March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, technical action suggests March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Europe’s shared currency fell sharply against a broadly stronger USD on Thursday, dipping 0.7 percent. Demand for the US dollar was largely driven by a Powell-induced advance in US Treasury yields.

EUR/USD left Thursday shaking hands with support at 1.1965, a previous Quasimodo resistance. A 1.1965 breach re-opens the risk of a return to familiar support coming in from 1.1887. It should also be noted the 200-day simple moving average is lurking close by, currently circling the 1.1804 region.

In terms of the RSI oscillator, we are pursuing terrain south of the 50.00 centreline right now, threatening a possible test of oversold levels.

H4 timeframe:

February 5 low at 1.1952 is within striking distance, thanks to the recent sell-off. Movement also threw light on demand coming in at 1.1913/1.1932—a zone serving buyers at the beginning of December.

H1 timeframe:

1.20, a widely watched level of support in this market, stood aside on Thursday and squeezed out any bids at the level.

The Quasimodo formation at 1.1957 is next on tap in terms of support, fastened just north of 1.1950 support.

Interestingly, the RSI, after dipping A toe in oversold territory, is seen within touching distance of support at 20.64.

Observed levels:

Daily support at 1.1965—given nearby H1 Quasimodo support at 1.1957, the H1 RSI oscillator dipping into oversold territory and the market trending higher since 2020—is an area buyers may welcome today.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Trendline support, taken from the low 0.5506, is on the verge of giving way following Thursday’s second consecutive downside push amid a spike in US Treasury yields that underpinned USD health.

Beyond trendline support, the technical radar falls on February 2nd low at 0.7563, with a break unmasking demand at 0.7453/0.7384 (prior supply).

In terms of trend on this scale, the unit has been convincingly higher since March 2020.

The RSI value continues to butt heads with the 50.00 centreline.

H4 timeframe:

Meanwhile, price recently shook hands with demand priced in at 0.7696/0.7715. This follows price action turning ahead of 0.7848/0.7867 supply on Wednesday, an area joined by a 50.0% retracement at 0.7849 and a 127.2% Fib extension at 0.7856.

0.7650/0.7681 is also in the pot as possible demand today should sellers navigate deeper terrain.

H1 timeframe:

The 0.78 round number and trendline support-turned resistance (taken from the low 0.7692) combination welcomed bearish flow on Thursday. A one-sided push to the downside was observed heading into the US session, throwing light on 0.77 and neighbouring demand at 0.7668/0.7688.

Out of the RSI, we can see the value interacting with oversold levels after failing to find acceptance above the 50.00 centreline.

Observed levels:

Between H4 demand at 0.7650/0.7681 and 0.7696/0.7715, together with the 0.77 figure on the H1 and demand from 0.7668/0.7688, this is an area buyers may be drawn to today.

Longer term, nonetheless, sellers appear to be taking the wheel. The trendline support breach on the daily timeframe helps confirm bearish intent from the monthly timeframe’s recently formed shooting star beneath trendline resistance/supply.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, with March also mounting a bullish assault so far, up by 1.4 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

On the back of surging US Treasury yields, Thursday witnessed the US dollar index cement a position north of the 91.00 figure and consequently elevate USD/JPY to higher ground.

Upstream, resistance is visible around the 108.28ish neighbourhood, fashioned by way of two Fib levels: 61.8% and 78.6% ratios.

With reference to the RSI indicator, we’re now navigating overbought waters, with resistance at 83.02 on the radar.

H4 timeframe:

Recent outperformance cleared sellers from Quasimodo resistance at 107.44—now a serving support level—and elbowed resistance at 108.09 into the spotlight.

H1 timeframe:

Short term, we can see the unit settled just south of the 108 figure yesterday, after forming demand around 107.52/107.64. The aforementioned area is important as it was within this zone a decision was made to overrun remaining offers within daily supply at 107.58/106.85. Therefore, a return to 107.52/107.64 could be interesting.

As expected, the RSI oscillator is engaging with overbought space, currently crossing swords with resistance at 86.43.

Observed levels:

Between daily Fib resistance at 108.28, the H4 resistance at 108.09 and the 108 figure on the H1, this is likely an area of resistance on the menu today for countertrend sellers and also perhaps a take-profit objective for buyers.

H1 demand at 107.52/107.64 is also likely a watched zone and could, if tested, trigger a short-term bullish scenario, having noted its connection with daily supply from 107.58/106.85.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Despite the trendline breach, primary trend structure reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Partly modified from previous analysis –

Thursday pencilling in a bearish outside reversal signals a possible dip to support at 1.3755, a level sharing space with trendline support, drawn from the low 1.1409. Higher on the curve, however, Quasimodo resistance at 1.4250 remains in view.

As highlighted in previous writing, RSI resistance made an entrance at 76.14 last week, capping upside since late 2017. Subsequent downside forced the indicator to within striking distance of the 50.00 centreline.

H4 timeframe:

Brought forward from previous analysis –

Support at 1.3852 remains a talking point on the H4 scale, accompanied by a neighbouring 61.8% Fib level at 1.3824. Also technically noteworthy is demand pencilled in from 1.3761/1.3789.

Trendline support-turned resistance remains visible to the upside, taken from the low 1.3566.

H1 timeframe:

1.40, as you can see, has proven stable resistance, withstanding numerous upside attempts since the beginning of the week.

Recent hours had price aggressively drive lower and dethrone not only the 100-period simple moving average, but also the 1.39 figure. The latter is currently being retested as resistance, consequently shifting technical interest to Quasimodo supports at 1.3847 and 1.3861.

Action out of the RSI oscillator shows the value toppled the 50.00 centreline yesterday and is now bottoming a whisker ahead of oversold territory.

Observed levels:

Partly modified from previous analysis –

On the bigger picture, as noted in previous writing, monthly suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

With 1.39 side-lined as support, the H1 Quasimodo supports at 1.3847/1.3861 (shares space with H4 support at 1.3852) could make a show today and stir a short-term bullish theme. A H1 close back above 1.39 is movement likely to be welcomed by buyers.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

March 4th 2021: Dollar Modestly Higher; Japanese Yen Touches Seven-Month Lows

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, technical action suggests March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Partly modified from previous analysis –

Demand from 1.1923/1.2001 remains a central theme on the daily scale, a barrier housing support at 1.1965 (a previous Quasimodo resistance). However, amidst renewed DXY strength, EUR/USD upside decreased on Wednesday.

Despite the pause, Quasimodo resistance at 1.2278 remains in position to receive price should buyers regain consciousness.

The technical view from the RSI reveals the value treading water under the 50.00 centreline, with resistance parked relatively nearby at 60.30.

H4 timeframe:

H4 trendline support-turned resistance, an ascending line drawn from the low 1.1952, attracted bearish flow on Wednesday.

Target zones from the aforesaid trendline resistance could see the 88.6% Fib level at 1.1983 enter the fold, while a push higher may pursue resistance at 1.2135—a previous Quasimodo support.

H1 timeframe:

For those who read Wednesday’s technical writing you may recall the following (italics):

Shorter-term action recently unearthed 1.21 resistance on the H1 scale, along with the 100-period simple moving average, and H4 trendline resistance. As a result, sellers could make an entrance from the 1.21 region today and attempt to hold back daily buyers.

As evident from the chart, 1.21 did indeed make a show and invited a bearish presence, targeting demand pictured at 1.2019/1.2037. The latter is a reasonably important zone on this timeframe, having it been within this area a decision was made to break the 1.2068 peak.

The RSI, after dipping from overbought territory, is seen circling the 50.00 centreline.

Observed levels:

Short-term flow likely has eyes on H1 demand from 1.2019/1.2037. Traders considering a bullish position from this region may want to take into account that a possible whipsaw through the zone may emerge to test 1.20. Also, it may be worth noting that a bullish scenario is likely to be backed by daily action out of demand at 1.1923/1.2001.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal typically found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Slowing down selling interest from the monthly timeframe’s bearish candlestick formation is daily trendline support, taken from the low 0.5506. As you can see, despite Wednesday’s modest retreat, this week has chalked up two back-to-back bullish candles off the trendline support.

Beyond trendline support, the technical radar falls on February 2nd low at 0.7563, with a break unmasking demand at 0.7453/0.7384 (prior supply).

In terms of trend on this scale, the unit has been convincingly higher since March 2020.

In addition to the above, the RSI is currently trekking the 50.00 centreline.

H4 timeframe:

Bearish bets emerged a few pips south of 0.7848/0.7867 supply on Wednesday, an area joined by a 50.0% retracement at 0.7849 and a 127.2% Fib extension at 0.7856.

Trendline support, taken from the low 0.7563, is marked as a possible downside objective if sellers make a firmer entrance, with subsequent selling to greet demand at 0.7696/0.7715.

H1 timeframe:

Wednesday’s mild decline drew candle action through the 0.78 figure to shake hands with trendline support, etched from the low 0.7692. Breaking this level potentially sets the stage for a short-term dip back to support at 0.7724 and possibly 0.77.

Above 0.78, 0.7850 resistance calls for attention.

The technical picture from the RSI shows the value breached trendline support and also dipped a toe south of the 50.00 centre line.

Observed levels:

With monthly implying that buying could slow, along with daily price struggling to attract much buying off trendline support, H4, with room to drop towards trendline support could guide H1 through respective trendline support, targeting H1 support at 0.7224.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, adding 1.8 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Supply at 107.58/106.85, a base welcomed into the fight at the beginning of the week, has so far proved ineffective.

Rising US Treasury yields sparked a wobble in equities and ultimately reinforced demand for the greenback. This also witnessed the RSI indicator visit overbought terrain, following last week’s rebound from 57.00 support.

H4 timeframe:

With buyers still clearly at the wheel, this perhaps swings the pendulum towards a Fib resistance cluster between 107.47 and 107.37, a zone also complemented by Quasimodo resistance at 107.44.

Aside from Tuesday’s low at 106.67, support is not expected to make an appearance until around the 106.11 region.

H1 timeframe:

107 represented a key base on Wednesday, holding back upside attempts.

To the downside, trendline support, taken from the low 104.92, and the 100-period simple moving average, circle nearby territory, whilst above 107, Quasimodo resistance calls for attention at 107.18.

The RSI value continues to consolidate around the lower side of overbought space—common viewing in trending environments.

Observed levels:

Together with monthly price showing room to take on higher levels, and daily supply at 107.58/106.85 echoing a reasonably fragile tone, H4 is likely to make a run for the Fib resistance cluster between 107.47 and 107.37.

The above signals H1 is likely to overthrow 107 and Quasimodo resistance from 107.18, possibly triggering a short-term bullish theme.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

As seen from the monthly chart, the pendulum firmly swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen for three years.

Despite the trendline breach, primary trend structure reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Brought forward from previous analysis –

Limited change has been observed this week, forming back-to-back indecisive candles.

Last week established a top a few pips south of Quasimodo resistance at 1.4250, prompting a sharp slump heading into the latter part of last week.

Support at 1.3755 is now in the firing line, a level sharing space with trendline support, drawn from the low 1.1409.

As highlighted in previous writing, RSI resistance made an entrance at 76.14, capping upside since late 2017. Subsequent downside has driven the indicator to within striking distance of the 50.00 centreline.

H4 timeframe:

Wednesday left behind a somewhat muted tone, producing little to get excited about.

Support at 1.3852, therefore, remains a talking point on the H4 scale, accompanied by a neighbouring 61.8% Fib level at 1.3824. Also technically noteworthy is demand pencilled in from 1.3761/1.3789

Trendline support-turned resistance also remains visible to the upside, taken from the low 1.3566.

H1 timeframe:

Bids and offers were reasonably consistent yesterday, generating a narrow range around the underside of the key figure 1.40. Also involved in the action is the 100-period simple moving average.

1.39 shines bright as possible support to the downside on the H1 scale, with further bearish attempts to potentially retest Quasimodo supports at 1.3847 and 1.3861.

Also particularly noteworthy on the RSI indicator is the value spinning below the 50.00 centreline, suggesting momentum to the downside could gather traction and reach oversold levels.

Observed levels:

Partly modified from previous analysis –

On the bigger picture, as noted in previous writing, monthly suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

Should short-term action dethrone 1.40, this implies buyers could be taking control and therefore may not witness a retest of daily support from 1.3755.

Another short-term scenario to watch out for is a whipsaw through 1.39 into H1 Quasimodo supports mentioned above at 1.3847/1.3861. The H1 close back above 1.39 is movement often welcomed by traders (in this case, buyers).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

March 3rd 2021: Risk Currencies Gain; DXY Caps Gains Around 91.00

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, technical action suggests March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Tuesday crossed paths with demand from 1.1923/1.2001, an area housing support at 1.1965 (a previous Quasimodo resistance), which, aided by the broad USD softness (DXY < 91.00), stirred a healthy bullish response.

The technical view from the RSI reveals the value treading water a touch under the 50.00 centreline, with resistance parked relatively nearby at 60.30.

H4 timeframe:

In order to reach the upper side of daily demand at 1.1923/1.2001, a whipsaw through H4 demand at 1.2019/1.2037 emerged. H4 buyers out of the said H4 demand were likely squeezed out of the market yesterday, with daily bids from daily demand welcoming sell-stops south of the H4 zone.

Tuesday’s bullish showing, as you can see, shifted technical interest to trendline support-turned resistance, an ascending line drawn from the low 1.1952.

H1 timeframe:

1.20, as expected, proved an effective level of support, withstanding a modest downside attempt during the early hours of London on Tuesday. Thanks to the reasonably forceful advance, price elbowed to within striking distance of the 1.21 figure, accompanied by the 100-period simple moving average, currently circling 1.2108.

The RSI, following an earlier bounce from oversold terrain, made its way into overbought territory in recent hours, consequently shining light on resistance at 78.97.

Observed levels:

The rebound from daily demand at 1.1923/1.2001 is interesting and may command further buying today.

However, shorter-term action recently unearthed 1.21 resistance on the H1 scale, along with the 100-period simple moving average, and H4 trendline resistance. As a result, sellers could make an entrance from the 1.21 region today and attempt to hold back daily buyers. This may also have H1 and H4 sellers seek bearish candlestick confirmation before pulling the trigger.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal typically found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Holding back selling interest from the monthly timeframe’s bearish candlestick formation is daily trendline support, taken from the low 0.5506.

As you can see, this week has chalked up two bac-to-back bullish candles off the trendline support, threatening a possible retest of supply from 0.8045/0.7985.

Beyond trendline support, the technical light shines on February 2nd low at 0.7563, with a break unmasking demand at 0.7453/0.7384 (prior supply).

In terms of trend on this scale, the unit has been convincingly higher since March 2020.

H4 timeframe:

Tuesday’s outperformance hauled AUD/USD above resistance at 0.7805 (now a serving support level), bolstered on the back of renewed USD softness.

Demand-turned supply from 0.7848/0.7867 is now in the firing line, an area sharing space with a 50.0% retracement at 0.7849 and a 127.2% Fib extension at 0.7856.

H1 timeframe:

US traders toppled the 0.78 figure yesterday, unlocking the gates for a test of the 100-period simple moving average at 0.7826.

Scope for further outperformance is seen on the H1 scale. Aside from 0.7850 resistance, a run towards the 0.79 figure is possible. Traders may also note that to the left of price action (yellow), supply is relatively thin.

The technical picture out of the RSI shows the value touched overbought levels and is currently seen mildly topping. Downside from this point could have the indicator unite with trendline support around the 55.00 neighbourhood.

Observed levels:

0.7850 resistance on the H1, backed by H4 supply at 0.7848/0.7867 and associated Fibs, could encourage bearish interest today.

Although any bearish scenario trades in line with the monthly timeframe’s candlestick pattern, traders must still acknowledge we have been trending higher since early 2020 and recently staged a modest comeback off daily trendline support.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, adding 1.8 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Snapping a five-day bullish wave (movement that overthrew the 200-day simple moving average and supply from 106.33/105.78), Tuesday, in the shape of a shooting star candle pattern, tested the lower side of supply coming in at 107.58/106.85.

