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
EUR/USD:
Daily TF.
Previous 52-week/Monthly and Weekly highs (1.38934/1.39060/1.38892) stood no chance today with the bulls in full force.
A supply area at 1.39669 – 1.39317 has been identified, where a bearish reaction is currently being seen, but not with conviction. It is doubtful the selling pressure will be able to overcome the buyers, even if a retrace does persist.
The round number 1.40000 is so close; traders can smell the liquidity lurking around it. Expect serious sellers to be waiting here as a lot of traders around the world will be watching this figure. With so much attention around this small area, and the expectation of a reversal here, what will Pro money be thinking? A guess would be to try and gain as much liquidity for a big move in their favor. This big figure will not only have sellers waiting, but also buyers attempting to buy the breakout. A supply area above marked with a check at 1.42443 – 1.41146 is a perfect area to facilitate a fakeout of this big number. Swing traders trying to fade the area will have their stops 20 to 30 pips above the figure on average, these stops will be buy orders if/once they are triggered. Pro money will then sell into the buy stops in small batches of orders not allowing price to move too far from their entries. The supply zone above will just add fuel to the selling pressure for the fakeout to be completed.
So do keep a watchful eye on the big figure and the Daily supply area above it which is within weekly supply at 1.42445 – 1.38589 as mentioned on the weekly outlook analysis.
Demand on this timeframe is still seen at the S/R flip area at 1.37974, this was the last place serious buyers came into the market.
Here is just a reminder of how beautiful the supply marked with a check looks in history, who would not want to trade this area??
4hr TF.
After rallying for 2 consecutive 4hr candles up to Daily supply (levels above), price action shows buyers were totally in control for most of the day yesterday.
On this timeframe, two demand areas are worth noting down , the first, a decision point for price rally up to supply which is the highest of the two marked with an x,at 1.38709 – 1.38798 , and below, the demand area and origin of the whole rally at 1.38709 – 1.38798.
Either 2 of these demand areas may have active buyers waiting if price retraces far enough, so as always, trade with caution.
[ul]
[li]Areas to watch for buy orders: 1.38709 – 1.38798, 1.38709 – 1.38798, 1.37974[/li][li]Areas to watch for sell orders: 1.42443 – 1.41146, 1.40000, 1.42443 – 1.41146 [/li][li]Most likely scenario: Price will likely not see much reaction at the current Daily supply as most of the supply has been consumed previously. A touch of the 1.40000 is expected very soon.[/li][/ul]