A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD:  

Weekly gain/loss: + 62 pips

Weekly closing price: 1.0621

Following a three-week slide, renewed buying interest came into the market last week from the top edge of a major weekly support area at 1.0333-1.0502 that's bolstered by the 2017 yearly opening level at 1.0515. In the event that the bulls continue to push forward this week, the next upside objective in view can be seen at 1.0819/1.0873 (weekly resistance/the 2016 yearly opening base).

Since the 22nd February, the daily candles have been sandwiched between a daily support hurdle coming in at 1.0520 and a daily supply area drawn from 1.0676-1.0608. If this daily supply is violated this week the next level on the horizon is a nearby daily resistance seen at 1.0710. On the other hand, a downside move through the daily support could set that stage for a continuation move south down to a daily support level pegged at 1.0360.

A quick recap of Friday's action on the H4 chart shows that the pair ended the day on a positive tone, closing above the H4 trendline resistance extended from the high 1.0714. In spite of Janet Yellen's recent comments regarding a potential rate hike in March, dollar bulls were clearly not impressed!

Our suggestions: On account of the above notes, we see the following:

While the H4 candles did indeed close above a H4 trendline resistance, the bulls have to contend with not only the H4 resistance zone marked with a green circle around the 1.0630ish range, but also the daily supply mentioned above at 1.0676-1.0608!

On the other side of the coin, the break above the H4 trendline resistance could be viewed as a mark of strength given where weekly price has just bounced from.

Both of the above points are valid, in our opinion. However, trading this market based on either, as you can see, would place you in direct conflict with opposite structure. Therefore, although it may not feel like the right move, sometimes trading flat is the more logical position to take.

Data points to consider: FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GBP/USD:  

Weekly gain/loss: – 161 pips

Weekly closing price: 1.2293

Over the last week we saw the GBP fall sharply, which led to price taking out the 2017 yearly opening base at 1.2329. Nevertheless, what is particularly notable from the weekly chart is the fact that the pair came within 15 pips of striking the weekly Quasimodo support level at 1.22.

Zooming in and looking at the daily picture, the pair printed a relatively nice-looking daily buying tail going into the week's closing point, consequently breaking a five-day bearish phase. Of particular interest here is that the daily buying tail formed around the lower limits of a daily demand area seen at 1.2252-1.2342.

In previous writings, our desk highlighted the 1.22/1.2250 H4 area as a potential buy zone in this market. 1.2250 fuses with a H4 AB=CD (see black arrows) formation that completes around the 1.2229 neighborhood (taken from the high 1.2706). In addition to this, our zone was further bolstered by the 1.22 handle (yellow zone), which, as you can see, represents the weekly Quasimodo support line discussed above. Well done to any of our readers who managed to jump aboard Friday's move from here, as price recently touched gloves with the underside of the 1.23 handle!

In our humble opinion, this may be a good place to reduce risk to breakeven and take some profits off the table, as beyond 1.23 we see a minefield of potentially troublesome zones. Of course, this is not to say that price will not rally higher today/this week, it just pays to be on the side of caution in this business!

Our suggestions: Unless price trades back into our above mentioned H4 buy zone, we see very little else to hang our hat on at the moment.

Data points to consider: MPC member Hogg speaks at 11.30am. FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: 1.22/1.2250 ([wait for a reasonably sized H4 bull candle to form within the zone before looking to pull trigger here] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

AUD/USD:  

• Weekly gain/loss: – 73 pips
• Weekly closing price: 0.7593

After two weeks of sluggish action seen around the weekly trendline resistance stretched from the high 0.8163, price eventually sold off last week and brought the unit to a low of 0.7543. As a result of this, our crosshairs will be fixed on the weekly support area at 0.7524-0.7450 this week.

Daily demand at 0.7511-0.7543 (positioned around the top edge of the above noted weekly support area) on the other hand remained firm on Friday, and by the looks of things will likely force price to cross swords with the nearby daily resistance at 0.7609 sometime today.

During the course of Friday's sessions, Fed Chair Janet Yellen alluded to the possibility of a rate hike in March. Despite this strong signal for bullish dollar upside, the currency tumbled lower and sent the Aussie higher! As of the week's close, the couple is seen lurking within touching distance of the 0.76 hurdle, which, as we're sure you can already see, is located just below the aforementioned daily resistance base (yellow zone).

Our suggestions: Through the simple lens of a technical trader, the 0.76 region is likely going to hold this unit lower today. Therefore, we believe that between 0.7609/0.76 is a prime location to hunt for lower-timeframe shorting opportunities (see the top of this report for ideas on entry signals). The first take-profit line, at least for our team, will likely be February's opening level at 0.7577, followed closely by the H4 mid-way support at 0.7550.

