September 21st 2021: EUR/USD Eyes H1 Prime Resistance at $1.1767-1.1776 After $1.17 Support

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Technical studies reveal movement hovering north of prime support at $1.1473-1.1583 on the weekly timeframe. Gleaning additional technical confluence through a 100% Fib projection at $1.1613 and 1.27% Fib extension at $1.1550, this base remains a key watch, long term. With respect to trend on the weekly chart, the market has largely been bullish since the early 2020.

Meanwhile, a closer reading of price on the daily timeframe reveals Monday spiked to within a stone’s throw of Quasimodo support at $1.1689. Albeit sponsoring a late August bid (black arrow), action from $1.1689 failed to find approval north of late July tops at $1.1909; therefore, this ranks $1.1689 as perhaps frail support. Assuming bearish leadership on the daily, the $1.1612 and $1.1602 (September/November 2020) lows signify downside support targets, followed by Fibonacci support between $1.1420 and $1.1522 (glued to the lower side of the weekly timeframe’s prime support at $1.1473-1.1583).

Charted a pip ahead of the daily Quasimodo, the $1.1690-1.1705 decision point put in an appearance on Monday, encouraging H4 sellers to dial back and hand the baton to buyers. Quasimodo support-turned resistance at $1.1742 is now in range on this timeframe, with subsequent bullish interest to perhaps take aim at Quasimodo resistance from $1.1771.

Intraday action on Monday was interesting. The US dollar, in addition to other safe-haven currencies such as the Japanese yen and Swiss franc, gained traction Monday, elevated amidst clear-cut risk-off sentiment. Europe’s single currency, however, reclaimed a large slice of lost ground, aided (technically) not only by the H4 decision point mentioned above at $1.1690-1.1705, but also $1.17 on the H1. At the time of writing, H1 resistance at $1.1728 is active; rupturing the latter paves the way to $1.1742 on the H4, a level shadowed by H1 prime resistance coming in at $1.1767-1.1776, joined by supply at $1.1762-1.1774.

Observed Levels:

Extending recovery gains on short-term charts may have sellers move in on prime resistance at $1.1767-1.1776 on the H1 and supply from $1.1762-1.1774, which dovetails with H4 Quasimodo resistance at $1.1771. However, prior to this, sellers might engage with Quasimodo support-turned resistance at $1.1742 on the H4.

An alternative scenario to be mindful of is a whipsaw south of $1.17 on the H1 to daily Quasimodo support parked at $1.1689. $1.1689 bids feeding off sell-stops below $1.17 could be enough to chalk up a bullish wave.

AUD/USD:

(Italics: previous analysis)

Latest out of the weekly timeframe has AUD/USD touching gloves with prime support at $0.6968-0.7242. Since printing a two-week recovery in late August, the currency pair has been fighting to entice fresh bullish interest. Failure to command position from $0.6968-0.7242 opens up support at $0.6673. Buyers regaining consciousness, nevertheless, has prime resistance at $0.7849-0.7599 to target. Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, the response from $0.6968-0.7242 could STILL be the beginnings of a dip-buying attempt to merge with the current trend.

The daily timeframe’s technical landscape informs traders bids are perhaps thin within weekly prime support, at least until price shakes hands with Fibonacci support at $0.7057-0.7126. Those who follow the relative strength index (RSI) will note the value journeyed through the 50.00 centreline last week and had Monday dip a toe below 40.00. This highlights a bearish atmosphere until making contact with oversold territory.

Price action on the H4 timeframe came within touching distance of a half-hearted decision point at $0.7200-0.7218 on Monday. To the upside, two resistances are on the radar at $0.7281 and $0.7317.

Lower on the curve, a H1 decision point at $0.7269-0.7259 elbowed into the spotlight, an area formed in the early hours of Monday which saw price tunnel through demand at $0.7248-$0.7259. Continued interest to the downside has $0.72 to target.

Observed Levels:

Each timeframe analysed underlines a bearish energy.

Weekly prime support at $0.6968-0.7242 appears vulnerable due to the daily timeframe exhibiting scope to approach Fibonacci support at $0.7057-0.7126. This, on top of the H1 timeframe’s decision point at $0.7269-0.7259 making a show, implies a short term move to $0.72 (H1) could be in the offing (note $0.72 aligns with the lower band of the H4 decision point at $0.7200-0.7218).

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance could eventually emerge to familiar supply at ¥113.81-112.22.

