pip retest off of the 0.9650 support seen on the H4 timeframe, which was a noted level to watch for in Wednesday’s morning report. Well done to any of our readers who managed to jump aboard this move!
As shown on the H4 chart, this has firmly positioned the unit just south of 0.97. Higher up on the curve, the recent advance has also turned the spotlight on daily resistance at 0.9714, as well as the 2018 yearly opening level priced in at 0.9744 on the weekly timeframe. According to the three charts, therefore, upside is somewhat restricted in this market.
Potential trading zones:
As already highlighted above, upside in this market, we believe, is limited. For that reason, a rotation to the downside may be upon us in the near future. 0.97 on the H4 timeframe is likely a watched number by many in this market today. Caution is advised shorting from this region, though, since 14 pips above is daily resistance at 0.9714! And, 30 pips above this is the 2018 yearly opening level on the weekly timeframe at 0.9744. Anyone smell a potential fakeout play?
Ultimately, the team has stated the safer short is to wait for the weekly level to come into play. That way, you help avoid getting stopped out on a fakeout above 0.97 on the H4 timeframe or the 0.9714 daily resistance on the daily timeframe.
Data points to consider today: US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
DOW 30:
Trade on the Dow Jones Industrial Average was subdued on Wednesday, contained near levels seen at the tail-end of trade on Tuesday. The energy sector, however, outperformed as oil prices soared to levels not seen since 2014.
Price, as demonstrated on the H4 timeframe, has begun showing signs of bearish intent from 25024/24803. A H4 resistance area marked in red comprised of March’s opening level and a H4 Quasimodo resistance. In addition to this, let’s also remember that the H4 RSI indicator is currently displaying bearish divergence.
Housed within the current H4 resistance area is the 2018 yearly opening level at 24809 seen on the weekly timeframe. These levels, on average, produce a bounce, so we could possibly see a downward move form from here. In conjunction with weekly movement, daily action is seen trading within the walls of a daily supply zone priced in at 24977-24682, which happens to house the aforementioned 2018 yearly open line and has strong connections with the aforementioned H4 resistance zone.
Potential trading zones:
Given the bearish rejection played out amid Wednesday’s movement from 25024/24803, the H4 candles are likely headed lower to retest H4 demand brought in at 24150-24278. Beyond this area, the team has noted the H4 demand at 23356-23452 as the next downside target, which happens to be positioned just beneath a daily Quasimodo support at 23509.
Data points to consider today: US Unemployment claims; Philly Fed manufacturing index; FOMC members Brainard, Quarles and Mester all take to the stage.
GOLD:
Since the beginning of the week, bullion has been somewhat subdued. On the H4 timeframe, a bullish pennant formation is currently forming that has enclosed within it February’s opening level at 1345.1. Overhead, H4 resistance at 1356.8 is the next upside hurdle, whereas lower down on the curve there’s a H4 demand base located at 1330.9-1334.4.
The story on the weekly timeframe shows that the yellow metal recently retested the upper edge of a weekly bullish flag (1366.0/1307.2), positioned just ahead of the 2018 yearly opening level at 1302.5 (fuses closely with a long-term weekly channel support etched from the low 1122.8). Should the top edge of the current flag formation be taken out, weekly resistance at 1375.5 is the next base line on the hit list. As things stand on the daily timeframe, it’s clear to see that the yellow metal has spent over a month compressing within an ascending channel. The channel support is taken from the low 1236.6, while the channel resistance is extended from the high 1340.5. On this scale, we still see potential for this market to jolt either way within this formation.
Potential trading zones:
Intraday traders will likely want to keep tabs on H4 demand mentioned above at 1330.9-1334.4 for potential longs, and likewise, H4 resistance at 1356.8 for possible shorting opportunities.
On the bigger picture, sellers are likely weak around the top edge of the current weekly bullish flag, given last week’s breach seen marked with a green arrow. As of yet, though, little attempt has been made to push higher. Before this occurs, traders may want to prepare themselves for a test of the noted daily channel support. Should this come to fruition, intraday traders at the current H4 demand will likely experience a fakeout, due to the area being positioned just north of the daily channel support. Therefore, do keep this in mind!
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