Amid Tuesday’s risk-off trading and broad softening of the US dollar, a 106.33/105.78 retest could take shape.

The RSI indicator continues to challenge overbought territory and shape bearish divergence.

H4 timeframe:

As you can see, the Fib resistance cluster between 106.84 and 106.73 (green—shares space with the underside of daily supply at 107.58/106.85) still has a hand in this fight, despite refreshing six-month highs at 106.95. What’s interesting about this Fib zone is the fact it joins hands with daily supply from 107.58/106.85.

Support at 106.11 resides as the next possible downside objective, having seen limited demand to the left of price.

H1 timeframe:

As evident from the H1 scale this morning, we can see price hit the brakes and turned just south of the 107 figure on Tuesday. Consequently, we’re now within a stone’s throw from shaking hands with 106.50 support—a level intersecting with trendline support, taken from the low 104.92, and the 100-period simple moving average.

Either 106.50 will be an area buyers welcome, or a base sellers overthrow to suggest moves towards the 106 region.

In terms of where we stand on the RSI indicator, the value currently tracks terrain south of the 50.00 centreline, implying a visit to oversold conditions is on the menu today.

Observed levels:

Partly modified from previous analysis –

Stops taken above daily supply from 106.33/105.78, followed by a subsequent test of daily supply at 107.58/106.85 and the recent formation of a shooting star, could be movement sellers draw to. This would, of course, go against monthly buying towards descending resistance.

Short-term charts suggest a possible dip to deeper water, in line with the daily scale, testing at least the 106.50 support on the H1. However, a break through here may fuel additional selling towards the 106 figure (fixed within daily demand at 106.33/105.78).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

As seen from the monthly chart, the pendulum firmly swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161). February followed through to the upside and refreshed 2021 highs at 1.4241, levels not seen for three years.

Despite the trendline breach, primary trend structure reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Brought forward from previous analysis –

Limited change was observed Tuesday, despite eking out modest gains (0.2 percent).

Last week established a decisive top a few pips south of Quasimodo resistance at 1.4250, prompting a sharp slump heading into the latter part of last week.

Support at 1.3755 is now in the firing line, a level sharing space with trendline support, drawn from the low 1.1409.

As highlighted in previous writing, RSI resistance made an entrance at 76.14, capping upside since late 2017. Subsequent downside flow has driven the indicator to within striking distance of the 50.00 centreline.

H4 timeframe:

Recent flow forged a bottom a whisker north of support drawn from 1.3852, accompanied by a neighbouring 61.8% Fib level at 1.3824. Also technically noteworthy is demand pencilled in from 1.3761/1.3789 and trendline support-turned resistance, taken from the low 1.3566.

H1 timeframe:

Confirmed by mild RSI bullish divergence, Quasimodo support at 1.3861 (plotted close by another Quasimodo support at 1.3847) made a show. Following price reclaiming 1.39+ status, the unit retested the latter as support heading into US hours and touched highs ahead of the widely watched 1.40 resistance, joined by a 100-period simple moving average at 1.3988.

Observed levels:

Short-term action suggests price could visit 1.40 on the H1, reinforced by the 100-period simple moving average. Sellers may be drawn to this area, particularly after last week’s decisive retracement.

On the bigger picture, as noted in previous writing, monthly suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

March 2nd 2021: DXY Clocks 3-Week High and Tackles 91.00

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, technical action suggests March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Thursday’s clear-cut shooting star pattern, in addition to Friday’s one-sided decline, had Monday increase downside and throw light on demand from 1.1923/1.2001, an area housing support at 1.1965 (a previous Quasimodo resistance).

The RSI wrapped up Monday south of the 50.00 centreline, following a near-test of resistance at 60.30 last week.

H4 timeframe:

Following Friday’s modest trendline support breach, an ascending line drawn from the low 1.1952, Monday retested the lower side of the aforesaid line and saw price action welcome demand at 1.2019/1.2037, an area withstanding downside pressure mid-February.

Technically on the H4 scale, limited support is seen below current demand, though the upper edge of daily demand is present around 1.1923/1.2001.

H1 timeframe:

Demand from 1.2036/1.2053 (glued to the upper side of H4 demand at 1.2019/1.2037) had a rough day on Monday, having its lower side challenged a number of times, likely consuming stops beneath the zone. Potentially weakening the zone, we could have sellers make a play for the widely watched figure 1.20.

The RSI continued to bump heads with oversold territory on Friday, with support at 20.64 remaining in sight.

Observed levels:

Lack of buying from H4 demand at 1.2019/1.2037, together with a fragile H1 demand at 1.2036/1.2053, implies 1.20 on the H1 is likely to make a show. Reinforced by the upper side of daily demand at 1.2001, buyers may embrace 1.20 as a support should the level be tested today.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal typically found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Despite Friday dipping a toe in waters beneath trendline support, taken from the low 0.5506, Monday had buyers hit back and reclaim a portion of last week’s 2 percent decline. Supply at 0.8045/0.7985 is seen as the next upside target on this scale.

The trendline support breach shines the technical light on February 2nd low at 0.7563, with a break here unmasking demand at 0.7453/0.7384 (prior supply).

In terms of trend on this scale, the unit has been convincingly higher since March 2020.

H4 timeframe:

The combination of trendline support, drawn from the low 0.7563, and demand priced at 0.7696/0.7715, clearly appealed on Friday, with buyers showing their support on Monday. Resistance calls for attention at 0.7805, with a break unveiling supply from 0.7848/0.7867 (prior demand).

Below current demand, technical traders are likely observing demands at 0.7650/0.7681 and 0.7601/0.7627, as well as Quasimodo support at 0.7592.

H1 timeframe:

Following an earlier recovery from support at 0.7724, the H1 candles have since consolidated just south of the 0.78 figure. Not only is this considered a widely watched psychological hurdle, the level brings Fib studies and an AB=CD bearish pattern to the table (black arrows).

The technical picture out of the RSI shows momentum climbing, entrenched within the parapets of an ascending channel. Note, the value also ended Monday marginally north of the 50.00 centreline.

Observed levels:

Short term, the 0.78 figure on the H1, accompanied by Fib studies and an AB=CD bearish pattern, will likely attract bearish interest. It is also worth noting that H4 resistance merges with the H1 area at 0.7805.

Longer term, on the other hand, shows buyers may have some gas left in the tank from trendline support on the daily timeframe. Though in support of a bearish play is monthly price rejecting space just beneath trendline resistance and supply from 0.8303/0.8082.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, adding 1.8 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

In the shape of five successive bullish candles—movement that overthrew the 200-day simple moving average and supply from 106.33/105.78—price action is touching gloves with supply priced at 107.58/106.85. Any downside reaction from this base is likely to retest the recently engulfed supply at 106.33/105.78 (possible demand).

While price action registered hefty gains in recent trading, the RSI indicator is testing overbought territory and forming bearish divergence.

H4 timeframe:

Resistance-turned support at 106.11 holding firm early Friday witnessed Monday cross swords with a Fib resistance cluster between 106.84 and 106.73 (green—shares space with the underside of daily supply at 107.58/106.85). Candlestick fans will also note the pair formed a shooting star pattern, generally viewed as a bearish signal at peaks.

H1 timeframe:

Leaving the 107 figure unchallenged, recent action rotated south and appears poised to retest 106.50 support and intersecting trendline support, etched from the low 105.06. Territory beneath here swings another trendline support, taken from the low 104.92, into the fray.

Although the unit continues to print modest higher highs, the RSI indicator is fluctuating around the lower side of overbought space.

Observed levels:

The stops taken above daily supply from 106.33/105.78, followed by a subsequent test of daily supply at 107.58/106.85, could be movement sellers draw to. This would, of course, go against monthly buying towards descending resistance.

The H4 timeframe testing a Fib resistance cluster between 106.84 and 106.73 is interesting, given its connection with daily supply mentioned above at 107.58/106.85. This could force a 106.50 test on the H1 and possibly even a breach—a move likely to be viewed as a short-term bearish signal to the lower H1 trendline support (104.92).

 

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

As seen from the monthly chart, the pendulum firmly swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161). February followed through to the upside and refreshed 2021 highs at 1.4241, levels not seen for three years.

Despite the trendline breach, primary trend structure reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Last week established a decisive top a few pips south of Quasimodo resistance at 1.4250, prompting a sharp slump heading into the latter part of last week.

Support at 1.3755 is now in the firing line, a level sharing space with trendline support, drawn from the low 1.1409.

As highlighted in previous writing, RSI resistance made an entrance at 76.14, capping upside since late 2017. Subsequent downside flow has driven the indicator to within striking distance of the 50.00 centreline.

H4 timeframe:

Partly modified from previous analysis –

Trendline support-turned resistance, extended from the low 1.3566, giving way on Friday paved the way for a test of demand from 1.3942/1.3900 (previous supply). As you can see, buyers and sellers continue to square off around the aforesaid demand zone, with sellers appearing to have the upper hand at the moment. This hints at a test of support from 1.3852, with additional downside bringing light to familiar demand at 1.3761/1.3789 (fixed north of daily support mentioned above at 1.3755).

H1 timeframe:

Partly modified from previous analysis –

1.40 proved effective resistance in early trading Monday, withstanding two back-to-back upside attempts which led to the pair testing waters just ahead of the 1.39 figure.

Above 1.40, the 100-period simple moving average is seen circling 1.4042, while territory sub 1.39 unearths two Quasimodo supports at 1.3861 and 1.3847.

The RSI oscillator, as you can see, made its way from oversold terrain on Friday and has been circling the 50.00 centreline since.

Observed levels:

Partly modified from previous analysis –

Monthly flow suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

H4 demand at 1.3942/1.3900 appears on thin ground, highlighting a short-term dip to H4 support at 1.3852 may be seen. Interestingly, this would draw H1 price through 1.39 bids (tripping stops) to test H1 Quasimodo supports at 1.3861 and 1.3847 (aligns with H4 support).

Therefore, the above may attract a short-term bearish theme in early trading, with a possible bullish defence entering the fight off 1.3850ish.

Any additional bearish flow could draw in H4 demand at 1.3761/1.3789, which happens to merge closely with daily support from 1.3755.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

Weekly Technical Market Insight: 1st – 5th March 2021

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

Measured by the US dollar index, the greenback fashioned a firm recovery last week, adding 0.6 percent and snapping a two-week bearish phase.

Leaving support at 89.34 unchallenged, USD bulls are likely taking aim at February 17 peak around 91.05, with subsequent outperformance to perhaps shake hands with the 127.2% Fib projection at 91.44. Additional resistances to observe this week are 92.26, a level surrounded by a 61.8% Fib level, a 127.2% Fib projection and a 100% Fib extension at 92.38, 92.36 and 91.96, respectively. Traders may also acknowledge the 200-day simple moving average lurking at 93.12—these dynamic values commonly provide support and resistance, therefore worth keeping an eye on in the first full week of March should we take on higher terrain.

Trend studies, as highlighted in previous weekly writing, show the buck has echoed a downside bias since topping south of the 103.00 figure in March 2020. This, of course, adds weight to the aforementioned resistances this week. Submerging support at 89.34 possibly adds conviction to the bearish narrative and may also spur longer-term breakout selling interest.

Against the backdrop of technical price action, the RSI indicator finished last week north of the 50.00 centreline and is currently stalking the underside of channel support-turned resistance.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Following Thursday’s clear-cut shooting star pattern, missing Quasimodo resistance at 1.2278 by a whisker, Friday fell sharply. The firm month-end USD bid was the main driver behind EUR/USD weakness, a move shining the technical spotlight on demand from 1.1923/1.2001 this week, an area housing support at 1.1965 (a previous Quasimodo resistance).

Out of the RSI, the indicator rotated south a touch below resistance at 60.30, pulling the value beneath the 50.00 centreline.

H4 timeframe:

Friday’s one-sided decline squeezed through bids at Quasimodo support from 1.2135, with price action subsequently retesting the underside of the level as resistance. This led to the unit marginally breaching trendline support heading into the close, pencilled in from the low 1.1952.

Ultimately, the trendline break could welcome demand at 1.2019/1.2037 this week, an area withstanding downside pressure mid-February.

H1 timeframe:

Friday was a day for taking stops on the H1 scale.

Early London observed trendline support give way (etched from the low 1.2023), trapping buyers and unlocking the door for breakout sellers. Subsequently, the 1.21 level, although supportive for a brief period, also caved and trapped buyers.

Breakout sellers south of the big figure are likely setting their sights on demand from 1.2036/1.2053 (glued to the upper side of H4 demand at 1.2019/1.2037), and possibly the 1.20 figure.

Interestingly, the RSI bumped heads with oversold territory on Friday, with support at 20.64 also in sight.

Observed levels:

Long term:

While the monthly chart exhibits scope to climb over the coming weeks, a dip to daily demand at 1.1923/1.2001 could be in store before buyers attempt to make an entrance.

Short term:

The H4 trendline support violation, alongside Friday’s spirited decline, has potentially opened the door to further downside early week.

To reach 1.20 on the H1 (blends with the upper side of daily demand at 1.2001), sellers must break H1 demand at 1.2036/1.2053 and also H4 demand from 1.2019/1.2037.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal typically found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

In one fell swoop, the Australian dollar fell more than 2 percent versus the US dollar on Friday, generating enough force to unnerve longs around trendline support, taken from the low 0.5506. This followed Thursday’s bearish outside reversal pattern from supply at 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082), a move supported by RSI bearish divergence (note Friday ended beneath the 50.00 centreline).

The trendline support breach throws light on February 2nd low at 0.7563 this week, with a break here unmasking demand at 0.7453/0.7384 (prior supply).

H4 timeframe:

Bearish forces unseated demand at 0.7848/0.7867, followed by support from 0.7805, and, towards the closing hour, price also clipped the lower side of demand coming in from 0.7696/0.7715.

Additional demand areas to be mindful of this week are 0.7650/0.7681 and 0.7601/0.7627, as well as Quasimodo support at 0.7592.

H1 timeframe:

Heading into the close, price embraced the 0.77 figure and saw buyers modestly step forward.

Demand at 0.7668/0.7688 resides just below (plotted nearby support at 0.7660), with resistance parked above at 0.7724.

RSI movement, as you can see, spent Friday trekking oversold terrain with the indicator also chalking up bullish divergence towards the end of the session.

Observed levels:

Long term:

The monthly timeframe’s shooting star pattern, combined with the daily timeframe’s trendline support breach, signals additional selling may develop this week, targeting February 2nd low at 0.7563.

Short term:

H1 demand at 0.7668/0.7688 (and nearby support at 0.7660) is worth noting in early trading this week as an area buyers may welcome, glued to H4 demand at 0.7650/0.7681. However, given the higher timeframes point to lower levels, traders must be prepared for short-lived upside.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, adding 1.8 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Supply at 106.33/105.78, an area capping upside since October 2020, ceded ground Friday, allowing Quasimodo resistance at 106.58 to enter the fight. Supply at 107.58/106.85 is also an area that deserves notice this week.

While price action registered a fourth successive bullish close in recent trading, traders may wish to note the RSI indicator is testing overbought territory and forming bearish divergence.

H4 timeframe:

Resistance-turned support at 106.11 entered the fray early Friday, bolstered on the back of broad-based USD buying (DXY nearing 91.00).

Providing USD bids maintain a presence north of 106.11, the Fib resistance cluster between 106.84 and 106.73 (green—shares space with the underside of daily supply at 107.58/106.85) could make a show in early trading this week.

Additional areas worthy of attention are support at 105.74 (prior Quasimodo resistance) and trendline support, drawn from the low 102.59.

H1 timeframe:

In view of the uptrend, sellers are likely to be guarded at supply from 106.69/106.62. A H1 close sub 106.50, however, may persuade additional selling, targeting trendline support, derived from the low 104.92, followed by the 106 figure. Any sustained bullish move above the aforesaid supply this week shifts attention to the 107 figure.

Technically, we’re also seeing bearish divergence form out of the RSI indicator, a touch below overbought space.