The uninspiring vibe out of weekly demand is demonstrated by way of a consolidation on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. Range support, as you can see, is currently in the frame. In the event price deviates from range extremes, Quasimodo resistance at ¥111.11 is seen, along with a concealed Quasimodo support at ¥108.43. Based on the relative strength index (RSI), the value is confined to a consolidation surrounding the 50.00 centreline, between 40.87 and 56.85.

Broad declines observed in major US equity indexes elevated demand for the safe-haven JPY Monday. USD/JPY downside swings technical curiosity to the H4 double-top pattern’s (¥110.44) profit target around ¥108.71—sharing chart space with a 1.618% Fibonacci projection at ¥108.86 and a 1.272% Fibonacci projection at ¥108.72. However, in order to reach the aforesaid pattern target, the lower edge of the daily range support highlighted above at ¥108.96-109.34 must be taken.

Heading into early US trading on Monday, H1 crossed swords with Quasimodo resistance-turned support at ¥109.45, and clocked a ¥109.65 top before changing gears and heading towards Quasimodo support at ¥109.31. Territory below the latter reveals support at ¥109.11.

Observed Levels:

In keeping with the H4 timeframe, booking additional losses is possibly on the cards until the double-top pattern’s (¥110.44) profit target around ¥108.71. Still, to reach the aforementioned profit target, sellers must marginally defeat the daily timeframe’s range support at ¥108.96-109.34 and take on any bullish interest from weekly demand at ¥108.40-109.41.

Should we nudge through H1 Quasimodo support at ¥109.31, this could be an early sign of bearish muscle making an entrance, and with this, additional selling might take shape.

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone remains active, welcoming an additional test mid-August. Yet, pattern traders will also note August’s move closed south of a double-top pattern’s neckline at $1.3669, broadcasting a bearish vibe. Conservative pattern sellers, however, are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Sterling kicked off the week on the ropes, clocking one-month lows versus the US dollar. GBP/USD remains comfortable beneath the 200-day simple moving average at $1.3831 and is within reach of Quasimodo support at $1.3609. Previous analysis underlined the daily chart has communicated a rangebound environment since late June between a 61.8% Fib retracement at $1.3991 and the noted Quasimodo support. Momentum, according to the relative strength index (RSI) value, extended position below the 50.00 centreline and scraped through 40.00 on Monday. This informs traders that momentum to the downside is increasing in the form of average losses exceeding average gains.

Yesterday’s bearish presence established a decision point at $1.3750-1.3721, an area forming a decision to tunnel through Quasimodo support from $1.3693 (currently serving as resistance). Daily Quasimodo support mentioned above at $1.3609 calls for attention as a downside objective also on the H4 scale.

From the H1 timeframe, mid-way through London on Monday clipped the lower side of $1.37 and also brought in resistance at $1.3689—a previous Quasimodo support level drawn from 26th August. Further softening places Quasimodo support at $1.3618 and the $1.36 figure in sight.

Observed Levels:

Having noted scope for the daily timeframe to test Quasimodo support at $1.3609, retesting either H4 resistance at $1.3693 or the H4 decision point at $1.3750-1.3721 could stir a bearish theme. Adding weight to $1.3693 is H1 resistance coming in at $1.3689 and the $1.37 figure.

The H1 Quasimodo support at $1.3618 forms a reasonable downside target, arranged just north of the noted Quasimodo support on the daily timeframe.

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: 20th – 24th September 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Deprived of resistance, the US dollar pencilled in a second consecutive gain last week, adding 0.7 percent, according to the US dollar index.

Support from 91.78-91.96 has proved persistent since the beginning of July, withstanding three successive downside attempts—the latest being early September.

Dollar bulls, as you can see, entered an offensive phase at the tail end of the week. While it’d be unwise to rule out a retracement at current levels, further buying could emerge as Quasimodo resistance calls for attention at 93.90. Strategically placed north of the 93.73 20th August high, and sharing space with 100% and 1.618% Fibonacci projections at 93.88 and 93.82, respectively, 93.90 delivers reasonably weighty confluence.

With respect to trend, 2020 was disappointing. 2021, nonetheless, has observed a defence off support at 89.69 and, year on year, is 3.7 percent higher.

The relative strength index (RSI), a popular gauge of momentum, retested the 50.00 centreline over the week and is now on the doorstep of trendline resistance (taken from the high 92.41), pinned a short distance below overbought territory.

  • While chart studies, in particular the relative strength index, suggests upside momentum may flatten out this week, Quasimodo resistance at 93.90 delivers technical confluence traders might be drawn to should further buying take shape.