Data points to consider: Australian retail sales at 12.30am. FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7609/0.76 region ([wait for a lower-timeframe signal to form before looking to pull the trigger] stop loss: dependent on where one confirms the zone).

USD/JPY:  

Weekly gain/loss: + 188 pips

Weekly closing price: 114.02

Twenty five or so pips ahead of the weekly support area at 111.44-110.10, a strong-looking weekly bullish engulfing candle took shape last week. On the assumption that the bulls remain in the driving seat here, the next area of value can be seen at 116.97/116.08 (the 2017 yearly opening level at 116.97 and weekly resistance at 116.08).

Since mid-January, the daily candles have been consolidating between a daily resistance area carved from 115.62-114.60 and a daily demand base seen at 111.35-112.37. Perhaps the most compelling factor here is that the daily bears recently connected with the top edge of this range. This, of course, poses a small problem as weekly action suggests further upside could be on the cards.

A brief look at recent dealings on the H4 chart shows that price immediately jumped to a high of 114.74 following the release of Yellen's comments. However, as you can see, the rally was a short-lived one with price spending the remainder of the US segment tumbling lower.

Our suggestions: While H4 price did pierce through the 114 handle quite aggressively on Friday, it managed to hold firm into the closing bell. With that being said though, buying from here knowing that daily price is trading from a resistance area is not really something that our team would be comfortable with. On a similar note, a break below 114 boasts little wiggle room to the downside as a H4 demand area is seen lurking at 113.47-113.70. And, of course, not to mention the fact that you'd be selling against potential weekly buyers!

As far as we can see, technical elements are too mixed for the time being leaving us with little choice but to remain flat for now.

Data points to consider: FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD:  

Weekly gain/loss: + 279 pips

Weekly closing price: 1.3375

The US dollar made considerable ground against its Canadian counterpart last week, lifting weekly action up to the 2017 yearly opening level at 1.3434 which intersects beautifully with a weekly trendline resistance taken from the high1.4689.

In conjunction with the weekly timeframe, daily price caught an offer from the underside of a daily supply area logged in at 1.3461-1.3426 on Friday and chalked up a nice-looking daily selling wick. However, it may be worth noting that although both the weekly and daily charts present a rather bearish tone at the moment, there is a daily support area at 1.3387-1.3317 also now in play!

In Friday's report, we mentioned to keep an eyeball on the H4 zone at 1.3434/1.3419 for shorting opportunities. This green area comprises of November, December and January's opening levels! As can be seen from the H4 chart, this zone did in fact hold prices lower so well done to any of our readers who managed to net some green pips here!

Moving forward, we have the following H4 support structures ahead:

The H4 broken Quasimodo line at 1.3353.

March opening level at 1.3312.

The 1.33 handle.

These three zones, coupled with the current daily support area, may pose problems for sellers this week.

Our suggestions: At current price, we would ideally need H4 price to close below the 1.33 region before our team would be comfortable looking for shorts again. Still, should the pair pullback today and retest the green H4 sell zone mentioned above, we would consider entering short from here on the basis that we're able to pin down a lower- timeframe sell setup (see the top of this report for ideas on how to find such a signal).

Data points to consider: FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.3434/1.3419 ([wait for a lower-timeframe signal to form before looking to pull the trigger] stop loss: dependent on where one confirms the zone).

USD/CHF:  

Weekly gain/loss: + 5 pips

Weekly closing price: 1.0075

USD/CHF prices, as you can see, are little changed, with the pair seen penciling in a weekly indecision candle last week. Of particular significance here, however, is the fact that the tail of the above noted weekly indecision candle struck the 2016 yearly opening level at 1.0029. Providing that this base holds ground this week, there's a chance that we may see weekly action shake hands with the 2017 yearly opening line coming in at 1.0175.

Looking down to the daily chart, we can see that price remains loitering mid-range between a daily supply at 1.0248-1.0168 (houses the 2017 yearly opening level mentioned above) and a daily demand base drawn from 0.9929-0.9975.

Reviewing Friday's movement on the H4 chart shows that despite Janet Yellen's recent comments regarding a potential rate hike in March, the pair generated little follow-through buying! Instead, the pair turned red and headed southbound, ending the week in bearish territory beyond the 1.01 handle.

Our suggestions: Based on the above notes, our desk has the following logged:

For longs, the H4 Quasimodo support at 1.0024 looks in good shape. This level boasts: a H4 channel support line taken from the low 0.9929 and the 2016 yearly opening level marked above at 1.0029. However, there is one cautionary point to consider here! Notice that parity sits just below this barrier. This number is a closely watched level and could potentially drag the unit below our Quasimodo base. Therefore, waiting for a lower-timeframe confirming setup to form before pulling the trigger would, in our opinion, be the safer route to take.