Observed levels:

Long term:

The stops taken above daily supply from 106.33/105.78 and the subsequent test of Quasimodo resistance at 106.58 unearths a possible bearish theme this week. Though before sellers step forward, price may shake hands with nearby supply at 107.58/106.85.

The above, of course, is somewhat out of tune with the monthly timeframe’s direction, bound for possible follow-through buying towards descending resistance.

Short term:

Across the page, the H4 timeframe shines light on a Fib resistance cluster between 106.84 and 106.73. Glued to the lower edge of daily supply at 107.58/106.85, this may be a zone sellers welcome this week. However, in order for this to occur, a minor whipsaw above H1 supply at 106.69/106.62 must form—stop run?

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February refreshed 2021 highs at 1.4241, levels not seen for three years.

Despite the trendline breach—a sign buyers have taken the wheel—primary trend structure on the monthly scale reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Mid-week trading established tops just south of Quasimodo resistance at 1.4250, underpinning a sharp slump heading into the latter part of the week.

Support at 1.4011 delivered little in terms of bullish flow, with Friday’s break throwing light on trendline support, drawn from the low 1.1409, a level sharing space with support at 1.3755.

RSI resistance made an entrance at 76.14, capping upside since late 2017, with the value exiting overbought terrain and settling within a whisker of the 50.00 centreline.

H4 timeframe:

Trendline support, extended from the low 1.3566, was taken in early trading on Friday, leading to a test of demand from 1.3942/1.3900 (previous supply).

As you can see, Friday’s reply from demand was mostly unresponsive, hinting at a test of support from 1.3852, with additional downside bringing light to familiar demand at 1.3761/1.3789 (fixed north of daily support mentioned above at 1.3755).

H1 timeframe:

Despite a decline in early Asia, buyers and sellers subsequently squared off around the 1.39 figure and prompted a pullback to 1.3959 resistance—a previous Quasimodo support base plotted just under the key figure 1.40.

Above 1.40, the 100-period simple moving average is seen circling 1.4075, while territory sub 1.39 unearths two Quasimodo supports at 1.3861 and 1.3847.

The RSI oscillator, as you can see, made its way from oversold terrain on Friday and mildly topped ahead of the 50.00 centreline.

Observed levels:

Long term:

Monthly flow suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

Short term:

H4 demand at 1.3942/1.3900 appears on thin ground, highlighting a short-term dip to support at 1.3852 may be seen in early trade this week. Interestingly, this would draw H1 price through 1.39 bids (tripping stops) to test H1 Quasimodo supports at 1.3861 and 1.3847 (aligns with H4 support).

Therefore, the above may attract a short-term bearish theme in early trading, with a possible bullish defence entering the fight off 1.3850ish.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 26th 2021: Dollar Index Recovers amidst US Treasury Yield Surge

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.4 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound, however, shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

EUR/USD stabbed to peaks at 1.2243 on Thursday, yet on the back of the DXY finishing off worst levels as US Treasury yields spiked, the currency pair wrapped up in the shape of a shooting star pattern off highs.

Upstream, we see Quasimodo resistance at 1.2278; to the downside, we’ll likely zero in on demand from 1.1923/1.2001—houses support at 1.1965—a previous Quasimodo resistance.

RSI action remains north of the 50.00 centreline, on the doorstep of resistance at 60.30.

H4 timeframe:

Shaped by way of a shooting star and a gravestone doji, candle action peaked just south of supply priced in at 1.2282/1.2245 on Thursday and retreated back to support at 1.2179. Having seen this level serve well as resistance since mid-January, the odds of buyers attempting to make an entrance here is high.

Though should 1.2179 fail to offer a floor, Quasimodo support at 1.2135 is likely to call for attention.

H1 timeframe:

The one-sided decline amid US hours on Thursday delivered a forceful 1.22 breach to the downside and subsequent test of support at 1.2166 (a previous Quasimodo resistance level).

In the event 1.2166 fails to rejuvenate buying, the 100-period simple moving average at 1.2156 could make a show, closely shadowed by trendline support, taken from the low 1.2023.

Interestingly, the RSI turned from resistance at 78.97, a base capping upside since the middle of January. Note also that the value dropped through the 50.00 centreline.

Observed levels:

The area formed between H1 trendline support (1.2023), the 100-period simple moving average and H1 support at 1.2166 (green zone) is an area buyers possibly have on the watchlist today. Not only is the zone bolstered by a nearby H4 support at 1.2179, monthly price suggests scope to approach higher levels. A H1 close above 1.22 is likely to add bullish conviction.

Consequently, the above analysis implies the daily timeframe’s shooting star pattern is perhaps brittle.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

AUD/USD, up by 2.9 percent in February, recently came within touching distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

Also technically notable is February’s bullish engulfing pattern (although this formation is generally best noted at troughs).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Thursday, as you can see, carved out a bearish outside reversal pattern from supply at 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082), movement nearly engulfing three previous candles.

Lower on the curve, demand is next in line at 0.7726/0.7806, intersecting with trendline support, etched from the low 0.5506.

RSI bearish divergence also greeted the charts yesterday, with the value subsequently exiting overbought space and registering 61.00.

H4 timeframe:

Risk sentiment suffered Thursday, consequently dragging risk-sensitive currencies lower, including the Australian dollar and New Zealand dollar.

The one-way decline, south of resistance at 0.8021, drove AUD/USD into demand at 0.7848/0.7867, fastened above supports at 0.7843 and 0.7805.

H1 timeframe:

Thursday’s downside moves eventually overwhelmed buying interest off 0.79, allowing for a test of the 50.0% retracement level at 0.7865, plotted ahead of 0.7850 support. Lower, we see a reasonably clear run back to 0.78.

What’s also technically appealing is the RSI indicator dipping a toe in oversold territory and recording bullish hidden divergence.

Observed levels:

The combination of H4 demand at 0.7848/0.7867, together with the 50.0% retracement at 0.7865 and the 0.7850 support on the H1 may be a welcomed area by buyers today.

Though should 0.7850 cave, the 0.78 figure is likely in the firing range, a psychological support merging with the upper side of daily demand at 0.7806 and H4 support at 0.7805.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February, up by 1.5 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Supply at 106.33/105.78 came under fire in recent movement, as USD/JPY registered a third successive daily gain, despite declines witnessed in US equities (action that usually reinforces a JPY bid).

With buyers gaining confidence north of the 200-day simple moving average at 105.48, additional supply is worth taking into consideration at 107.58/106.85.

Additionally, RSI action remains healthy off 57.00 support, on the verge of shaking hands with overbought terrain.

H4 timeframe:

Unable to hold back buyers, resistance at 106.11 stepped aside on Thursday and was swiftly retested as support in recent hours.

This drew light towards the 127.2% Fib projection at 106.44, with a break uncovering Quasimodo resistance at 106.58.

H1 timeframe:

Quasimodo resistance at 106.27 entered the fight on Thursday, forcing a 106 retest. Upstream, the 127.2% Fib projection at 106.44 on the H4 is next in the line of fire, followed by 106.50 resistance.

Technically, we’re also seeing bearish divergence form out of the RSI.

Observed levels:

Chart studies suggest we’re heading higher in the short term, backed by the monthly timeframe’s technical picture and a somewhat fragile supply on the daily timeframe at 106.33/105.78. So, with that being said, a H1 bullish breakout theme could emerge above 106.27, with 106.44 (H4) and 106.50 resistance (H1) targeted.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4241, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

Sterling dropped sharply against the US dollar on Thursday, snapping a five-day bullish phase.

Largely driven by a surge in US Treasury yields backing a USD spike higher, GBP/USD retreated 1 percent and now flirts with support priced in at 1.4011.

The RSI rotated lower from 77.40 and exited overbought levels.

H4 timeframe:

Trendline support, extended from the low 1.3566, is now within a stone’s throw from making an entrance, intersecting with a 38.2% Fib level at 1.3982. Traders considering the trendline as a base for potential buying are urged to consider 1.3942/1.3900 demand (previous supply), as price could whipsaw through trendline support to collect fresh buyers off the aforementioned demand.

H1 timeframe:

1.41 put up little fight on Thursday, with price also overthrowing the 100-period simple moving average to the downside in strong fashion.

The pair, as you can see, settled around the key figure 1.40, a large psychological level that’s sponsored by a nearby 61.8% Fib level at 1.3985 and a 161.8% Fib projection at 1.3982, as well as Quasimodo support from 1.3959.

With reference to the RSI oscillator, you will also note the value entered oversold terrain, testing lows around 26.00.

Observed levels:

The combination of H4 trendline support and 38.2% Fib confluence at 1.3982, in addition to 1.40 support on the H1, alongside 61.8%/1.618% Fib confluence around 1.3985, could see short-term buying develop today.

What’s also supportive of a bid hitting the charts, of course, is the monthly chart trading north of trendline resistance and daily price crossing swords with support from 1.4011.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 25th 2021: DXY Off Best Levels Alongside US Treasury Yields

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.2 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound, however, shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Partly modified from previous analysis –

EUR/USD left behind a muted tone on Wednesday, establishing a relatively indecisive candle that ranged between 1.2174 and 1.2109.

1.2190 tops represent immediate resistance, with a break uncovering Quasimodo resistance from 1.2278. Any downside attempts will likely zero in on demand from 1.1923/1.2001—houses support at 1.1965—a previous Quasimodo resistance.

RSI action remains north of the 50.00 centreline, within striking distance of resistance at 60.30.

H4 timeframe:

Resistance at 1.2179 continues to hog the limelight on the H4 scale, a base fastened south of Quasimodo resistance at 1.2200 and resistance at 1.2214.

Bearish bets, should we navigate deeper waters today, could eventually direct price towards trendline support, extended from the low 1.1952.

H1 timeframe:

Heading into the early hours of US trading, H1 whipsawed through the 100-period simple moving average (1.2130) and shook hands with trendline support, coming in from the low 1.2023. Leaving the 1.21 figure unchallenged, bids shaped a firm floor off the aforesaid trendline and welcomed a wave of buying into the close.

Two nearby Quasimodo resistances lurk above at 1.2166 and 1.2177, respectively, sharing space with RSI resistance parked at 60.19.

Observed levels:

The non-committal tone from sellers on the daily scale, on top of monthly price displaying scope to scale higher, could have H4 buyers invade 1.2179 and 1.2200 resistances. This also places a question mark on H1 Quasimodo resistances around 1.2166 and 1.2177.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Up by 4.3 percent, February is on track to conclude in the shape of a clear-cut bullish engulfing candle. Also technically appealing is the pair closing in on 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Upbeat risk sentiment, together with the US dollar index (DXY) finishing considerably off best levels, elevated AUD/USD Wednesday and clocked fresh multi-month highs.

Consequent to the above, supply coming in from 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082) is now in the firing line.

In terms of the RSI indicator, the value entered overbought space in recent movement and is on the doorstep of resistance from 80.19.

H4 timeframe:

Aided by support at 0.7897 (a prior Quasimodo resistance level), the currency pair rallied and crossed swords with Quasimodo resistance at 0.7966 yesterday. Weak offers around this location unbolts the trapdoor to test the lower side of daily supply underlined above at 0.8045/0.7985.

H1 timeframe:

Recent hours observed a dominant surge of buying, enough to dethrone offers around 0.7950 resistance.

Next in line, in terms of resistance, we can see a 127.2% Fib extension at 0.7983, closely shadowed by a 161.8% Fib projection at 0.7987 and the key figure 0.80. Also technically visible is the RSI value penetrating overbought levels and shining light on resistance at 80.85.

Observed levels:

The trend on the daily timeframe is clearly in good shape, though resistance formed by way of the lower side of daily supply at 0.7985 and the H1 Fibs between 0.7983 and 0.7987, along with the 0.80 figure, deserves attention.

A 0.7950 retest could pull in a short-term bullish scenario, with dip-buyers likely welcoming the move, targeting 0.7985/0.80ish as an initial upside objective.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February, up by 1.2 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

The US dollar gained for a second successive session versus the Japanese yen on Wednesday, supported amidst a risk-on narrative. USD/JPY bulls also took cues from a rally in US Treasury yields, despite a weaker DXY.

Price action snapped back above the 200-day simple moving average at 105.48, addressing supply from 106.33/105.78 and pulling the RSI indicator’s value off support at 57.00.

H4 timeframe:

As evident from the H4 chart, upside slowed ahead of resistance at 106.11—October 7 peak—on Wednesday, marginally paring gains into the close. North of here, a 127.2% Fib projection can be seen at 106.44, whereas further selling could eventually bring light to a nearby trendline support, etched from the low 102.59.

H1 timeframe:

Going into US trade on Wednesday, price whipsawed through 106 and touched gloves with Quasimodo resistance at 106.09. Subsequent selling from 106.09 should not surprise. Not only were H1 sellers likely fading sell-stops north of 106, H4 sellers from the 106.11 resistance were possibly active.

The next downside objective resides at 107.73, a previous Quasimodo resistance level, with a break perhaps shifting attention to demand at 105.47/105.56 (aligns with the 200-day simple moving average on the daily chart).

Observed levels:

107.73 support is likely to be tested on the H1 today, though whether buyers make a show (in line with the monthly timeframe) is difficult to estimate as daily price may seek a retest of the 200-day simple moving average around 105.48, consequently testing H1 demand at 105.47/105.56.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4241, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

Establishing a half-hearted shooting star pattern—a candlestick formation generally interpreted as a bearish signal at peaks—ahead of Quasimodo resistance at 1.4250, this could sponsor a retest at support from 1.4011.

The RSI continues to trek overbought terrain, reaching highs of 77.00 yesterday. Bear in mind, the indicator can remain overbought for prolonged periods in trending environments.

H4 timeframe:

Despite climbing above 1.42—for the first time since April 2018—price was unable to find acceptance above the big figure. This led to a test of demand at 1.4051/1.4099 (an important zone given it was likely within this area a decision was made to break 1.42), which, as you can see, has so far been welcomed by buyers.

South of current demand, traders will note demand at 1.4034/1.3989 (prior supply) and intersecting trendline support, drawn from the low 1.3566.

H1 timeframe:

In similar fashion to the H4 scale, H1 faded 1.42 in recent action and reconnected with the 1.41 figure.

Downstream, the 100-period simple moving average, currently circling 1.4061, offers possible support in the event 1.41 fails to hold. Below the SMA, we also see demand at 1.3995/1.4035, which houses the key figure 1.40.

With reference to the RSI indicator, the value formed hidden bullish divergence as price bumped heads with 1.41. With the RSI also crossing back above the 50.00 centreline, this suggests upside momentum may intensify.

Observed levels:

The bounce from 1.41 on the H1, aided by H4 demand at 1.4051/1.4099 as well as the clear uptrend GBP/USD is in right now and monthly price trading strongly north of trendline resistance, may be enough to spark buyer interest today and re-attempt to tackle the 1.42 region.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 24th 2021: Dollar Stabilises After Powell to End Mostly Unchanged; Pound Clocks Three-Year High

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.1 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound, however, shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

The USD, as measured by the US dollar index, staged a modest recovery Tuesday, snapping a three-day bearish phase. This witnessed EUR/USD fade session peaks and produce a well-known candlestick formation, commonly labelled as a shooting star—a bearish pattern.

1.2190 tops continue to represent immediate resistance, with a break uncovering Quasimodo resistance from 1.2278. Any downside attempts will likely zero in on demand from 1.1923/1.2001, which happens to house a support at 1.1965—a previous Quasimodo resistance.

RSI action remains north of the 50.00 centreline, within striking distance of resistance at 60.30.

H4 timeframe:

Resistance at 1.2179 proved an effective base once again on Tuesday, capping upside. Bearish bets, although appearing to be drying up, could eventually direct price action towards trendline support, extended from the low 1.1952.

North of 1.2179, we have nearby Quasimodo resistance at 1.2200 and another resistance at 1.2214.

H1 timeframe:

Despite an early slump heading into London on Tuesday, volatility thinned considerably for the remainder of the day, ranging between 1.2166 and 1.2134.