EUR/USD:

(Italics: previous analysis)

Europe’s common currency shed 0.7 percent versus a broadly-bid dollar last week, seating price action within range of prime support on the weekly timeframe at $1.1473-1.1583. Fibonacci enthusiasts will note the 100% Fib projection at $1.1613 and 1.27% Fib extension at $1.1550 circling the upper range of the aforesaid support. Interestingly, long-term stops likely rest south of the $1.1640ish lows, perhaps accommodating enough energy to fill $1.1473-1.1583 bids. With respect to trend on the weekly chart, the market has largely been bullish since the early months of 2020.

The second half of the week witnessed an acceleration to the downside, throwing light on Quasimodo support at $1.1689 from the daily timeframe. Albeit sponsoring a late August bid (black arrow), action from $1.1689 failed to find approval north of late July tops at $1.1909; therefore, this ranks $1.1689 as perhaps frail support this week.

Assuming a bearish leadership on the daily, the $1.1612 and $1.1602 (September/November 2020) lows signify downside support targets, followed by Fibonacci support between $1.1420 and $1.1522 (glued to the lower side of the weekly timeframe’s prime support at $1.1473-1.1583).

Against the backdrop of higher timeframes, price action on the H4 chart passed through Quasimodo support at $1.1742 in strong fashion Friday. With $1.1742 likely to serve as resistance, the $1.1690-1.1705 decision point putting in an appearance should not surprise. Statistically, though, decision points left untested following the immediate move out of the base tend to offer unreliable structure. $1.1690-1.1705 also teams up closely with daily Quasimodo support mentioned above at $1.1689, which you may recall chart studies have labelled fragile.

Through the lens of a simple technical trader, limited support is also evident on the H1 scale until $1.17 (sat within the walls of the H4 timeframe’s decision point at $1.1690-1.1705). Stacked demand is present between $1.1706 and $1.1744 (23rd August), with little inside of this formation revealing that active buyers will show interest. For that reason, $1.17 is a key downside objective this week. However, buyers entertaining the idea of bouncing from August 24th lows around $1.1728 shines the spotlight on a pullback to prime resistance coming in at $1.1767-1.1776, joined by supply at $1.1762-1.1774.

Observed Levels:

Long term:

Weekly prime support at $1.1473-1.1583, coupled with a 100% Fib projection at $1.1613 and 1.27% Fib extension at $1.1550, might welcome price action this week. As underlined above, $1.1473-1.1583 is in a reasonably privileged location: below the $1.1640ish lows. Overturning daily Quasimodo support at $1.1689, therefore, is a possible scenario, targeting daily Fibonacci support at $1.1420-1.1522.

Short term:

In conjunction with the longer-term picture, a bearish energy is present on the lower timeframes this week.

Any pullback, therefore, would be viewed as a sell-on-rally scenario, either from H4 resistance at $1.1742 (previous Quasimodo support) or H1 prime resistance at $1.1767-1.1776 (and supply at $1.1762-1.1774).

The combination of $1.17 on the H1 and its surrounding decision point on the H4 at $1.1690-1.1705 offers a clear downside target.

AUD/USD:

(Italics: previous analysis)

Prime support at $0.6968-0.7242 on the weekly timeframe has been fighting to entice fresh bullish interest since the area powered a two-week recovery in late August. Failure to command position from $0.6968-0.7242 opens up support at $0.6673. Buyers regaining consciousness, nevertheless, has prime resistance at $0.7849-0.7599 to target. Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, the response from $0.6968-0.7242 could STILL be the beginnings of a dip-buying attempt to merge with the current trend.

The daily timeframe scraping through prime support at $0.7286-0.7355 in the latter part of the week broadcasts weakness. This delivers free rein to Fibonacci support at $0.7057-0.7126, set within the parapets of weekly prime support at $0.6968-0.7242. With the relative strength index (RSI) cementing position below the 50.00 centreline—telling traders that average losses over the 14-day lookback period surpass average gains—this adds weight to a bearish atmosphere.

Although the higher timeframe canvas favours sellers, the H4 timeframe touched gloves with prime support at $0.7236-0.7266 (glued to the upper edge of weekly prime support at $0.6968-0.7242). You may recall this area was made reference to throughout the week—see below from previous writing (italics):

Sellers assuming leadership yesterday hauled the currency pair through stacked demand on the H4 timeframe between $0.7282 and $0.7343, dropping to within a stone’s throw from prime support at $0.7236-0.7266. The latter may interest bullish eyes—a base arranged to receive downside momentum derived from sell-stops below stacked demand.