For shorts, our team still has their beady little eye on the 1.02/1.0170 (yellow zone) neighborhood. The area comprises of the following converging structures: both December and January's opening levels at 1.0170/1.0175, a H4 trendline resistance pegged from the high 1.0118, a H4 Quasimodo resistance at 1.0197, a 1.02 psychological handle and let's not forget that all of this is seen housed within the daily supply zone coming in at 1.0248-1.0168. In light of this confluence, our team will, dependent on the time of day, look to sell from the 1.0175 neighborhood, with stops placed a few pips above 1.02.
Data points to consider: FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: 1.0024/1.0029 region ([wait for a lower-timeframe signal to form before looking to pull the trigger] stop loss: dependent on where one confirms the zone).
• Sells: 1.0175 region ([an area one could possibly trade at market] stop loss: 1.0205).

DOW 30:  

Weekly gain/loss: + 187 points

Weekly closing price: 20990

The US equity market continued to climb north last week, registering its fourth consecutive weekly gain! With equities now trading at record highs, where do we go from here? Well, given that there is absolutely no weekly resistance levels in sight, the best we can do for the time being is continue looking to ‘buy the dips'. The closest higher-timeframe area can be seen at 20714-20821: a daily demand zone.

Stepping across to the H4 candles, we can see that Friday's action was fairly lackluster despite the Fed Chair Janet Yellen voicing intentions to hike rates in March. As is evident from the chart, the index closed the week below the 21000 mark, which could call for a continuation move south down to the H4 demand base drawn from 20837-20869.

Our suggestions: In light of the above points, we still have absolutely no intention of looking to short this unit.

We would rather look to buy from the above noted H4 demand, or even the H4 demand seen below it at 20769-20801, which happens to be positioned within the walls of the aforementioned daily demand zone! The interesting thing here is that in between these two H4 barriers (the yellow zone) is March's opening level at 20824 and a possible H4 AB=CD completion point at 20813 (see black arrows). To that end, should we see price strike the yellow zone today/this week, our team would, assuming that a reasonably sized H4 bull candle took shape, look to buy from here with stops either placed below the trigger candle or below the H4 demand at 20769-20801.

Data points to consider: FOMC member Kashkari speaks at 8pm GMT.

Levels to watch/live orders:

• Buys: 20801/20837 region ([wait for a reasonably sized H4 bull candle to form before looking to pull trigger here] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

GOLD:  

Weekly gain/loss: – $21.6

Weekly closing price: 1234.3

After four weeks of continuous buying the gold market took a turn for the worse last week, chalking up a beautiful-looking bearish engulfing candle! Further losses could be seen this week given that this bearish candle formation also formed around a weekly resistance barrier drawn from 1241.2. The next weekly support target on tap comes in at 1180.1: a long-term support and resistance level that stretches right back to mid-2013!

While the weekly bears look set to chase lower prices this week, the daily chart shows that Friday's movement penciled in a daily buying tail out of a daily support area at 1232.9-1224.5. With this in mind, not only have we got two conflicting candlestick signals here, we also have two opposing structures!

Leaving the H4 Quasimodo support level at 1221.7 unchallenged, comments from the Fed Chair Janet Yellen sparked a round of buying on Friday and brought the yellow metal up to the underside of a H4 resistance zone at 1235.7-1238.1. Of course, a selloff from this area is a possibility today, given where price is positioned on the weekly timeframe at the moment. However, selling from here would involve trading against potential daily buyers! Along the same vein, a break above the current H4 resistance area may set the stage for a continuation move north to the March opening base at 1245.9. Nevertheless, in order to take advantage of this move you would need to be willing to trade against possible weekly sellers!

Our suggestions: In the absence of clearer price action, we have decided to remain flat during today's trading.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

STOCKS

Dow (21005.71, +0.01%) could possibly test 20750 or a little lower before again bouncing back towards 21500 in the medium term. Immediate resistance near 21200-21500 levels may hold for a couple of sessions. Overall medium term trend is up.

Dax (12027.36, -0.27%) came off from resistance on the daily candle chart near 12090 and while that holds, we may expect a dip towards 11900 in the next few sessions. Overall view is bullish just now. Only on a break below 11900, can we shift our focus on lower levels of 11800-11700. For now we keep open chances of testing 12100-12170 while above 11900.