Trendline support, extended from the low 1.2036, is not far off, with a breach shining the technical spotlight on additional trendline support, coming in from the low 1.2023. Note that in between the aforesaid trendlines we can also see the 100-period simple moving average lurking around 1.2112.

Out of the RSI indicator, the value is currently entrenched within the walls of two converging trendlines, forming what many may recognise as a bearish pennant pattern.

Observed levels:

With monthly price displaying scope to scale higher, alongside H4 sellers showing little interest off resistance at 1.2179, targeted supports today may be the H1 trendlines from lows 1.2036 and 1.2023.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Up by 3.6 percent, February is on track to conclude in the shape of a clear-cut bullish engulfing candle. Also technically appealing is the pair closing in on 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Despite AUD/USD taking a breather yesterday and establishing an indecision candle, the pair remains testing the mettle of supply from 0.7937/0.7890. Therefore, the possibility of additional upside unfolding today is still there, targeting supply coming in from 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082).

Any corrections have 0.7726/0.7806 demand in sight, fixed above trendline support, an ascending level drawn from the low 0.5506.

H4 timeframe:

Retracing from fresh 2021 highs, Tuesday reconnected with support at 0.7897 (a prior Quasimodo resistance level).

With buyers and sellers currently battling for position around the aforesaid support level, in a market trending higher since 2020, Quasimodo resistance seen at 0.7966 is likely to be on the radar for many technical traders today.

H1 timeframe:

Whipsawing through the 0.79 figure to within touching distance of demand at 0.7857/0.7877, price went forward and reclaimed 0.79+ status heading into the US session on Tuesday.

Forming a position north of 0.79 today could have buyers invade Tuesday’s peak at 0.7934, with subsequent upside to possibly reach for 0.7950.

In line with the above, the RSI is rebounding from the 50.00 centreline.

Observed levels:

Largely unchanged from previous analysis –

The monthly timeframe continues charging towards supply at 0.8303/0.8082, implying a push above supply at 0.7937/0.7890 to supply at 0.8045/0.7985 on the daily scale may be on the menu.

Short term remains positive for buyers, with a 0.79 retest (H1) holding firm, bolstered by H4 support priced in at 0.7897.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February, up by 0.6 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Partly modified from previous analysis –

Snapping a four-day losing streak, boosted on USD strength, USD/JPY is on the brink of retesting the 200-day simple moving average at 105.48.

February 10th trough at 104.40 calls for attention to the downside, arranged just ahead of demand at 103.56/103.93. This is an interesting zone, given it was within this area a decision was made to generate seven back-to-back bullish days and penetrate a number of local peaks.

With respect to the RSI indicator, the value is flirting with support at 57.00.

H4 timeframe:

Trendline support, taken from the low 102.59, fixed above demand at 104.67/104.81, are prime areas to be watchful of to the downside on the H4 chart.

A pop above Monday’s high at 105.84, on the other hand, throws light on resistance at 106.11—October 7 peak.

H1 timeframe:

Resistance at 105.40 made its way on the scene Tuesday—a previous Quasimodo support base—and served short-term sellers well. Upstream, technical eyes are likely fixed on the 100-period simple moving average around 105.47, with subsequent buying to possibly draw in Quasimodo resistance at 107.73.

105 support also remains a point of interest on the H1 scale, fixed just north of Quasimodo support at 104.91.

Observed levels:

Long term, sellers appear in control at the moment, south of the 200-day simple moving average, targeting February 10th trough at 104.40 (daily timeframe—see above). This, of course, could weigh on buying derived from January’s bullish engulfing candle.

Short term, H1 is sandwiched amidst resistance at 105.40 and the 105 figure, therefore intraday traders may be drawn to this region today. Though be aware a whipsaw above 105.40 to the 100-period simple moving average on the H1 (105.47) and the 200-day simple moving average on the daily (105.48) could also take shape.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4116, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

Sterling finished higher Tuesday, further extending a bullish presence north of support at 1.4011 and inching closer to 1.4250 Quasimodo resistance.

The RSI continues to trek overbought terrain, reaching highs of 76.20 yesterday. Bear in mind, the indicator can remain overbought for prolonged periods in trending environments.

H4 timeframe:

Supply drawn from 1.4111/1.4091 made an entrance on Tuesday, yet was unable to prompt much in terms of bearish flow. Northbound, technical action notes channel resistance, pencilled in from the high 1.3855, closely followed by resistance plotted at 1.4154.

H1 timeframe:

Bolstered on UK PM Johnson setting out a schedule for easing lockdown, we witnessed short-term flow scale above the 1.41 figure and in recent hours retest the latter in the shape of a hammer candle—often interpreted as a bullish signal.

Although RSI bearish divergence is in view, the 1.41 retest could welcome a bullish scenario today, targeting 1.4150 resistance.

Observed levels:

Monthly price taking in the view north of trendline resistance, together with room for daily buyers to invade resistance at 1.4250 and H4 supply at 1.4111/1.4091 displaying a fragile tone, could have H1 buyers lift the currency pair higher from 1.41 today, with at least 1.4150 resistance in sight.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

February 23rd 2021: Dollar Remains on the Ropes, Clocking Multi-Year Lows Against GBP and AUD

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.2 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

The greenback resumed its slide Monday, elevating Europe’s shared currency for a third successive daily session.

Up by 0.3 percent, the concern for buyers remains around 1.2190 tops, with subsequent upside interest to likely take aim at Quasimodo resistance from 1.2278.

RSI action is now firmly north of the 50.00 centreline and within striking distance of resistance at 60.30.

H4 timeframe:

A closer reading of price action on the H4 scale reveals Monday voyaged above Quasimodo resistance at 1.2149 in reasonably forceful fashion. With the latter commonly serving as support once breached, resistance at 1.2179 could be next on tap to the upside, closely followed by Quasimodo resistance at 1.2200 and another resistance at 1.2214.

Downstream, technical focus is likely to be drawn towards Monday’s session low at 1.2091.

H1 timeframe:

Recently shaking hands with February’s peak at 1.2169, EUR/USD is seen marginally paring gains, on track to retest 1.2150 support.

Technical structure south of 1.2150 shows trendline support, extended from the low 1.2036, followed by another nearby trendline support coming in from the low 1.2023.

With reference to the RSI indicator, we are currently seeing the value depreciate beneath overbought terrain and form early bearish divergence. This suggests the line may swing beneath the 50.00 centreline today.

Observed levels:

Partly modified from previous analysis –

Monthly price trading off session lows, currently shaped by way of a hammer candle—commonly interpreted as a bullish signal (particularly at troughs)—suggests daily price could perhaps take on 1.2190 tops and potentially invade Quasimodo resistance at 1.2278.

H4 Quasimodo resistance-turned support at 1.2149, coupled with 1.2150 support on the H1, could be a location buyers attempt to step forward from today, targeting 1.2179 and 1.2200 resistance on the H4 as primary hurdles.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Up by 3.6 percent, February is on track to conclude in the shape of a clear-cut bullish engulfing candle. Also technically appealing is the pair closing in on 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Reinforced on the back of commodity prices and a sliding greenback, AUD/USD extended Friday’s impressive 1.3 percent advance on Monday and crossed swords with supply at 0.7937/0.7890. So far unable to attract much bearish flow, traders are urged to pencil in supply coming in from 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082).

Any corrections have 0.7726/0.7806 demand in sight, fixed above trendline support, an ascending level drawn from the low 0.5506.

H4 timeframe:

Technically aided by demand at 0.7848/0.7867, Quasimodo resistance at 0.7897 gave way—now a serving support with another layer of Quasimodo resistance seen at 0.7966.

H1 timeframe:

Despite Monday’s session clocking fresh 2021 peaks, short-term action shows price marginally paring gains and on the verge of reconnecting with 0.79 support. Though continued downside shines light on demand at 0.7857/0.7877, while a 0.79 rejection may stir buyers and subsequently target 0.7950 resistance.

Out of the RSI indicator, resistance is in focus from 80.85, with the value also threatening to exit overbought territory.

Observed levels:

The monthly timeframe continues to charge towards supply at 0.8303/0.8082, implying a push above supply at 0.7937/0.7890 to supply at 0.8045/0.7985 on the daily scale may be on the menu.

Short term is also relatively positive for buyers, with a 0.79 retest (H1) potentially on the cards, bolstered by H4 support priced in at 0.7897.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February. Although up by 0.4 percent, price is currently fading session tops.

Descending resistance (not considered traditional trendline resistance) takes the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Partly modified from previous analysis –

The US dollar remained on the ropes against the Japanese yen Monday, weighed by broad USD selling (DXY < 90.00), despite the benchmark 10-year US Treasury yields refreshing multi-month highs at 1.394%.

Following Friday’s close south of the 200-day simple moving average at 105.49, Monday, aided by supply at 106.33/105.78, led candle action to fresh session lows and registered a fourth consecutive daily loss.

February 10th trough at 104.40 calls for attention to the downside, arranged just ahead of demand at 103.56/103.93. This is an interesting zone, given it was within this area a decision was made to generate seven back-to-back bullish days and penetrate a number of local peaks.

With respect to the RSI indicator, following earlier bearish divergence out of overbought territory, the value is now beneath support at 57.00.

H4 timeframe:

For those who read Monday’s technical briefing you may recall the following:

As you can see, bearish bets lured the currency pair to demand at 105.26/105.14 (prior supply). Friday’s price action derived from the demand area so far has been uninspiring, forming two back-to-back candles that wrapped up significantly off session highs. Beyond the aforesaid demand, trendline support, etched from the low 102.59, is lying in wait.

As evident from the H4 chart, we navigated through remaining bids within demand on Monday and are now within close range of the aforementioned trendline support, which happens to coincide with a Fib support zone made up between 104.64 and 104.83 (green).

H1 timeframe:

Heading into London’s morning session, we can clearly see sellers took the wheel, aided by trendline support-turned resistance, taken from the low 104.41, and the 100-period simple moving average at 105.71.

Quasimodo support at 105.27, as expected, provided little in the way of a floor on Monday, with the majority of buying from here likely consumed during Friday’s pullback. This led the unit to 105 support (fastened just ahead of Quasimodo support at 104.91), holding in line with the RSI indicator bottoming around oversold space.

Observed levels:

Long term, sellers appear to remain in the saddle, targeting February 10th trough at 104.40.

The above could drive short-term flow beyond 105 and H1 Quasimodo support at 104.91 into the H4 Fib zone at 104.64/104.83, strengthened by H4 trendline support.

Therefore, we might see buyers show some life from 104.64/104.83, though given higher timeframes potentially eyeing 104.40, upside may be short-lived.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4086, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

The British pound rose against the US dollar on Monday amid optimism surrounding the UK’s vaccination rollout program.

1.4250 Quasimodo resistance is now in sight, thanks to GBP/USD recording a third successive daily gain and taking on resistance at 1.4011 (now serving as a potential support).

The RSI continues to trek overbought terrain, reaching highs of 74.40 on Monday. Bear in mind, the indicator can remain overbought for prolonged periods in trending environments.

H4 timeframe:

Supply at 1.4034/1.3989, a zone extended from April 2018, ceded ground yesterday, allowing the pair within a stone’s throw away from 1.4111/1.4091 supply (sharing space with channel resistance, taken from the high 1.3866).

H1 timeframe:

In light of yesterday’s movement retesting the big figure 1.40 as support, 1.41 may call for attention today. Though before we touch gloves with the latter, a retest at demand from 1.3995/1.4035 could play out.

RSI bearish divergence (red) is currently in view, with the value recently exiting overbought terrain.

Observed levels:

As aired in Monday’s writing, monthly price remains optimistic, targeting 1.4376 tops. With daily resistance also now taken at 1.4011, this potentially adds weight to any retest seen from either H1 demand at 1.3995/1.4035 or the 1.40 figure within (note H1 demand is fixed within H4 demand at 1.4034/1.3989 and also holds daily support at 1.4011).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

Weekly Technical Market Insight: 22nd – 26th February 2021

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

 Since early February, sellers claimed the 127.2% Fib projection at 91.44 and now loiter a touch north of January 21 low at 90.04. Sellers gaining strength this week shines the technical spotlight on support priced in at 89.34—the origin of January’s pullback.

North of 91.44, the technical radar shifts to resistance at 92.26, accompanied by a 61.8% Fib level at 92.36. Also of note is the 200-day simple moving average, circling around 93.36 (price has been trading beneath this dynamic value since June 2020).

In terms of trend, as noted in previous writing, the US dollar has echoed a downside bias since topping south of the 103.00 figure in March 2020. Consequently, January’s pullback and February’s subsequent decline may be interpreted as a bearish cue. Submerging 90.04 this week is likely to confirm a short-term bearish narrative, while ducking under support at 89.34 and the 88.25 February 16 low (2018) could spark longer-term breakout selling interest.

With reference to the RSI oscillator, channel support gave way and was retested as resistance. Subsequent action witnessed the value absorb the 50.00 centreline, implying additional downside momentum could be on the cards this week.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels, trading 0.2 percent lower as we head into the final full week of February.

Downstream, 1.1857/1.1352 represents demand; northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Demand from 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance)—remains an area of focus. Up by 0.7 percent in the latter half of the week, the concern for buyers this week is likely the 1.2190 tops, followed by Quasimodo resistance plotted at 1.2278.

RSI action remains flirting with trendline resistance (yellow box), extended from the low 33.86. Note the value also continues to work with the 50.00 centreline.

H4 timeframe:

Upside gaining speed into the closing stages of trade last week landed H4 candles within touching distance of Quasimodo resistance at 1.2149. Looking ahead, we can also see resistance parked at 1.2179, closely followed by Quasimodo resistance at 1.2200 and another resistance at 1.2214.

Downstream, technical focus remains on support at 1.2057, arranged just north of demand at 1.2019/1.2037.

H1 timeframe:

Europe’s single currency gathered traction vs. the greenback heading into London hours Friday, pulling EUR/USD north of 1.21 resistance amid a healthy Eurozone PMI print (57.7 versus January’s 54.8 read).

A minor DXY pullback, however, put a cap on gains, with the pair topping just south of 1.2150 resistance. As you can see, this positioned the unit within a stone’s throw from retesting 1.21 and neighbouring 100-period simple moving average.

RSI fans will also note the value staged a retracement from resistance at 78.97 (overbought territory) and retested support around 54.20/47.05.

Observed levels:

Long term:

Monthly price trading off session lows, currently shaped by way of a hammer candle—commonly interpreted as a bullish signal (particularly at troughs)—suggests daily price could perhaps take on 1.2190 tops this week and potentially invade Quasimodo resistance at 1.2278.

Short term:

Recognising a higher timeframe bullish vibe, retesting 1.21 support (and 100-period simple moving average) on the H1 in early trading this week is a possible scenario. Holding 1.21 signals 1.2150 resistance could make a show, a level aligning closely with H4 Quasimodo resistance at 1.2149.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has seen the Australian dollar flex some financial muscle against the US dollar. Up by 3 percent, the pair refreshed 2021 peaks and consequently shined light on 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Benefitting from a weaker USD and growing optimism over the global growth/reflation outlook, Friday established a near-full-bodied bullish candle. This also took RSI action above trendline resistance to within striking distance of overbought territory.

Settling within close range of supply at 0.7937/0.7890, this is likely an area we’ll see call for attention early this week, with a break of this base potentially unmasking the monthly timeframe’s 0.8303/0.8082 supply zone.

Any corrections this week may direct the technical spotlight back to trendline support, an ascending level drawn from the low 0.5506.

H4 timeframe:

Friday’s 1.3 percent rally took the currency pair above a number of resistances, with price movement now hinting at a possible test of Quasimodo resistance from 0.7897.

Any downside moves this week have support at 0.7843 to target; additional dips bring light to support drawn from 0.7805.

H1 timeframe:

0.78 resistance stepped aside Friday, with subsequent buying confronting and eventually taking over 0.7850 resistance. Price action traders will note the pair retested 0.7850 as we transitioned into US trade. Break/retest formations are common in trending markets, and tend to encourage follow-through action.