Recognising $0.7236-0.7266 welcomed price action late Friday, $0.7310 stands in as an initial target early week should buyers stage a recovery.

Meanwhile, out of the H1 chart, early London on Friday responded to trendline resistance, extended from the high $0.7469, hardened by the 61.8% Fibonacci retracement at $0.7319 and a 1.272% Fibonacci projection at similar levels. This led movement under $0.73 heading into US trading hours and concluded within reach of $0.7248-$0.7259 demand (a zone placed within H4 prime support at $0.7236-0.7266).

Observed Levels:

Long term:

Weekly prime support at $0.6968-0.7242 is a key base on the bigger picture, though having noted the daily timeframe’s prime support giving up position at $0.7286-0.7355, a deep dive into the aforementioned weekly zone is a possibility.

Short term:

Focus is on the H4 timeframe’s prime support at $0.7236-0.7266, as buyers potentially gear up to take advantage of selling pressure (sell-stops) below stacked demand. As underlined above, the initial upside goal north of $0.7236-0.7266 sits at $0.7310.

$0.7248-$0.7259 demand on the H1, therefore, could be brought into the fight before a short-term bid arises.

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance could eventually emerge to familiar supply at ¥113.81-112.22.

The uninspiring vibe out of weekly demand is demonstrated by way of a consolidation on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. Reluctance to commit outside of these areas toughens the consolidation; range limits, therefore, are likely to remain on the watchlist this week. In the event price deviates from range extremes, Quasimodo resistance at ¥111.11 is seen, along with a concealed Quasimodo support at ¥108.43. Based on the relative strength index (RSI), the value is confined to a consolidation surrounding the 50.00 centreline, between 40.87 and 56.85.

A three-day recovery in the 10-year yield and a muscular USD bid, together with technical support derived from the 1.272% Fibonacci projection on the H4 timeframe at ¥109.14, aided USD/JPY at the tail end of the week. This, as you can see, left the double-top pattern’s (¥110.44) profit target around ¥108.71 (plotted alongside a 1.618% Fibonacci projection at ¥108.86) unchallenged. Continued interest to the upside this week is likely to close in on supply at ¥110.82-110.39 (entertains the noted double-top configuration and shares a connection with daily prime resistance at ¥110.86-110.27).

Price action on the H1 timeframe accommodated ¥110 on Friday, though momentarily explored ground north of the figure ahead of Quasimodo resistance at ¥110.11. Prime support coming in from ¥109.74-109.80 is particularly interesting, stationed beneath intraday lows around ¥109.81.

Observed Levels:

Long term:

Recognising weekly demand is in play at ¥108.40-109.41, joined by the end-of-week rebound from range support on the daily timeframe at ¥108.96-109.34, points to a test of daily range resistance at ¥110.86-110.27 this week.

Short term:

In harmony with the longer-term bullish image, any bearish attempt from ¥110 on the H1 could feed buyer interest from prime support at ¥109.74-109.80. This sets the stage for an initial upside objective at approximately ¥109.90ish.

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone remains active, welcoming an additional test mid-August. Yet, pattern traders will also note August’s move closed south of a double-top pattern’s neckline at $1.3669, broadcasting a bearish vibe. Conservative pattern sellers, however, are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Sterling extended its underperformance against a spirited USD on Friday; the currency pair finished the week lower by 0.7 percent. Despite many desks forecasting an interest rate rise in the UK as early as May, candle action discovered deeper water below the 200-day simple moving average at $1.3829. This raises the possibility of Quasimodo support at $1.3609 presenting itself this week.

It was also aired in recent writing that the daily chart communicates a rangebound environment. Since late June, buyers and sellers have been squaring off between a 61.8% Fib retracement at $1.3991 and the noted Quasimodo support. Momentum, according to the relative strength index (RSI) value, however, is below the 50.00 centreline and on the doorstep of 40.00. This informs traders that momentum to the downside is increasing in the form of average losses exceeding average gains.

Interestingly, H4 prime support at $1.3689-1.3724 was acknowledged heading into Friday’s close. This area may interest those looking at price taking out stops beneath lows around $1.3730 (blue oval), with a primary profit objective set at $1.3765.