Nikkei (19373.60, -0.49%) came back to levels below 19400 after staying at higher levels for only 2-sessions. Was this a false break on the upside? In that case there could be a fall towards 19200-19000 levels in the medium term. Else a bounce back to levels above 19400, may take it higher in line with our expectation.

Shanghai (3229.22, +0.34%) is testing the 21-day MA as an immediate support and if that holds, we could see a bounce back towards 3275 and higher in the medium term. View is bullish for the coming sessions.

Nifty (8897.55, -0.02%) has faced rejection from levels near 9000 but is stuck in the 8850-9000 region for the last few sessions. While crucial resistance near 9000 holds, we may expect a fall towards 8800 or lower in the near term. Else, there could be some consolidation within the 8800-9000 region for some more time.

COMMODITIES

Gold (1234) is trading within its sideways range of 1212-1275. Unless it will manage to close above 1247-50, it will be difficult for gold to move higher.Gold/WTI ratio is at 23.02 with a resistance at 23.50,may came down towards 21 or even lower.

Silver (17.83) is holding its upward trend line support of 17.62.A close above 18 could open up the resistance of 18.60. A close below 17.45 could be trend reversal.

Copper (2.68) is hovering around its pivot of 2.768 of its recent trading range of 2.60-83. It is holding its upward trend line support at 2.65-68 since October 16.

Brent (55.59) and WTI (53.12) both are trading within their sideways ranges of 54-58 and 52-55 with no directional bias. Weekly Brent-WTI spread is at 2.13, took support at 2 and may bounce back towards 2.5-3.

FOREX

With a rate hike in March well accepted and discounted in the prices, the markets will look forward to RBA meet tomorrow and ECB meet on Thursday, 6th March'17. While Geopolitical tensions may drive Yen this week, the Indian markets will wait for the all important State Elections result on Saturday, 11th March'17.

Contrary to expectations, Dollar Index (101.44) retreated sharply but the trend remains up till it stays above the medium term support near 101.00-100.70. It may trade sideways in the range of 100.70-102.25 this week.

The main driver for Euro (1.0607) in the recent times has been the French election and a collapse of the centre-right candidate Francois Fillon's campaign has shot it up to the 3-week high and our resistance 1.0620 levels but a failure to rise above 1.0620-30 immediately may keep it range bound in 1.0500-1.0630 till the ECB meet on 9th Mar'17.

Dollar-Yen (113.78) has been unnerved by North Korean missile launch this morning and with the uptrend a bit weakened now, horizontal trade in the range of 113-115 looks more likely instead of the previously expected rise.

Fresh concerns about a second referendum on Scottish independence keep Pound (1.2285) weak. As discussed previously, further consolidation may be seen near the interim support 1.2200 before it declines further towards 1.2100-2085 levels.

Aussie (0.7573) is waiting for the RBA meet tomorrow but barring any surprise tomorrow, the central bank is widely expected to keep the rates unchanged. The currency may test the near term support zone 0.7520-00 before declining further to lower levels of 0.7450.

Dollar-Rupee (66.81) remained stable in the very narrow range of 66.80-90 on Friday but may test the long term support near 66.50 from where it may bounce back to 67.00-20 this week.

INTEREST RATES

Probability of a rate hike in March has increased and Yellen has also given an indication of this in her Friday's speech. The US yields may rise in the near term.

The US yields have risen. The 5Yr (2.00%), 10Yr (2.47%) and the 30Yr (3.07%) are almost stable just now but have come up to test resistance levels which may hold in for the next couple of sessions. The 30Yr (3.07%) may face immediate resistance near 3.10% which could produce some rejection in the near term.

The German-US 2Yr (-2.12%) had bounced back from levels near -2.20% but could see some pause to see another dip in the near term. A rise towards -2.05% is possible on the upside followed by another sharp rejection which could take it lower towards -2.20% again. We need to keep an eye on this closely.

The US-UK 10Yr (-1.29%) has paused near current levels and in case a small bounce is seen, we could expect some recovery in the Pound after the sharp fall seen last week.

The UK yields have risen, the 5YR rising the most from 0.3150% to 0.5740% in just 2-sessions. The 10YR (1.18%) and the 20Yr (1.72%) are also trading higher and could move up in the near term.

EUR/USD

The EUR/USD pair closed the week a 1.0620, with the American dollar down on Friday, despite Fed's Yellen pretty much confirmed a March hike. The head of the US Central Bank spoke about the US economic outlook at the Executives Club of Chicago, and said that policymakers are ready to act at their next monetary policy meeting, if employment and inflation stay in line with officers expectations. She also added that two more rate hikes this year are likely, as the bank is now working to prevent the US from overheating. The US also released encouraging macroeconomic figures last Friday, as the ISM non-manufacturing PMI rose to 57.6, the highest since April 2015, from 56.5 in January. The Markit services PMI on the other hand, was revised slightly lower to 53.8 from a flash reading of 53.9 and 55.6 in January.