Although the RSI oscillator spun lower from resistance at 80.85, producing bearish divergence, chart-based traders likely feel further outperformance is on the cards, targeting 0.79.

Observed levels:

Long term:

The monthly timeframe points towards an acceleration to the upside this week, though in order for this to come to fruition, daily buyers must overthrow supply at 0.7937/0.7890.

Short term:

H4 suggests scope to approach higher land this week, at least until shaking hands with Quasimodo resistance at 0.7897. Interestingly, the aforesaid level resides within the lower range of daily supply mentioned above at 0.7937/0.7890. Therefore, this is likely a level sellers are mindful of this week.

The 0.7850 retest on the H1, based on higher timeframe chart studies, could attract additional bullish flow and reach for 0.79.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February. Although up by 0.7 percent, price is currently fading session tops.

Descending resistance (not considered traditional trendline resistance) takes the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Sellers remained in the driving seat Friday, poised to explore deeper water this week after closing south of the 200-day simple moving average at 105.51.

February 10th trough at 104.40 calls for attention, arranged just ahead of demand at 103.56/103.93. This is an interesting zone, given it was within this area a decision was made to generate seven back-to-back bullish days and penetrate a number of local peaks.

With respect to the RSI indicator, following earlier bearish divergence out of overbought territory, the value is now within a short walk of support at 57.00.

H4 timeframe:

The October 7 (2020) peak at 106.11 proved effective resistance last week, withstanding two bullish upside attempts. As you can see, bearish bets lured the currency pair to demand at 105.26/105.14 (prior supply), set ahead of a 50.0% retracement level at 105.08.

Friday’s price action derived from the demand area so far has been uninspiring, forming two back-to-back candles that wrapped up significantly off session highs (red arrows). Beyond the aforesaid demand, trendline support, etched from the low 102.59, is lying in wait.

H1 timeframe:

Aided by neighbouring 100-period simple moving average at 105.69, USD/JPY tested a trendline support-turned resistance, taken from the low 104.41.

With the RSI indicator dipping a toe in waters south of the 50.00 centreline, and Quasimodo support at 105.27 unlikely to have much bullish interest following Friday’s test, additional bearish flow towards the 105 figure could be in the offing in early movement this week.

Observed levels:

Long term:

The reaction from daily supply at 106.33/105.78, and subsequent push below the 200-day simple moving average around 105.51, echoes a bearish tone this week. This, therefore, places a question mark on upside flow derived from the monthly timeframe’s bullish engulfing candle.

Short term:

In addition to the daily timeframe’s position (see above), and the H4 revealing restrained interest off demand at 105.26/105.14 along with H1 displaying scope to extend south of trendline support-turned resistance, sellers could take the wheel in early trade and take aim at 105.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4036, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

On the back of a successful vaccination program across the UK, sterling, according to many desks, is poised to continue to outperform against the buck.

With support lingering below price at 1.3755, resistance at 1.4011 made its way into the spotlight on Friday, a previous Quasimodo support base.

While the RSI also stepped into overbought territory, this does not necessarily imply buyers are losing grip. On the contrary, the indicator can remain overbought for prolonged periods in trending environments.

H4 timeframe:

As evident from the H4 scale, Friday bumped heads with supply at 1.4034/1.3989, a zone extended from April 2018. Despite price mildly scratching the upper side of the supply, it was unlikely enough to trip stops. This—coupled with sellers making a show heading into the closing hours of trade—underlines demand at 1.3942/1.3900 (prior supply), which happens to share space with a trendline support (1.3566).

Technicians who adopt multi-timeframe analysis will also acknowledge daily resistance at 1.4011 resides within the upper range of the aforementioned H4 supply.

A breakout north, on the other hand, highlights supply around 1.4076, though bear in mind 1.4111/1.4091 supply exhibits stronger historical significance.

H1 timeframe:

A closer reading of price action on the H1 scale shows the unit crossed swords with a 100% Fib extension at 1.4011 (merges with daily resistance), posted north of the key figure 1.40.

1.40 is a widely watched level; buyers were likely taking profits around this region and breakout buyers entering long the break.

With the RSI demonstrating bearish divergence (although the value remains above 50.00) and H1 price action poised to perhaps pursue ground beneath 1.40, we could have the pair test the mettle of Quasimodo support at 1.3959. A break here potentially calls for the 1.39 level.

Observed levels:

Long term:

Monthly price remains optimistic, targeting 1.4376 tops. However, before the unit attempts to navigate higher levels, daily resistance at 1.4011 represents a possible stumbling block this week. Daily support is seen at 1.3755.

Short term:

Alongside daily resistance at 1.4011, H4 supply at 1.4034/1.3989 and H1 on the verge of reclaiming territory beneath the 1.40 figure, unlocks the possibility of a short-term bearish theme towards at least H1 Quasimodo support at 1.3959, followed by the upper edge of H4 demand at 1.3942.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 19th 2021: Sterling Clocks Fresh 2021 Peaks Amid Dollar Losses

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains off session lows, though currently trades 0.4 percent lower.

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Demand from 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance)—remains an area of focus.

RSI action remains gripping two converging RSI trendline resistances (yellow box), while circling the 50.00 centreline.

H4 timeframe:

As USD demand receded amid disappointing labour market, Europe’s single currency benefitted on Thursday.

The one-sided move higher took over 1.2075 resistance, with price movement taking on resistance from 1.2087 in recent hours. Quasimodo resistance at 1.2149 is seen to the upside, with a break uncovering the 88.6% Fib level at 1.2162 and resistance from 1.2179.

H1 timeframe:

Quasimodo support at 1.2023, a level accompanied by a 127.2% Fib extension at 1.2029, has done a superb job in holding price higher.

Thursday’s bullish impetus, as you can see, has landed candle action within a stone’s throw from the 1.21 level and 100-period simple moving average. Moving through here could direct flow to resistance at 1.2132 (a previous Quasimodo support), stationed just south of 1.2150 resistance.

RSI movement, as you can see, climbed above resistance around 54.20/47.05 and retested the upper edge of the base in recent moves, suggesting overbought conditions today.

Observed levels:

Based on current chart studies, 1.21 potentially offers fragile resistance. A H1 breakout above 1.21, therefore, could be interpreted as a bullish cue, targeting H1 resistance at 1.2132, followed by 1.2050 (aligns with H4 Quasimodo resistance at 1.2149).

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.7 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

AUD/USD bulls modestly stepped forward on Thursday, snapping a two-day bearish phase.

Upriver, beyond 2021 pinnacles at 0.7820, supply inhabits the 0.7937/0.7890 neighbourhood. Calling for attention to the downside, on the other hand, is trendline support, an ascending level drawn from the low 0.5506.

RSI flow remains flirting with trendline resistance. A downside move here has the 50.00 centreline in sight, while moves north could have the value invade overbought space.

H4 timeframe:

Current flow is seen fluctuating between resistance parked at 0.7769 and drop-base-rally demand at around the 0.7727ish region (green).

Outside of this range, support at 0.7698 can be found, a previous Quasimodo resistance, while a bullish play may target resistance drawn from 0.7805.

H1 timeframe:

H4 resistance mentioned above at 0.7769 recently made an entrance, following an earlier push off session troughs, movement that took on 0.7750 resistance and the 100-period simple moving average. A H1 close north of 0.7771 could spark a bullish theme to 0.78, despite a nearby Quasimodo resistance plotted at 0.7782.

RSI followers may also note the value climbed the 50.00 centreline, implying upside momentum is to the upside and could continue to overbought territory.

Observed levels:

Monthly and daily timeframes displaying scope to attack higher levels places a question mark on H4 resistance from 0.7769. A H1 close above the latter could have breakout buyers make a show, with 0.78 (H1) targeted, set just south of H4 resistance at 0.7805.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Buyers are beginning to show life on the monthly scale, following January’s bullish engulfing candle.

Up by 1 percent, descending resistance (not considered traditional trendline resistance) takes the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Partly modified from previous analysis –

Thursday extended Wednesday’s retracement out of supply from 106.33/105.78, consequently throwing light on the nearby 200-day simple moving average at 105.51.

The RSI indicator recently produced bearish divergence off overbought territory. Support remains on the table around 57.00.

H4 timeframe:

Partly modified from previous analysis –

The October 7 (2020) peak at 106.11 made a show Wednesday and, as you can see, stimulated a bearish response that extended into Thursday’s session.

Demand remains in sight at 105.26/105.41 and 105.26/105.14 (commonly referred to as stacked demand), while should buyers eventually overthrow 106.11, a 127.2% Fib projection at 106.44 is in view, shadowed by Quasimodo resistance at 106.58.

H1 timeframe:

Technical framework on the H1 scale shows price grinding towards the 100-period simple moving average at 105.61, with a break shining light on a neighbouring trendline support, taken from the low 104.41.

Upside, we can see the 106 figure, shadowed by two nearby Quasimodo resistances at 106.09 and 106.27.

RSI fans will note the value is circling a 50.00 support area.

Observed levels:

Largely unchanged outlook.

The reaction from daily supply at 106.33/105.78 might tempt sellers to extend the unit lower and retest the 200-day simple moving average around 105.51. Given the monthly timeframe’s bullish position right now (see above), a dip to the SMA could spark a bullish theme. Note the SMA also coincides closely with H4 demand at 105.26/105.41 and H1 trendline support.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed multi-month highs at 1.3985.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Sterling nudged higher against the dollar Thursday amidst successful COVID-19 vaccinations across the UK. As you can see, this placed supply at 1.3996/1.3918 under pressure.

North of supply we can see we have resistance parked at 1.4011, a previous Quasimodo support base (red).

RSI action remains teasing the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region, testing overbought territory.

H4 timeframe:

For those who read previous analysis you may recall the following (italics):

Early hours Tuesday witnessed price movement puncture the upper side of supply from 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918). With many price action traders likely to view this as a bullish cue (sellers consumed at supply), dip-buying could emerge off support from 1.3852.

As evident from the chart, 1.3852 served well as support and has indeed taken on supply from 1.3942/1.3900, which has brought light to another supply at 1.4034/1.3989 (fastened to the upper side of daily supply mentioned above at 1.3996/1.3918 which also houses daily resistance at 1.4011).

H1 timeframe:

Upside gained speed heading into London hours on Thursday, overriding the 100-period simple moving average, the 1.39 figure and 1.3951 tops.

Ultimately, what this has done is throw the key figure 1.40 into the realms of possibility, a psychological barrier aligning with a 100% Fib extension at 1.4022 and a 127.2% Fib projection from 1.3996. Therefore, this is likely to be on the radar for many GBP/USD traders today.

RSI flow has recently exited overbought territory, following a peak at 79.87.

Observed levels:

The 1.40 figure on the H1 and associated Fib levels is likely to not only interest sellers, but it may also be a logical upside target for longs. Also of interest is 1.40 unites closely with daily resistance at 1.4011 and H4 supply parked at 1.4034/1.3989.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 18th 2021: Greenback Extends Gains Amidst Upbeat Economic Data

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains off session lows, though currently trades 0.8 percent lower.

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Another spirited USD advance (DXY > 91.00) weighed on Europe’s shared currency Wednesday, consequently shifting the technical spotlight towards demand from 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance).

RSI action dipped back under the 50.00 centreline, after shaking hands with two converging RSI trendline resistances (yellow box).

H4 timeframe:

EUR/USD extending losses on Wednesday led price movement through support drawn from 1.2087 and 1.2057. Run-of-the-mill demand resides around the 1.2035 region (red arrow), though bearish bets may take aim at trendline resistance-turned support, extended from the high 1.2349.

H1 timeframe:

Quasimodo support at 1.2023 made an entrance heading into US hours Wednesday, a level accompanied by a 127.2% Fib extension at 1.2029. Further upside off this base will likely make its way towards supply coming in at 1.2078/1.2062, though pushing southbound will bring light to the widely watched 1.20 level, joined by 78.6% Fib level at 1.1998.

RSI recently rebounded off support from 20.64 and exited oversold space.

Observed levels:

Monthly price is on course to perhaps retest 1.1857/1.1352 demand, while daily flow is on the doorstep of demand from 1.1923/1.2001.

Shorter-term flow reveals H4 nudged under support at 1.2057, therefore a bearish theme could emerge until we shake hands with nearby trendline support.

Although H1 is balancing off Quasimodo support at 1.2023, a dip to 1.20 bids is perhaps on the table. This is a level not only linked with a 78.6% Fib level at 1.1998, but also the upper side of daily demand taken from 1.2001.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.5 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

AUD/USD concluded Wednesday pretty much unmoved and established an indecision doji candle.

Upriver, beyond 2021 pinnacles at 0.7820, supply inhabits the 0.7937/0.7890 neighbourhood. Calling for attention to the downside, on the other hand, is trendline support, an ascending level drawn from the low 0.5506.

RSI flow is seen touching gloves with RSI trendline resistance. A downside move here has the 50.00 centreline in sight, while moves north could have the value invade overbought space.

H4 timeframe:

Resistance at 0.7769 remains in play. Though traders are encouraged to note the drop-base-rally demand zone at around the 0.7727ish region (green) is also attracting a modest bullish defence.

As evident from the chart, support at 0.7698, a previous Quasimodo resistance, is next in line should sellers take on more of a dominant position today.

H1 timeframe:

The 100-period simple moving average around 0.7761 served well as dynamic resistance on Wednesday, directing the H1 candles south of 0.7750.

Quasimodo support is seen at 0.7719, with a break uncovering the 0.77 figure. Bullish impetus, movement that takes the currency pair north of the 100-period simple moving average, could lead things back to resistance at 0.7777, followed by 0.78.

Observed levels:

Partly modified from previous analysis –

Retesting 0.7750 resistance could spark a short-term bearish scenario towards 0.77 on the H1 (H1 Quasimodo support is potentially fragile having seen the level tested last Friday).

Longer term, the monthly chart shows buyers are likely to eventually take the wheel, though prior to this, daily action could retreat and retest trendline support, perhaps inspiring a wave of dip-buying.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Buyers are beginning to show life on the monthly scale, following January’s bullish engulfing candle.

Up by 1.2 percent, resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas support continues to inhabit 101.70 in the event sellers make a show.

Daily timeframe:

Wednesday witnessed sellers step forward within the walls of supply from 106.33/105.78, following Tuesday’s dynamic push above the 200-day simple moving average at 105.52. Snapping a five-day winning streak, yesterday’s action could spark a retest at the aforementioned SMA.

The RSI indicator exited overbought waters and produced bearish divergence. Support remains on the table around 57.00.

H4 timeframe:

The October 7 (2020) peak at 106.11 made a show on Wednesday and, as you can see, stimulated a bearish response.

Demand in sight can be seen at 105.26/105.41 and 105.26/105.14 (commonly referred to as stacked demand), while should buyers overthrow 106.11, a 127.2% Fib projection at 106.44 is in view, shadowed by Quasimodo resistance at 106.58.

H1 timeframe:

Partly modified from previous analysis –

106 proved a fragile level yesterday, yet support drawn from 105.80 (previous Quasimodo resistance). South of here, we also have two trendline supports to be mindful of, extended from the low 104.55 and 104.41, along with a 100-period simple moving average.

The RSI indicator, as you might expect, in view of the upside movement since last week, continues to explore overbought territory. Notice that support also formed around the 44.00ish range, a common scenario in a rising market.

Observed levels:

The reaction from daily supply at 106.33/105.78 might tempt sellers to extend the unit lower and retest the 200-day simple moving average around 105.52. Given the monthly timeframe’s bullish position right now (see above), a dip to the SMA could spark a bullish theme. Note the SMA also coincides closely with H4 demand at 105.26/105.41.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed multi-month highs at 1.3951.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

After Tuesday’s indecision candle connected with supply at 1.3996/1.3918 and refreshed 2021 highs, Wednesday saw sellers step forward and shine light on support from 1.3755.

RSI action recently broke above the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 67.67), though recently retreated back into the consolidation after coming within touching distance of overbought levels.