The American currency retreated on profit taking ahead of the weekend, as Yellen pretty much confirmed what Fed's members have been anticipating all through the week, particularly ahead of the release of the US Nonfarm Payrolls report this Friday. Also, the common currency found some support on news that French far-right leader Marine Le Pen was summoned by a judge Friday over allegations of misusing European Union funds.

The EUR/USD pair recovery was enough to trim previous week's losses, but not enough to confirm further gains ahead, or even to confirm a bottom, as the price has been unable to extend beyond the 1.0630 region for a third consecutive week. The daily chart shows that the recovery stalled below a sharply bearish 20 SMA, whilst the Momentum indicator has turned flat around its 100 level, failing to enter positive territory, whilst the RSI hovers around 43. In the 4 hours chart, technical readings support a short-term bullish continuation, as the price broke higher pass its 20 and 100 SMAs that anyway maintain their bearish slopes, whilst technical indicators hold well above their mid-lines, barely paring their advances ahead of the weekly close. The recovery can extend up to the critical 1.0700/20 price zone, although strong selling interest is expected to surge around this last, if reached.

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0635 1.0660 1.0710

USD/JPY

The USD/JPY pair closed the week with strong gains around 114.00, but pulled back on Friday from 114.74 as the dollar eased against all of its major rivals. The USD/JPY pair has been trading in a well-limited range ever since early February, with the upside capped by 114.55, the 23.6% retracement of the November/December bullish run. On Friday, Bank of Japan Deputy Governor Hiroshi Nakaso said that the current policy framework offers the flexibility and sustainability to achieve the BOJ's "strong commitment" to raising inflation to a goal. Dollar's strength ever since Donald Trump won the US elections has taken some steam off the Central Bank as the JPY weakened, although the uptick in inflation has been quite shallow so far. From a technical point of view, the daily chart shows that the price has recovered above a bullish 100 DMA, now the immediate support at 113.50, but also that technical indicators lack upward strength, and hover within neutral territory. In the 4 hours chart, technical indicator have pulled down sharply from overbought levels, with the Momentum poised to enter negative territory, whilst the 100 and 200 SMAs converge at 113.25, providing a not so strong support due to the lack of directional strength. February's high stands at 114.95, and the pair needs to settle above it to be able to shrug off its negative tone.

Support levels: 113.50 113.25 112.90

Resistance levels: 114.55 114.95 115.30

GBP/USD

The USD/JPY pair closed the week with strong gains around 114.00, but pulled back on Friday from 114.74 as the dollar eased against all of its major rivals. The USD/JPY pair has been trading in a well-limited range ever since early February, with the upside capped by 114.55, the 23.6% retracement of the November/December bullish run. On Friday, Bank of Japan Deputy Governor Hiroshi Nakaso said that the current policy framework offers the flexibility and sustainability to achieve the BOJ's "strong commitment" to raising inflation to a goal. Dollar's strength ever since Donald Trump won the US elections has taken some steam off the Central Bank as the JPY weakened, although the uptick in inflation has been quite shallow so far. From a technical point of view, the daily chart shows that the price has recovered above a bullish 100 DMA, now the immediate support at 113.50, but also that technical indicators lack upward strength, and hover within neutral territory. In the 4 hours chart, technical indicator have pulled down sharply from overbought levels, with the Momentum poised to enter negative territory, whilst the 100 and 200 SMAs converge at 113.25, providing a not so strong support due to the lack of directional strength. February's high stands at 114.95, and the pair needs to settle above it to be able to shrug off its negative tone.

Support levels: 113.50 113.25 112.90

Resistance levels: 114.55 114.95 115.30

GOLD

Gold bounced on Friday from a fresh 2-week low of 1,222.80, but closed the week with strong losses, with spot at $1,234.15 a troy ounce, bearing anyway pretty well with dollar's strength and the possibility of a March rate hike in the US. The bright metal has been under pressure ever since topping at 1,263.79 at the beginning of the week, undermined by Fed's officers rhetoric, supporting a rate hike as soon as this March, reiterated on Friday by head's Yellen. The bright metal settled above the 50% retracement of the post-US election slump, at 1,230.00, although in the daily chart the price is below a now horizontal 20 DMA, after failing to surpass the 200 DMA, whilst technical indicators present a downward slope, but so far hold above their mid-lines, indicating an increasing bearish potential. In the 4 hours chart, the 20 SMA has turned sharply bearish above the current level and is about to cross below the 100 SMA, while technical indicators have managed to recover from oversold readings, but turned flat within bearish territory.

Support levels: 1,230.00 1,222.80 1,210.90

Resistance levels: 1,238.60 1,245.50 1,255.20

WTI CRUDE

West Texas Intermediate crude oil futures closed the week with modest losses at $53.20 a barrel, recovering on Friday from a fresh 3-week low of 52.53, as the dollar eased against all of its major rivals. Oil was also supported by news coming from the OPEC as early reports of February compliance suggest the organization was close to the 100% in the month. On the downside, the oilfield company Baker Hughes reported that the number of active drilling rigs rose for a seventh consecutive week, up by 7 to a total of 609. From a technical point of view, the daily chart shows that the commodity closed below a horizontal 20 DMA but above a modestly bullish 100 DMA, this last around 51.50, while the Momentum indicator remains flat around its 100 level, and the RSI heads modestly higher around 46, all of which limits chances of a steeper recovery. In the 4 hours chart, the price is well below all of its moving averages, with the 20 SMA having already crossed below the 100 SMA and now converging with the 200 SMA at 53.40, and technical indicators heading nowhere within negative territory, in line with the longer term perspective.

Support levels: 52.50 51.90 51.40

Resistance levels: 53.70 54.20 54.80

DJIA

US equities closed modestly higher on Friday, with the Dow Jones Industrial Average up 2 points, to 21,005.71. The Nasdaq Composite added 9 points and closed at 5,870.75, while the S&P ended at 2,383.12, 0.05% higher. Financial-related equities soared on Yellen's comments about a possible rate hike this March, if employment and inflation continue within FED's expectations. Within the Dow, Caterpillar was the best performer, up 0.81%, followed by Merck & Co that added 0.76%. Nike led decliners, shedding 1.90%, followed by Wal-Mart that closed 1.03% lower. The DJIA daily chart shows that it held far above a bullish 20 DMA, while the Momentum indicator heads sharply lower within positive territory, and the RSI consolidates at 77, correcting part of the extreme overbought readings reached in the week. In the 4 hours chart, the index hovers around a bullish 20 SMA, while the RSI indicator consolidates around 54, but the Momentum indicator heads sharply lower within negative territory, anticipating a downward corrective move on a break below 20,934, Friday's low and the immediate support.

Support levels: 20,934 20,882 20,827

Resistance levels: 21,064 21,114 21,164

FTSE 100

The FTSE 100 closed at 7,374.26 on Friday, down daily basis by 8 points or 0.11%, but firmly higher weekly basis and at record highs. Investors were cautious ahead of speeches from US key policymakers, including FED's head Janet Yellen. A weaker Pound provided support to local equities, although plummeting WWP dragged the benchmark lower. The world's largest advertising company closed down 7.95%, topping losers' list after reporting a sharp decline in its revenue growth. Fresnillo was also among the worst performers, down 2.89%. Old Mutual led advancers adding 1.81%, followed by Standard Live that closed 1.75% higher. Ahead of the weekly opening, the index retains the positive tone, although with no upward strength, as it holds above a bullish 20 DMA, but technical indicators turned modestly lower, the Momentum around its mid-line and the RSI at 66. In the 4 hours chart, the index remains well above a strongly bullish 20 SMA, whilst technical indicators retreated from overbought readings, supporting a downward corrective move on a break below Friday's low at 7,352.

Support levels: 7,352 7,320 7,287

Resistance levels: 7,397 7,420 7,450

DAX

European equities closed in the red on Friday with the German DAX down 32 points to 12,027.36. In the region, banks were among the best performers, while commodity-related equities led declines. Despite Friday's poor performance, the DAX ended above 12,000 its highest weekly settlement since April 2015. Commerzbank topped winners' list, up 4.14%, followed by RWE AG that added 1.36%. Deutsche Bank was the worst performer, down 5.45%. The bank supervisory board is meeting on Sunday to discuss a $8.5B capital raise, after announcing on Friday that its planning an equity offering and the sale of part of its asset management unit after failing to find a buyer for its Postbank consumer business. Technically, the daily chart shows that the benchmark remains firmly above all of its moving averages, while the Momentum indicator holds above its 100 level, lacking certain directional strength and the RSI indicator retreats partially from overbought readings. In the 4 hours chart, the 20 SMA maintains a sharp bullish slope well below the current level, while technical indicators are pulling back from overbought territory, favoring a short term downward correction, particularly on a break below 11,989.