H4 timeframe:

Brought forward from previous analysis –

Early hours Tuesday witnessed price movement puncture the upper side of supply from 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918). With many price action traders likely to view this as a bullish cue (sellers consumed at supply), dip-buying could emerge off support from 1.3852.

It should also be noted that a dip below 1.3852 could send price back to demand at 1.3761/1.3789.

H1 timeframe:

As can be seen from the H1 chart this morning, recent flow dived under the 100-period simple moving average and crossed swords with 1.3850 support. Below, 1.38 is on the radar, stationed just north of Quasimodo support from 1.3787. Above the 100-period simple moving average, on the other hand, we can see the 1.39 big figure resistance.

RSI movement bottomed ahead of oversold levels on Wednesday and is within touching distance of the lower side of 50.00.

Observed levels:

In similar fashion to Wednesday’s writing, the monthly timeframe eyeing 1.4376, in addition to H4 price testing support at 1.3852 and H1 1.3850 support, this could have buyers take the spotlight and attempt to bring things over the 100-period simple moving average on the H1 today.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 17th 2021: Yields Surge to Fresh 2021 Peaks; DXY Forms Daily Bullish Engulfing Candle

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has so far witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently stirring a hammer formation (though we will not know this until the month concludes).

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Partly modified from previous analysis –

Albeit off best levels, Tuesday concluded another session mostly unmoved around 1.2130.

Demand at 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance)—offers a logical downside target should sellers regain consciousness.

1.2190 tops, shadowed by Quasimodo resistance from 1.2278, are seen as possible upside targets.

RSI fans will note the value remains engaging with the 50.00 centreline, which happens to share space with two converging trendline resistances (yellow box).

H4 timeframe:

Areas to monitor on the H4 chart are the 88.6% Fib level at 1.2162, closely stationed by resistance from 1.2179.

To the downside, swing support is recognised at 1.2087, followed by 1.2075 support (joined by a 50.0% level at 1.2060).

H1 timeframe:

USD bulls went on the offensive Tuesday, prompting bearish bets on EUR/USD following a whipsaw through 1.2150 resistance (a move commonly referred to as a stop run or a bull trap). In one fell swoop, we punched back through the 100-period simple moving average and shook hands with 1.21, which, as you can see, has served well as support during US trading.

Downstream, aside from H4 support priced at 1.2087, H1 demand resides close by at 1.2078/1.2062.

Out of the RSI oscillator, the value bottomed north of oversold terrain and is on course to cross swords with the lower side of a resistance zone between 47.05 and 54.20.

Observed levels:

Outlook mostly unchanged due to lacklustre performance –

Monthly price continues to express interest in higher levels, which may eventually motivate daily buyers.

A short-term support zone forged on the H1 timeframe (green) between the upper side of demand at 1.2078 and the 1.21 figure (between the area, H4 support is plotted at 1.2087), therefore, could attract a bullish scenario today and take the currency pair north of the 100-period simple moving average.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.6 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

The Australian dollar found itself under pressure against a broadly stronger US dollar (DXY > 90.50) on Tuesday, establishing what many candlestick enthusiasts refer to as a bearish outside reversal.

Upriver, beyond 2021 pinnacles at 0.7820, supply inhabits the 0.7937/0.7890 neighbourhood. Calling for attention to the downside, on the other hand, is trendline support, an ascending level drawn from the low 0.5506.

RSI flow is seen touching gloves with RSI trendline resistance. A downside move here has the 50.00 centreline in sight, while moves north could have the value invade overbought space.

H4 timeframe:

Resistance at 0.7805 made an entrance in the early hours of trade on Tuesday, ultimately guiding price action through support at 0.7769.

As evident from the chart, 0.7769 currently serves as resistance and could ultimately lead things back towards support at 0.7698, a previous Quasimodo resistance. Note, however, that a bullish defence could also emerge around the 0.7727ish region (green – a drop-base-rally demand zone).

H1 timeframe:

Tuesday’s depreciation directed intraday flow south of 0.78 on Tuesday, movement that tested the mettle of 0.7750 support and a nearby 100-period simple moving average.

With RSI flow dipping through a relatively long-standing trendline support, taken from the low 23.72, and space for sellers to stretch their legs south of 0.7750 to at least Quasimodo support from 0.7719 (followed by 0.77), a short-term bearish scene could emerge sub 0.7750.

Observed levels:

Short term, a H1 close below 0.7750 is likely to stir a bearish theme towards 0.77 on the H1 (H1 Quasimodo support is potentially fragile having seen the level tested last Friday).

Longer term, the monthly chart shows buyers are likely to eventually take the wheel, though prior to this, daily action could retreat and retest trendline support, perhaps inspiring a wave of dip-buying.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Buyers are beginning to show life on the monthly scale, following January’s bullish engulfing candle.

Up by 1.3 percent, resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas support continues to inhabit 101.70 in the event sellers make a show.

Daily timeframe:

Notably, price action on the daily chart made its way above the 200-day simple moving average at 105.53 yesterday, registering a fifth successive daily advance and testing the walls of supply coming in from 106.33/105.78.

Breaking north of a 200-day simple moving average is generally interpreted as a bullish indication, a move that may tempt buyers to take on the aforementioned supply and reach for another layer of supply arranged at 107.58/106.85.

The RSI indicator is seen edging its way back into overbought territory and also possibly bringing bearish divergence to the table.

H4 timeframe:

In line with the US dollar index staging a strong bullish show and the 10-year US Treasury yield puncturing 1.30 percent, USD/JPY bulls pressed higher from demand at 105.26/105.14 (previous supply).

The October 7 (2020) peak at 106.11 is next on tap, in terms of resistance, with a break unmasking a 127.2% Fib projection at 106.44, shadowed by Quasimodo resistance at 106.58.

H1 timeframe:

Recent bullish flow, as you can see on the H1 chart, saw the unit topple a number of resistances, including psychological resistance at 106.

Assuming buyers maintain a bullish presence above 106, this could stir interest to Quasimodo resistance at 106.27.

The RSI indicator, as you might expect in view of the upside movement since last week, continues to explore overbought territory. Notice that support also formed around the 44.00ish range, a common scenario in a rising market.

Observed levels:

With H1 visibly retesting 106 as support, following an earlier breach, this suggests H4 may attempt to overthrow the October 7 (2020) peak at 106.11. Fuelled on the back of monthly price striving for higher levels, this could have intraday flow draw towards Quasimodo resistance at 106.27 on the H1, followed by the H4 127.2% Fib projection at 106.44.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed multi-month highs at 1.3951.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Despite refreshing 2021 highs on Tuesday, GBP/USD remains testing the spirit of supply at 1.3996/1.3918. Candlestick traders will also note yesterday’s action forged an indecision candle, which could, given the market trending higher since 2020, be interpreted as a bearish cue. Essentially, though, buyers and sellers are in a standoff.

Support on the daily scale can be seen at 1.3755.

RSI action recently broke above the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 67.67), and is on the verge of entering overbought territory.

H4 timeframe:

Early hours Tuesday witnessed price movement puncture the upper side of supply from 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918). With many price action traders likely to view this as a bullish cue (sellers consumed at supply), dip-buying could emerge off support from 1.3852.

It should also be noted that a dip below 1.3852 could send price back to demand at 1.3761/1.3789.

H1 timeframe:

Technical studies derived from the H1 chart reveal price action tracking ground south of the 1.39 figure, which could see the pair embrace trendline support, taken from the low 1.3566, fixed together with a nearby 100-period simple moving average.

A test of the aforesaid trendline support, however, could also bring about a whipsaw to neighbouring support at 1.3850.

Observed levels:

The monthly timeframe eyeing 1.4376, in addition to H4 price recently testing the upper edge of supply at 1.3942/1.3900, potentially shines the technical spotlight on H1 trendline support as a possible platform buyers may be attracted to.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Sterling Clocks Fresh Multi-Month Peaks Vs. Dollar Amidst On-going Vaccination Progress

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has so far witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently stirring a hammer formation (though we will not know this until the month concludes).

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Partly modified from previous analysis –

EUR/USD continues to consolidate last week’s gains around 1.2130, following a recovery from demand at 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance). 1.2190 tops, shadowed by Quasimodo resistance from 1.2278, are seen as possible upside targets.

RSI fans will note the value remains engaging with the 50.00 centreline, which happens to share space with two converging trendline resistances (yellow box).

H4 timeframe:

Outlook unchanged due to lacklustre performance –

Quasimodo resistance at 1.2142—aligning with a 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149—remains centre of attention on the H4 scale, withstanding two upside attempts last week. Space north of here may call for resistance at 1.2179, with subsequent buying to possibly take aim at another resistance plotted at 1.2214.

As you can see, Friday also discovered a healthy pocket of bids from swing support recognised at 1.2087, leaving 1.2075 support unchallenged.

H1 timeframe:

Monday had H1 sellers respond from Quasimodo resistance at 1.2142 noted on the H4 scale. H1 buyers also welcomed the 100-period simple moving average at 1.2122. Taking on higher levels may see buyers push beyond what appears to be a consumed H1 Quasimodo resistance at 1.2173 to pursue 1.22 resistance.

47.05/54.20 continues to serve as support out of the RSI indicator, a support/resistance area in play since the beginning of February.

Observed levels:

Outlook mostly unchanged due to lacklustre performance –

Both monthly and daily timeframes ended last week off worst levels, in the shape of a hammer pattern—movement often interpreted as a bullish cue. By the same token, both charts demonstrate room to scale higher, targeting 1.2190 tops on the daily chart.

On the shorter term, H4 Quasimodo resistance at 1.2142, despite blending closely with Fib studies, has failed to invite selling beneath local H4 support at 1.2087. The non-committal tone from sellers, along with H1 holding off the 100-period simple moving average, places a question mark on the H4 Quasimodo formation.

According to chart studies, therefore, H1 buyers could potentially reach for the 1.22 neighbourhood.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 2 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Modest USD weakness elevated AUD/USD appeal Monday, recording a third successive daily advance and testing 0.7782 tops.

North of 0.7782, technical elements imply a continuation bid, refreshing 2021 pinnacles and possibly drawing in supply from 0.7937/0.7890. Sellers regaining consciousness, on the other hand, could lead trendline support back into the fight, an ascending level drawn from the low 0.5506.

RSI flow recently dethroned the 50.00 centreline and landed the indicator at RSI trendline resistance, with further upside to possibly touch overbought space.

H4 timeframe:

Bearish flow stepped aside within supply at 0.7769/0.7749 in recent trading, tripping any stops and retesting the upper side of the zone.

Quasimodo resistance plotted at 0.7781 appears to have already been consumed, with continuation moves potentially eyeballing resistance taken from 0.7805.

H1 timeframe:

AUD/USD action was pretty much muted on Monday, despite managing to eke out modest gains on the session.

Upstream, 0.78 psychological resistance resides close by, while lower on the curve, sellers could approach 0.7750 support and the 100-period simple moving average.

Familiar trendline support, taken from the low 23.72, remains in the frame on the RSI, with the value continuing to claw out position north of the 50.00 centreline.

Observed levels:

Partly modified from previous analysis –

The monthly could call for higher levels over the coming weeks, which may lend buyers support on the daily scale and have the pair refresh 2021 highs, with daily supply at 0.7937/0.7890 also to possibly make an entrance.

Across the page on the short-term timeframes, H4 supply at 0.7769/0.7749 was taken out and retested on Monday. This shines the technical spotlight on possible buying today, targeting 0.78 (H1) and 0.7805 resistance on the H4.

The combination of 0.71 and 0.7805 could also attract a short-term correction move, though given higher timeframe flow pointing higher, any moves lower could be short-lived.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Buyers are beginning to show some life on the monthly scale, following January’s bullish engulfing candle.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Partly modified from previous analysis –

Technical structure to be mindful of:

  • The 200-day simple moving average at 105.54 and supply coming in from 106.33/105.78.
  • Lower on the curve, demand at 103.56/103.93 is close by, shadowed by trendline resistance-turned support, pencilled in from the high 111.71.

The RSI indicator rebounding from 57.00 support (previous resistance) has elbowed overbought conditions back in sight.

H4 timeframe:

Supply at 105.26/105.14 failed to inspire follow-through selling on Monday and swiftly stepped aside. Trekking higher terrain today, therefore, could be in the offing, taking aim at the alternate AB=CD resistance at 105.63 (the 127.2% Fib extension)—provided a platform for sellers to work with early last week.

The above swings the pendulum in favour of buyers, at least in the short term until we shake hands with 105.63.

H1 timeframe:

Monday observed narrow trading—movement which established a bullish pennant pattern from 105.41 and 105.26. A breakout north unearths a possible drive into Quasimodo resistance at 105.55, a level surrounded by a 161.8% Fib projection at 105.58 and an 88.6% Fib level at 105.61. Beyond here, bullish flow could also approach another Quasimodo resistance at 105.80.

Failure to breakout higher is likely to shift interest to support priced at 105.14, followed by the 105 figure.

The RSI indicator shows the value recently exited overbought waters and is currently hovering around the 65.00 neighbourhood.

Observed levels:

Monthly, daily and H4 timeframes point to a possible breakout above the H1 timeframe’s bullish pennant, targeting at least H1 Quasimodo resistance from 105.55 (aligns with the 200-day simple moving average around 105.53 and the H4 alternate AB=CD resistance at 105.63).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed multi-month highs at 1.3918.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Amidst a modestly softer USD and vaccine optimism out of the UK, GBP/USD welcomed fresh yearly peaks ON Monday and tested supply at 1.3996/1.3918. This follows the break of resistance at 1.3755 earlier last week.

RSI enthusiasts will note the indicator recently broke above the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 68.78), and is on the verge of entering overbought territory.

H4 timeframe:

Monday kicked off on the front foot, lifting the currency pair north of 1.3852 resistance into the walls of supply at 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918).

H1 timeframe:

Monday echoed a subdued stance as price forged a rising wedge pattern between 1.3883 and 1.3914 around the 1.39 figure.

As you can see, the lower side of the rising wedge has already given way. Should 1.39 step aside, downside may gain speed and test 1.3850 support, along with nearby trendline support, taken from the low 1.3566.

Observed levels:

Though monthly price appears set to take aim at higher levels, the daily timeframe testing supply at 1.3996/1.3918, along with H4 also testing supply at 1.3942/1.3900, could send H1 south of 1.39 towards the 1.3850 neighbourhood.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Weekly Technical Market Insight: 15th – 19th February 2021

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

The greenback was on the ropes last week, consequently snapping a two-week bullish phase. Measured by the US dollar index, the buck shed 0.7 percent, following a bearish outside reversal formed on February 5 from a 127.2% Fib projection at 91.44.

Friday settling considerably off best levels, together with the RSI oscillator burrowing through channel support and the 50.00 centreline, places the 90.04 trough (January 21) in sight. Violating the aforesaid level this week shines the technical spotlight on support drawn from 89.34.

In addition to last week’s retreat, the US dollar has echoed a downside bias since topping south of the 103.00 figure in early March 2020. Consequently, January’s pullback and the recent decline may be interpreted as a bearish cue. Submerging support at 89.34 and the 88.25 February 16 low (2018) is likely to further confirm the current bearish narrative.

From a technical perspective, therefore, the 90.00 figure might be worth keeping a tab on this week, with a break perhaps calling for support at 89.34.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently stirring a hammer formation (though we will not know this until the month concludes).

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Up by 0.6 percent, EUR/USD bulls wrapped up the week on the front foot. Earlier action witnessed the pair extend recovery gains north of demand at 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance).

As you can see, Friday settled off worst levels (shaped by way of a hammer candle pattern), suggesting bulls could grow in confidence this week and approach 1.2190 tops, shadowed by Quasimodo resistance from 1.2278.

RSI fans will note the value ended the week engaging with the 50.00 centreline, which happens to share space with two converging trendline resistances (yellow box).