Support levels: 11,989 11,938 11,867

Resistance levels: 12,053 12,100 12,148

GOLD - The commodity closed lower the past week though with caution. On the downside, support comes in at the 1,240.00 level where a break will turn attention to the 1,230.00 level. Further down, a cut through here will open the door for a move lower towards the 1,220.00 level. Below here if seen could trigger further downside pressure targeting the 1,210.00 level. Conversely, resistance resides at the 1,260.00 level where a break will aim at the 1,270.00 level. A turn above there will expose the 1,280.00 level. Further out, resistance stands at the 1,290.00 level. All in all, GOLD looks to strengthen further.

Whatever debate there was regarding the March 15 FOMC was indeed settled by Fed Chair Janet Yellen's remarks to the Executives' Club of Chicago on Friday. March is on! Equity markets took the comments in stride as investors view the rate hike as a positive reflecting an economy that is strengthening. Forex markets reaction was somewhat guarded as the dollar came off intraday highs with the March rate hike is now completely priced. This price action suggests that further dollar upside is limited near term. We've moved from 30 to 80 % probability for a March hike in a mere two weeks, so post-Yellen profit taking was always in the cards. Although I view the March hike as a preemptive strike, I suspect at this stage only an outlier NFP similar to last May which derailed the Fed's June 2016 rate hike, would alter the FOMC decision for March. But the real concern for dollar traders is the trajectory for interest rates in 2017. Dr Yellen did take the sting out her Hawkish delivery, by referencing data dependency. However, if the data suggests that employment and inflation are close and if President Tump follows through with infrastructure spending and tax cuts, traders will then start thinking about the possibility of the fourth hike in 2017, and this will boost the US dollar outlook significantly

Australian Dollar

Eyes will be on today's RBA cash rate decision, and while the RBA is unlikely to shift away from its neutral stance, as usual, the markets will be attuned to the Central Banks views of both domestic and international markets evolution

In early trading, the Aussie is perched just below 76 on a combination of USD longs profit taking and buoyant risk sentiment after equity markets took Dr Yellen remarks well. So long as the global growth story line remains firmly intact, support for the Aussie dollar should remain robust near-term

Japanese Yen

USDJPY continues to hold, but the topside momentum based on March has slowed considerably. As we enter the Fed blackout period, the dollar will get zero support like it did last week from the hawkish chorus of Fed speakers that were underpinning the Greenback. Dealers are looking at 114.95 ( FEB High) as the key for further topside momentum, but at his stage, it's looking like a bridge too far to cross.

Euro

The EUR risk profile in EUR changing with high PMI and inflation was surging. Rate curve volatility is picking up so the higher rates should keep EUR supported near term even more so as French election risk is abating with Le Pen losing ground in the polls.

Welcome back to your screens for another week. I hope your weekend was refreshing and you’re back ready to crush another trading week!

What better way to spend your Monday Asian session than analysing EUR/USD starting with a clear as day 4 hourly support level on the 4 hourly.

EUR/USD 4 Hourly:

So as you can see, we have a pretty obvious support level at the bottom of the chart thanks to that juicy double bottom.

Both touches of the level come within just a 6 pip zone and more importantly, both touches of the level were met with immediate buying to push out of the level HARD.

EUR/USD 15 Minute:

Zooming into the intraday chart with the period separators on to represent days of the week, you can see that last Thursday push into the higher time frame level was then followed by the multiple chances to get long on any short term pullback into previous resistance that we’d look to act as support.

As the market opens for the week, the highest one shows that the bulls are still in control and we still have a long entry available to start the week if you don’t think the ship has already sailed.

Finally, I just wanted to bring up this daily EUR/USD support level that price held before Draghi helped pull the pair back down again.

USDCHF: The pair rejected higher prices the past week leaving risk lower. On the downside, support lies at the 1.0000 level. A turn below here will open the door for more weakness towards the 0.9950 level and then the 0.9900 level. On the upside, resistance resides at the 1.0100 level where a break will clear the way for more strength to occur towards the 1.0150 level. Further out, resistance comes in at the 1.0200 level. All in all, USDCHF remains biased to the downside on price weakness.

EURUSD: The pair saw a price rejection the past week, leaving risk higher in the new week. On the upside, resistance comes in at 1.0650 level with a cut through here opening the door for more upside towards the 1.0700 level. Further up, resistance lies at the 1.0750 level where a break will expose the 1.0800 level. Conversely, support lies at the 1.0600 level where a violation will aim at the 1.0550 level. A break of here will aim at the 1.0500 level. All in all, EURUSD faces further downside pressure medium term but faces recovery higher.