H4 timeframe:

Quasimodo resistance at 1.2142—aligning with a 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149—remains centre of attention on the H4 scale, withstanding two upside attempts last week. Space north of here may call for resistance at 1.2179, with subsequent buying to possibly take aim at another resistance plotted at 1.2214.

As you can see, Friday also discovered a healthy pocket of bids from swing support recognised at 1.2087, leaving 1.2075 support unchallenged.

H1 timeframe:

Mid-way through London Friday observed buyers attempt to arrange a defence off 1.21 psychological support, with price movement even establishing a hammer candle pattern—a formation generally viewed as a bullish signal. However, heading into US hours, the majority of buyers were squeezed out of the market as the pair whipsawed to lows ahead of demand at 1.2078/1.2062. This has stop-run written all over it.

Quasimodo resistance at 1.2142 noted on the H4 scale remains a prominent fixture on the H1 timeframe. Taking on higher levels this week may see buyers push beyond what appears to be a consumed H1 Quasimodo resistance at 1.2173 to pursue 1.22 resistance.

47.05/54.20 continues to serve as support and resistance out of the RSI indicator, an area in play since the beginning of February.

Observed levels:

Long term:

Both monthly and daily timeframes ended last week off worst levels, in the shape of a hammer pattern—movement often interpreted as a bullish cue.

By the same token, both charts demonstrate room to scale higher this week, targeting 1.2190 tops on the daily chart.

Short term:

H4 Quasimodo resistance at 1.2142, despite blending closely with Fib studies, has failed to invite selling beneath local H4 support at 1.2087. The non-committal tone from sellers, along with H1 reclaiming 1.21+ status Friday, places a question mark on the H4 Quasimodo formation.

According to chart studies, therefore, this week favours buyers until around the 1.22 neighbourhood.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.6 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Amid renewed USD softness, AUD/USD bulls remained on the offensive heading into the latter part of last week. Northbound, 0.7782 tops are in sight this week, along with the 2021 peak at 0.7820, whereas sellers regaining consciousness could lead trendline support back into the fight, an ascending level drawn from the low 0.5506.

RSI flow dethroned the 50.00 centreline and landed the indicator at RSI trendline resistance, with further upside to possibly touch overbought space.

H4 timeframe:

Bearish bets from supply at 0.7769/0.7749 appear somewhat restrained right now, implying a move to resistance at 0.7805 could be in the offing.

In case sellers make an entrance, nonetheless, support at 0.7698 might call for attention.

H1 timeframe:

With the help of the 100-period simple moving average around 0.7726 and Quasimodo support at 0.7719, Friday gathered traction and dethroned 0.7750 resistance.

North of Thursday’s peak at 0.7771, Quasimodo resistance at 0.7777 resides nearby as a possible upside objective this week, with a break uncovering 0.78 psychological resistance.

Interestingly, movement out of the RSI indicator also shows the value rebounded off familiar trendline support Friday and clawed above the 50.00 centreline to highlight a possible move into overbought space.

Observed levels:

Long term:

The monthly could call for higher levels over the coming weeks, which may lend buyers support on the daily scale and have the pair refresh 2021 highs this week, with daily supply at 0.7937/0.7890 also to possibly make an entrance.

Short term:

With higher timeframes poised to pursue upside, and H4 supply at 0.7769/0.7749 displaying signs of vulnerability, H1 buyers may take this as a bullish sign and hold north of 0.7750 to take on H1 Quasimodo resistance at 0.7777 and 0.78 (which aligns with the 0.7805 resistance on the H4).

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have since struggled to find acceptance at higher levels. Consequent to this, February currently trades off best levels.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Technical structure to be mindful of this week is the 200-day simple moving average at 105.54 and supply coming in from 106.33/105.78. While lower on the curve, trendline resistance-turned support, pencilled in from the high 111.71, could make a show. Demand at 103.56/103.93 is also seen close by.

The RSI indicator ended the week engaging with 57.00 support (previous resistance).

H4 timeframe:

The 38.2% Fib level taken from 104.50—a level representing the initial take-profit objective from the alternate AB=CD resistance at 105.63 (the 127.2% Fib extension)—provided a platform for buyers to work with last week.

Friday, however, witnessed supply at 105.26/105.14 make an entrance, a clear-cut drop-base-drop formation that boasts healthy downside momentum from its base. Technically speaking, a break of the aforesaid supply this week could swing the pendulum in favour of retesting AB=CD resistance, whereas a punch lower could draw in not only the 38.2% Fib, but also trendline support (102.59).

H1 timeframe:

In addition to supply underlined above on the H4 scale at 105.26/105.14, H1 resistance made up between 105.14, 105.08 (50.0% retracement) and the 105 figure stepped forward during the early hours of London on Friday.

Sellers making a show from 105.14/105.00 underlines demand at 104.78/104.89, with a breach underscoring 104.50 support. This demand is considered reasonably important, given it was here a decision was made to break above 105 resistance.

The RSI indicator shows the value finished the week within shouting distance of 50.00, following moves out of overbought space.

Observed levels:

Long term:

The lack of buying following the monthly timeframe’s bullish engulfing candle, together with room to push south on the daily timeframe to demand at 103.56/103.93, places sellers at the wheel this week, technically speaking.

Short term:

In line with the higher timeframe picture, H4 supply at 105.26/105.14 could interest sellers this week. A H1 close under demand at 104.78/104.89, therefore, could fuel a short-term bearish theme to 104.50 support.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has so far refreshed multi-month highs at 1.3866.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

In the shape of a bullish outside reversal, Friday witnessed buyers strengthen their grip north of support at 1.3755, following two back-to-back shooting star candle patterns—structure generally interpreted as a bearish signal. Bouncing higher this week throws light on supply at 1.3996/1.3918.

The RSI indicator remains circling the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 65.49). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Demand at 1.3761/1.3789 welcomed price action on Friday, movement which motivated a bullish wave back to resistance at 1.3852, a previous Quasimodo support. Rupturing the aforementioned level this week shines the headlights on supply at 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918).

H1 timeframe:

Reinforcing H4 resistance at 1.3852, we have a modest H1 Fib cluster (resistance) around 1.3850 (made up of a 161.8% Fib projection at 1.3850 and a 100% Fib extension at 1.3855), joined together with RSI trendline resistance making a show just ahead of overbought terrain.

Downside targets fall in around the 100-period simple moving average at 1.3810 and the 1.38 figure; a nudge through 1.3845, however, could see price bump heads with the 1.39 figure.

Observed levels:

Long term:

Along with daily buyers making a stand on Friday and highlighting supply at 1.3996/1.3918 as a possible upside target, monthly price remains optimistic above trendline resistance.

Short term:

Daily price exhibiting scope to advance this week places a question mark on H4 resistance at 1.3852 and, by extension, the H1 Fib cluster around 1.3850. This could prompt a bullish breakout scenario north of 1.3850 this week, targeting 1.39 on the H1 (aligns with the underside of H4 supply at 1.3942/1.3900, which itself is glued to the lower side of daily supply at 1.3996/1.3918).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

February 12th 2021: Risk Continues to Bolster DXY Ahead of 90.00

February 12th 2021: Risk Continues to Bolster DXY Ahead of 90.00

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently provoking a hammer formation (though we will not know this until the month concludes).

To the downside, 1.1857/1.1352 represents demand, while northbound shines the technical spotlight on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Unchanged from previous analysis –

The combination of demand at 1.1923/1.2001 and support at 1.1965 (previous Quasimodo resistance), has so far served buyers well.

As you can see, Thursday modestly built on recent upside, with price action closing in on 1.2190 tops, followed by Quasimodo resistance from 1.2278.

Technicians are also urged to chalk up support at 1.1887, realised a touch south of the aforesaid demand area.

With reference to the RSI indicator, the value (currently trades at 52.00) is on the doorstep of RSI trendline resistance and neighbouring RSI resistance at 60.30.

H4 timeframe:

Largely unchanged from previous analysis –

H4 remains testing the mettle of Quasimodo resistance priced in at 1.2142, a base aligning with a 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149. Space north of here may call for resistance at 1.2179, with subsequent buying to possibly take aim at another resistance plotted at 1.2214.

In the event sellers make a show from current resistance, a dive to support at 1.2057 could be in store.

H1 timeframe:

Quasimodo resistance at 1.2142 noted on the H4 scale is also a prominent fixture on the H1 timeframe. In view of the lacklustre selling seen from 1.2142—unable to puncture 1.2115 and test 1.21 support—moves higher could be in store.

Consumed H1 Quasimodo resistance at 1.2173 signals the 1.22 resistance level could also be in the offing should 1.2142 give way.

47.05/54.20 support is visibly in play out of the RSI indicator, an area withstanding a handful of downside attempts since February 8.

Observed levels:

H4 Quasimodo resistance at 1.2142 is clearly under pressure, with sellers currently exhibiting a non-committal tone.

This—coupled with daily and monthly timeframes demonstrating room to scale higher—could trigger a bullish breakout theme north of 1.2142 today, with H4 resistance at 1.2179 targeted, closely followed by the 1.22 resistance (H1).

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often interpreted as a bearish signal at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.5 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Amid renewed USD softness, AUD/USD bulls went on the offensive Thursday and reclaimed Wednesday’s tentative bearish phase. Northbound, offers appear relatively thin until 0.7782 tops, along with the 2021 peak at 0.7820.

RSI flow dethroned the 50.00 centreline and landed the indicator within touching distance of RSI trendline resistance, with further upside to possibly touch overbought space.

H4 timeframe:

Latest developments on the H4 scale yesterday saw a breach of Quasimodo resistance drawn from 0.7747. Note price movement recently retested the level as support and, for now at least, is holding. Sustained strength to the upside could shift focus to resistance at 0.7805 as Quasimodo resistance at 0.7781 appears to have already been taken.

H1 timeframe:

Retreating from 0.7771 session peaks led AUD/USD back to retest the grip of 0.7750 support. Buyers and sellers are currently squaring off around the aforesaid level, with buyers poised to take control and throw light on a potential advance to Quasimodo resistance at 0.7777, with a break uncovering the 0.78 figure.

Recent movement out of the RSI indicator reveals the value balancing off 53.60 after an earlier push to highs ahead of overbought terrain.

Observed levels:

All four timeframes show buyers may be eyeballing higher ground. The combination of H4 support at 0.7747 and 0.7750 support could provide buyers a platform to work with today and push for at least H1 Quasimodo resistance at 0.7777.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have struggled to find acceptance at higher levels. Consequent to this, February currently trades off best levels.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Largely unchanged from previous analysis –

Wednesday exhibited a pretty much even session, with Thursday, albeit modestly higher on the day, unable to generate sufficient energy to breakout of Wednesday’s range.

Current movement follows the recent rejection from the lower side of supply at 106.33/105.78 and 200-day simple moving average at 105.55. Further selling could eventually pull things to trendline resistance-turned support, pencilled in from the high 111.71.

With reference to the RSI indicator, the value is testing the lower side of a support-turned resistance at 57.00. RSI fans may also note the recent trendline support break.

H4 timeframe:

Partly modified from previous analysis –

Tuesday’s downside move, as underlined in previous writing, landed Wednesday at the 38.2% Fib level taken from 104.50—a level representing the initial take-profit objective from the alternate AB=CD resistance at 105.63 (the 127.2% Fib extension).

As you can see, Thursday saw buyers maintain a somewhat cautious defence off the 38.2% Fib. South of here shines the technical spotlight on nearby trendline support (102.59), together with support at 104.16.

H1 timeframe:

104.50 continues to provide buyers with a supportive platform on the H1 scale, with price closing in on the 100-period simple moving average from 104.88, and possibly the 105 figure and 105.14 resistance.

What also remains interesting on the H1 is demand forged from 104.21/104.37. A whipsaw beneath 104.50 into the aforesaid demand could spark a short-term bullish scenario.

The RSI indicator has observed upside momentum level off just south of overbought territory.

Observed levels:

The daily timeframe’s downside flow implies longer-term sellers still have the upper hand until crossing swords with trendline support around the 103.70 neighbourhood.

With that in mind, a bearish theme may develop should H1 shake hands with the 100-period simple moving average from 104.88, or even the 105 figure and 105.14 resistance (between 105 and 105.14 we also see a H1 50.0% retracement at 105.08).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February refreshed multi-month highs at 1.3866.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

As you can see, buyers have so far failed to find grip north of 1.3819, despite Tuesday’s strong-willed advance above resistance at 1.3755. Candlestick enthusiasts will note two back-to-back shooting star candle patterns formed—structure generally interpreted as a bearish signal.

Follow-through moves to the downside could retest 1.3755 as support, though a bounce higher has supply at 1.3996/1.3918 to target.

Interestingly, the RSI indicator is seen touching gloves with the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 64.80). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Resistance at 1.3852, a previous Quasimodo support, remained a reasonably forceful ceiling on Thursday, threatening a possible dip to support at 1.3751 (prior Quasimodo resistance) and nearby demand at 1.3729/1.3748.

H1 timeframe:

Partly modified from previous analysis –

In conjunction with the H4 timeframe, the H1 chart also recently crossed paths with a modest Fib cluster (resistance) around 1.3850 (made up of a 161.8% Fib projection at 1.3850 and a 100% Fib extension at 1.3855).

Holding off the Fib arrangement guided a 1.38 retest on Thursday, a level which sparked modest intraday bullish interest. Traders will also note the 100-period simple moving average circling close by at 1.3789.

From the RSI indicator, the value nudged beneath trendline support and prompted a swift retest which held into Thursday’s close.

Observed levels:

Monthly price remains optimistic. Though given the daily bearish candlestick formations, a 1.3755 support retest may have to occur before buyers make an entrance.

In tandem with the daily scale, H4 also shows room to retreat as far south as support at 1.3751, located a touch under daily support at 1.3755.

Does this imply H1 buyers around the 1.38 figure are on thin ground? As a push south of here also directs focus to H4 support at 1.3751.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red

EUR/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently provoking a hammer formation (though we will not know this until the month concludes).

To the downside, 1.1857/1.1352 represents demand, while northbound shines the technical spotlight on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

The combination of demand at 1.1923/1.2001 and support at 1.1965 (previous Quasimodo resistance), has served buyers well.

Tuesday extended recovery gains by 0.6 percent, finishing at session pinnacles. The next upside target on the daily scale can be seen around 1.2190 tops, with a break unmasking Quasimodo resistance from 1.2278.

Technicians are also urged to chalk up support at 1.1887, realised a touch south of the aforesaid demand area.

With reference to the RSI indicator, the value (currently trades at 52.00) is on the doorstep of RSI trendline resistance and neighbouring RSI resistance at 60.30.

H4 timeframe:

Early hours Tuesday observed an energetic push north of trendline resistance (1.2349)—movement throwing light on Quasimodo resistance priced in at 1.2142 and converging 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149. Space above may also call for resistance at 1.2179.

H1 timeframe:

Supply at 1.2136/1.2119 made its way into the light in recent hours, an area sharing space with a descending resistance, extended from the high 1.2189 (it should be noted this is not a textbook trendline resistance). Though given the convergence of the two areas, sellers are likely to try and guard noted supply.

Interestingly, above supply and descending resistance, the H4 Quasimodo resistance mentioned above at 1.2142 is plotted close by.

RSI devotees will see trendline support put in an appearance yesterday and nudged the value back into overbought space. RSI resistance is a key watch around 78.97—capped upside momentum on a handful of occasions since mid-January.

Observed levels:

Monthly, daily and H4 price action, according to our chart studies, call for higher levels. In light of this, H1 supply and descending resistance are perhaps fragile.

Anyone feel a fakeout of H1 stops to test the H4 Quasimodo level could be on the menu?

AUD/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often interpreted as a bearish signal at peaks) has so far failed to seduce sellers. February, as you can see, trades around session highs, up by 1.3 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Following Friday’s recovery from trendline support (0.5506), Tuesday fashioned a third successive gain and finished the day around session peaks.

Sustained bullish interest may approach 0.7782 tops, along with the 2021 peak at 0.7820.

RSI flow elbowed back above 50.00 in recent moves, with the value now within a stone’s throw from reaching RSI trendline resistance.

H4 timeframe:

Quasimodo resistance-turned support stepped forward in recent trading at 0.7698, helping to facilitate Tuesday’s rally.

Additional Quasimodo resistance can be found at 0.7747, with a breach perhaps directing focus to resistance at 0.7805.

H1 timeframe:

As anticipated, the 0.77 figure did a superb job as support on Tuesday as buyers lifted the currency pair north of the aforesaid psychological level in early trade.

This has thrown light on 0.7750 resistance and, of course, H4 Quasimodo resistance underlined above at 0.7747.

Fresh short-term bearish RSI divergence on the RSI window also remains a key point to be mindful of.

Observed levels:

0.7750 resistance, together with H4 Quasimodo resistance at 0.7747, could attract a pocket of offers and thereby cap short-term buying.

However, having seen daily and monthly charts exhibit scope to navigate higher terrain, the 0.7750 neighbourhood is unlikely to deliver much to write home about.

With the above taken into account, a 0.7750 breach could trigger short-term breakout buying, potentially bound for 0.78 (H1) as a primary upside objective.

USD/JPY

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have struggled to find acceptance at higher levels. Consequent to this, February currently trades off best levels.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Amidst retreating yields and broad-based USD softness, USD/JPY came under reasonable pressure Tuesday and finished at session lows. This, of course, followed the recent rejection from the lower side of supply at 106.33/105.78 and 200-day simple moving average at 105.56.

Further selling could eventually pull things back to trendline resistance-turned support, taken from the high 111.71.

Technical eyes may also be drawn to the RSI indicator, as the value tunnelled through support at 57.00 and trendline support.

H4 timeframe:

Those who read Tuesday’s technical writing may recall the following (italics):

In conjunction with the daily timeframe recently crossing swords with supply and the 200-day simple moving average, recent movement saw H4 bump heads with an alternate AB=CD bearish pattern at the 127.2% Fib extension level from 105.63.

Traditional take-profit objectives from AB=CD formations are 38.2% and 61.8% Fib retracements, which in this case are 104.50 and 103.72, respectively—derived from pattern extremes: A-D legs.

As you can see, recent weakness prodded the 38.2% Fib level at 104.50, representing the initial take-profit objective from AB=CD resistance. Additional selling highlights possible bids around 104.16 support and intersecting trendline support.

H1 timeframe:

104.50 support (joins with the 38.2% H4 Fib level) is now in play thanks to recent selling, though buyers have yet to show much interest.

Fragile bids, therefore, may allow for demand at 104.21/104.37 to make a show sometime today, an area sitting on top of H4 support mentioned above at 104.16.

Although 104.50 shows signs of weakness, RSI action demonstrates bullish divergence out of oversold waters.

Observed levels:

The daily timeframe’s flow implies longer-term sellers still have the upper hand until crossing swords with trendline support around the 103.70 neighbourhood.

Short term, however, buyers could put in a temporary appearance. Buyers may be drawn to a whipsaw through 104.50 bids on the H1 which may snag fresh bids off H1 demand at 104.21/104.37.

GBP/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance, movement that stirred major trendline resistance (2.1161), February recently refreshed multi-month highs at 1.3819.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Since the latter part of January, resistance at 1.3755 has remained a problematic ceiling for buyers, despite a clear upside bias in place since 2020. As you can see, however, Tuesday witnessed buyers grow in confidence and overthrow 1.3755, drawing attention to supply at 1.3996/1.3918.

Interestingly, the RSI indicator is seen touching gloves with the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 65.00). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Resistance at 1.3763 stepped aside and served well as support on Tuesday, making way for supply coming in at 1.3837/1.3800 (sheltered under resistance at 1.3852, a previous Quasimodo support).

H1 timeframe:

Latest developments on the H1 scale shows price engulfed 1.38 resistance, with enough force to squeeze out the majority of sellers around this neighbourhood. Breakout buyers currently maintain position north of the psychological line, with increased upside interest to throw 1.3850 in the pot as possible resistance (made up of a 161.8% Fib projection at 1.3850 and a 100% Fib extension at 1.3855).

It should also be noted the RSI indicator continues to pursue overbought status, with downside attempts likely to target two trendline support structures.

Observed levels:

Monthly price calling for higher levels, along with daily action clearing resistance at 1.3755 in a market trending higher since the beginning of 2020, places long-term buyers in a strong position.

The above implies H4 supply at 1.3837/1.3800 could be hanging on by a thread. H1 buyers may interpret this as a bullish indication—particularly if H1 retests 1.38 and holds—targeting the 1.3850 region.


DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Dollar Index Remains Depressed Following Friday’s Non-Farm Payrolls

EUR/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply at 1.1857/1.1352 in August, EUR/USD, by way of two vigorous back-to-back bullish candles, welcomed 2021 in good health.

While increased upside towards ascending resistance (prior support – 1.1641) may materialise, an 1.1857/1.1352 retest is also on the cards in view of January and February’s correction.

In terms of trend, the primary uptrend has been in play since the price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Demand at 1.1923/1.2001, together with support at 1.1965 (previous Quasimodo resistance), claimed position into the second half of last week.

Friday also produced a bullish outside reversal—a signal buyers tend to take note of, particularly off supportive structure within uptrends (note this market has been trading higher since 2020). The next upside target on the daily scale can be seen around 1.2190 tops.

Technicians are also urged to chalk up support at 1.1887, realised a touch south of the aforesaid demand area.

With reference to the RSI indicator, the value (currently trades at 44.30) remains on the doorstep of the 50.00 centreline, followed by RSI trendline resistance and RSI resistance at 60.30.

H4 timeframe:

Trendline resistance (1.2349) and a 50.0% retracement level at 1.2067 deserve attention on the H4 scale. Although sellers could make an entrance here, a breach is also interesting—movement that directs focus to Quasimodo resistance priced in at 1.2142 and resistance at 1.2179.

H1 timeframe:

With the US dollar index exploring deeper water Monday, this modestly lifted EUR/USD and registered a second consecutive gain.

After H1 retested support at 1.2032 (sited above the 100-period simple moving average), a previous Quasimodo resistance, the candles made their way into the walls of supply at 1.2078/1.2062. Interestingly, the supply merges with H4 trendline resistance.

Skies above current H1 supply point to the 1.21 neighbourhood.

RSI followers will note support at 52.09 served well on Monday, closely coinciding with trendline support.

Observed levels:

From a long-term technical perspective, buyers could book further gains. The upper side of monthly demand at 1.1857, along with daily demand at 1.1923/1.2001 and daily support from 1.1965, offers healthy confluence to work with.

While bullish bets are likely to increase, short-term chart structure exhibits resistance (trendline formation on the H4 and H1 supply from 1.2078/1.2062) and, by extension, possible bearish themes.

AUD/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January pencilled in a half-hearted shooting star candle formation (often interpreted as a bearish signal at peaks), following two spirited months of gains off demand at 0.7029/0.6664 (prior supply).

February, however, is positive thus far, sparking a possible continuation higher to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In the context of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Monday extended recovery gains north of trendline support (0.5506), with sustained bullish interest to perhaps approach 0.7782 tops, along with the 2021 peak at 0.7820. Should buyers throw in the towel and take over trendline support, on the other hand, light shines on demand at 0.7453/0.7384 (prior supply).

RSI flow elbowed back above 50.00 in recent moves, signalling the value could reach for RSI trendline resistance and possibly venture into overbought space.

H4 timeframe:

Sellers from Quasimodo resistance at 0.7698 were on the ropes Monday as AUD/USD pursued higher ground. With 0.7698 possibly echoing support today, follow-through upside could materialise and approach another Quasimodo resistance at 0.7747.

H1 timeframe:

In tandem with the H4 chart, offers were cleared around the 0.77 figure on the H1 chart Monday, likely tripping stops.

Supply (red arrow) is visible around 0.7725, yet price may be attracted to 0.7750 resistance and H4 Quasimodo resistance from 0.7747.

Mild bearish divergence is seen out of the RSI window, along with the indicator also exiting overbought territory.

Observed levels:

All four timeframes show bulls are growing in confidence.

With this, H1 could defend 0.77 today and reach for at least the 0.7750 region.

USD/JPY

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have remained mostly at the wheel in February, north of support at 101.70.

Resistance can be seen in the form of a descending line (not considered a traditional trendline resistance), etched from the high 118.66.

Daily timeframe:

Partly modified from previous analysis –

USD/JPY recently snapped a seven-day winning streak, garnering resistance from the lower side of supply at 106.33/105.78 and a 200-day simple moving average at 105.57. Healthy selling from here could eventually pull things back to trendline resistance-turned support, taken from the high 111.71.

Technical eyes may also be drawn to the RSI indicator, which recently exited overbought levels and drew light on support at 57.00.

H4 timeframe:

Largely unchanged from previous analysis –

In conjunction with the daily timeframe recently crossing swords with supply and the 200-day simple moving average, last week saw H4 bump heads with an alternate AB=CD bearish pattern at the 127.2% Fib extension level from 105.63.

Traditional take-profit objectives from AB=CD formations are 38.2% and 61.8% Fib retracements, which in this case are 104.50 and 103.72, respectively, derived from the pattern extremes: A-D legs.

H1 timeframe:

In line with the US dollar index navigating lower levels, USD/JPY, heading into the US session on Monday, aggressively pushed lower and shook hands with interesting support between 105.10 and 105.18 (green—made up of a 78.6% Fib level at 105.10, a support level at 105.14, a 127.2% Fib projection also at 105.14 and a 100% extension from 105.18).

Downstream, we also have demand at 104.96/105.06, an area that houses the 105 figure.

Momentum—measured by the RSI oscillator—is showing signs of recovering ahead of the oversold region, following a dominant move beneath the 50.00 centreline.

Observed levels:

January’s Monthly bullish engulfing candle could prove persuasive over the coming weeks. Though buyers could have trouble booking further gains in the face of daily supply (106.33/105.78) and 200-day simple moving average.

The H4 timeframe registers scope to reach for the 38.2% H4 Fib level at 104.50, in line with the daily timeframe’s direction.

H1 support between 105.10 and 105.18 is currently working alongside the monthly timeframe’s bullish engulfing candle.

GBP/USD

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

December’s 2.5 percent extension elevated GBP/USD and stirred trendline resistance (2.1161), with January refreshing multi-month highs and logging a 0.2 percent gain.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Largely unchanged from previous analysis –

In spite of a third consecutive daily gain, resistance at 1.3755 remains a ceiling buyers have been unable to penetrate since January 21.

Breaching the latter, however, brings light to supply at 1.3996/1.3918.

The RSI indicator has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region (the value stands at 58.00). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Largely unchanged from previous analysis –

The Quasimodo formation at 1.3572 proved effective support in the second half of last week, with recent action touching gloves with peaks at 1.3749. Overhead, resistance is visible at 1.3763, with a break unveiling supply at 1.3837/1.3800.

H1 timeframe:

Following a dominant whipsaw through 1.37, with enough force to likely trip stops and cause pain, H1 reclaimed 1.37+ status as we transitioned into the US session and consolidated gains just south of Quasimodo resistance from 1.3751.

Above 1.3751, the H1 chart exhibits scope to approach 1.38.

RSI fans may also note the indicator formed bearish divergence on Monday and is currently pursuing terrain slightly south of overbought space.

Observed levels:

While the monthly timeframe shines light on the possibility of further gains, along with a clear upside bias in play since the beginning of March, sellers may attempt to secure a position from the combination of daily, H4 and H1 resistances between 1.3755, 1.3763 and 1.3751, respectively.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Top 5 Risk Management Trading Tips During the Covid-19 Pandemic

According to the WHO, cases of pneumonia of unknown cause emerged in Wuhan City, China, on 31 December, 2019. A novel coronavirus was identified as the cause by Chinese authorities on 7 January, 2020, and was temporarily named ‘2019-nCoV’. Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases. A novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.

Although referred to as coronavirus, or coronavirus pandemic, the WHO recently announced the official name of the infectious disease as Covid-19. The virus is described as ‘Severe Acute Respiratory Syndrome Coronavirus 2’, or ‘Sars-CoV-2. said to have originated from the illegal sale of wild animals in Wuhan City. The hunt for the animal origin of Covid-19, however, is still unknown.

As guided by the Centers for Disease Control and Prevention (CDC) and other public health officials in the United States and other countries, employees are transitioning to remote work in order to comply with recommendations concerning social distancing and lockdown protocol. The cybersecurity of corporate networks, therefore, have become potentially exposed.

Firewalls and Virtual Private Networks (VPNs) are in place to keep unknowns from gaining access to company resources. Though with many now working outside the company network, it alters the dynamic of cybersecurity. Such a huge change in business operations could expose companies even after the Covid-19 is contained. For those businesses suffering from supply chain issues, poor cash flow and shutdown of non-essential business, business continuity is a serious concern.

Volatility across financial markets has also increased exponentially. Events are developing at breakneck speed with market sentiment and fundamentals shifting in response to the spread of Covid-19. To accommodate these volatile markets during the Covid-19 pandemic, adapting your trade plan is essential to meet the wider range of price action.

Pulling out All the Stops

Since early March, daily moves between 100 to 300 pips on EUR/USD have been the norm. A stark contrast to market conditions a few months ago.

The protective stop-loss order helps prevent excessive losses and margin calls. Even under normal market conditions It is an essential risk-management tool. Given notable increase in volatility, stop-loss placement is a concern for many traders. Widening stop distance is, of course, an option to help overcome this, though do bear in mind this also increases risk If position size is not accounted for.

The way traders reduce risk to breakeven may also require modification. In times of market volatility, positions need ‘more room to breathe’ – price movement can connect with the entry price a number of times before settling on a direction.

Protecting gains when they occur is also just as important. Prudent traders will respect take profit targets, or at least use a trailing stop to prevent a winning position turning into a loser.

Leverage

Most traders employ leverage to maximise returns. Higher leverage often leads to bigger profits, particularly in Forex trading. However, it is a two-sided coin, equally increasing gains and losses. Adjusting leverage to account for wider movement of market price is, therefore, certainly something traders will be considering.

Trade Duration

Covid-19 is uncharted waters for all. Whether it be quarterly results from a publicly-traded company or unemployment figures, traders are essentially trekking unknown terrain. News reports concerning Covid-19 grace our screens on an hour-to-hour basis, so it is essential to stay plugged in to the latest news and track open positions.

Still, it’s impossible to monitor positions 24/7 or over the weekend when access is limited. That’s why some traders are currently choosing to liquidate positions before the close of trade each day.

Equity Risk

In parallel with leverage, traders will also consider paring back and trading smaller risk. If you already have strict position-sizing rules in place, this may not apply.

If you are currently risking 3-5% of your account equity each trade, you may want to abide by 1-2%. Though, it really all depends on what risk you are personally comfortable with. Risking 5% per trade, for example, means if you lose 20 consecutive trades, unlikely but still a possibility, your account could be wiped out. This is certainly something to take into account in these unprecedented times.

Orders

Two core order types are used in the market. A market order is executed immediately at current prices, while a limit order is executed when the limit price is met. As limit orders are not triggered unless conditions are met, they are effective tools to help protect traders from volatility. Another benefit is the ability to execute multiple trades simultaneously in different markets when such opportunities arise.

Covid-19 Trading

The virus continues to tax health systems and health care workers around the world. Many essential workers in the United States do not have any form of sick leave, which makes it difficult for them to visit healthcare systems for care. This, along with their continued exposure to the virus, has led to strikes and work stoppages.

Misinformation about the virus and disease also continue to proliferate social media. These posts have compared the Covid-19 to the flu and suggest the public reaction to the disease is overblown. This misinformation could lead to large numbers of people disregarding orders to practice social distancing and isolation, therefore potentially exacerbating the crisis.

Covid-19 is clearly having a dramatic effect on financial markets. Therefore, it’s vital to monitor your risk-management strategies to fit this challenging trading environment. The trading tips highlighted in this article should help minimise losses and keep your account on the straight and narrow.


DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can high risk; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.