Dollar strength dominated the forex markets most of the time last week as speculations of a Fed hike in March heated up. Markets were also relieved as US president Donald Trump's first address Congress didn't deliver anything dramatic. Stock indices surged to new record high, taking yields and Dollar up too. Nonetheless, as most of the positive factors in greenback were priced, traders took profit on Dollar long positions after Fed chair Janet Yellen's comments. And more importantly, Euro staged a U turn after polls showed that far-right French president candidate Marine Le Pen lost ground, thus reducing Frexit risks. Euro has indeed ended as the strongest major currency, followed by Swiss France and Dollar. On the other hand, Canadian dollar ended as the weakest on the sharp pull back in oil price.

Fed Yellen affirmed March hike "would" likely be appropriate

After a chorus of hawkish Fed comments, fed fund futures are now pricing 79.7% chance of a rate hike at March 14/15 FOMC meeting. That's more than double of prior week's pricing. Fed chair Janet Yellen's speech on Friday affirmed such expectations. Yellen said that "at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate." And, she also emphasized that "the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016." This affirmed Fed's last projection of three rate hikes this year. Meanwhile, the new staff projections to be released this month will now be even more important if Fed does hike. We'd like to see if Fed would project a total of four hikes this year.

Euro rebounded as Le Pen lost ground

However, Dollar's strength was overwhelmed by the common currency. Euro has been under much pressure recently due to political uncertainties. It's indeed the weakest one last month. A key factor to watch is French election in April and the run-off in May. A win of anti-Euro far-right leader Marine le Pen will significantly increase risk of Frexit. On Friday, a poll by research firm BVA found that Le Pen would get 26% of votes in the first round in May, down 1.5% from the prior poll on February 23. On the other hand, centrist Emmanuel Macron got 24%, up 3% from prior poll. Conservative Francois Fillon's support was unchanged at 19%. This is consistent with the base case of most analysts. That is, no one will get majority in the first round and Le Pen will face Macron in the run-off. According to BVA, Macron will defeat Le Pen by 62 to 32 in the one-on-one vote.

TNX struggling to breakout

Technically, there are two developments to note. Firstly, the strong rebound in 10 year yield last week eliminated that case of a deep correction to 2.130 retracement level. However, despite all the optimism, the TNX is still held inside established range and struggled to take out 2.5 handle decisively. That is seen as one of the factors that's holding back the rally in the greenback. The markets will look into the non-farm payroll report to be released this Friday. And as noted above, new economic projections by Fed could hold the key. After all, near term outlook in TNX stays neutral for the moment as the consolidation from 2.621 could still extend, even with another fall. But sustained trading above 2.500 will bring a retest of 2.621. Break will resume the medium term up trend from 1.336.

Dollar index strength doubtful

Dollar index resumed the rebound from 99.23 and hit as high as 102.26. Friday's sharp pull back suggests temporary topping and the index could turn into sideway trading initially this week. As long as 100.66 support holds, further rise is still mildly in favor to retest 103.82 high. However, we'll stay cautious for two reasons. Price actions from 99.23 are not clearly impulsive yet and that mixes up the outlook in the index. Also, EUR/USD could have a take on 1.0630 near term resistance soon. And break there will likely drag the Dollar index down. Break of 100.66 support will argue that the rebound from 99.23 is completed and turn bias back to the downside for this support.

Opportunity to turn long in Euro

Our EUR/JPY short strategy last week was totally wrong as Yen reversed with treasury yield and Euro staged a strong rebound. Technically, it looks like a good timing to turn long in Euro. That's from the considerations that EUR/JPY defended 118.23 cluster support and rebounded. EUR/AUD defended 1.3671 support and rebounded. Both crosses are likely in near term reversal. 1.0630 resistance in EUR/USD and 0.8643 in EURGBP, if taken out, will affirm the turn in overall trend in Euro too. However, we will be very cautious as it's highly affected by political developments. To play safe, we will buy EUR/AUD on a dip to 1.3900, with a stop at 1.3800 this week.

EUR/USD Weekly Outlook

EUR/USD's decline attempt was contained at 1.0494, above 1.0493 support and rebounded. Initial bias stays neutral this week first. On the upside, break of 1.0630 resistance will argue that pull back from 1.0828 is completed. Also, rise from 1.0339 could possibly be resuming. In that case, intraday bias will be turned back to the upside for 1.0828 resistance and above. On the downside, below 1.0493 support will affirm the case that fall from 1.0828 is resuming the larger down trend. In that case, intraday bias will be back to the downside for resting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

In the long term picture, the down trend from 1.6039 (2008 high) is still in progress and there is no clear sign of completion. We'd expect more downside towards 0.8223 (2000 low) as long as 1.1298 resistance holds.

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