For those who read Friday’s technical briefing you may recall the following H1 analysis (italics):

Elsewhere, short-term action based on the H1 chart has the pair circling the lower side of $1.38, as we write. Interestingly, supply at $1.3837-1.3812 lurks directly overhead and could help facilitate what many traders will recognise as a stop-run after the event. Chart space below $1.38 shifts attention to Quasimodo support from $1.3751.

As evident from the H1 timeframe, we can see price did indeed slice through $1.38 and tag supply at $1.3837-1.3812 before plunging lower. Two key Quasimodo supports were taken in the process at $1.3759 and $1.3751 (both now potential resistances), and punctured the $1.3726 8th September low. What’s interesting from a Fibonacci perspective is $1.3726 is accompanied by Fibonacci support between $1.3715 and $1.3732.

Observed Levels:

Long term:

Scope to unearth lower price levels this week is a possibility, both on the weekly and daily timeframes. A reasonable downside target rests with the daily timeframe’s Quasimodo support at $1.3609, which sits within weekly supply-turned demand at $1.3629-1.3456.

Short term:

While higher timeframes eye lower ground, H4 and H1 timeframes imply a pullback could be in the offing early week from H4 prime support at $1.3689-1.3724 and H1 Fibonacci support between $1.3715 and $1.3732. H1 resistances are seen at $1.3759 and $1.3751, though the H4 target resistance is a touch higher at $1.3765.

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.

September 17th 2021: GBP/USD H4 Prime Support at $1.3689-1.3724 Likely Eyed

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Prime support on the weekly timeframe resides at $1.1473-1.1583—sharing space with a 100% Fib projection at $1.1613 as well as a 1.27% Fib extension at $1.1550. Interestingly, long-term stops likely rest south of the $1.1640ish lows and perhaps accommodate enough energy to fill $1.1473-1.1583 bids. To the upside, the spotlight is on supply at $1.2412-1.2214. With respect to trend, we can see the market has largely been higher since the early months of 2020.

Meanwhile, a closer reading of price movement on the daily timeframe reveals Europe’s single currency fell sharply against a broadly energetic USD on Thursday. The buck clocked a fresh three-week top after US retail sales surprised to the upside, increasing by 0.7 percent in August (vs. minus 0.7 percent forecast). Technically, this seats Quasimodo support at $1.1689 back in the line of fire as a downside objective. Supporting further selling is the relative strength index (RSI) voyaging south of the 50.00 centreline; this informs traders average losses (over the 14-day lookback period) exceed average gains.

Recent hours nudged under support from $1.1764-1.1776, which, as you can see, is currently serving as resistance. Bearish forces confronting Quasimodo support at $1.1742 is not out of the question, which may energise a bullish showing to prime resistance at $1.1829-1.1804, an area potentially housing a healthy defence.

Lower on the curve, shorter-term flow made its way through Quasimodo support at $1.1775 amid early London hours Thursday, setting the stage to address a 1.272% Fibonacci projection at $1.1742 and neighbouring Quasimodo support at $1.1732.

Observed Levels:

The daily timeframe demonstrating some breathing space south until shaking hands with Quasimodo support at $1.1689 brings to light a bearish scene. While a retest of H1 resistance (previous Quasimodo support) at $1.1775 may occur, continuation selling from current levels is an option, targeting the H1 timeframe’s 1.272% Fibonacci projection at $1.1742—aligns with H4 Quasimodo support— and H1 Quasimodo support at $1.1732.

Albeit unlikely to make a show today, prime resistance on the H4 timeframe at $1.1829-1.1804 is a zone traders could have on their watchlists next week, particularly if bulls make an entrance off H4 Quasimodo support.

AUD/USD:

(Italics: previous analysis)

Prime support at $0.6968-0.7242 on the weekly timeframe is fighting to entice fresh bullish interest. Failure to command position opens up support at $0.6673. Should buyers regain consciousness, prime resistance at $0.7849-0.7599 calls for attention. With respect to trend, we’ve been higher since early 2020. Therefore, the response from $0.6968-0.7242 could STILL be a dip-buying attempt.

In the ‘shape’ of a bearish outside reversal, Thursday watched price breach the lower limit of prime support from $0.7286-0.7355. With the relative strength index (RSI) cementing position below the 50.00 centreline—telling traders that average losses over the 14-day lookback period surpass average gains—price action is now centred on Fibonacci support at $0.7057-0.7126.

Sellers assuming leadership yesterday hauled the currency pair through stacked demand on the H4 timeframe between $0.7282 and $0.7343, dropping to within a stone’s throw from prime support at $0.7236-0.7266 (glued to the upper edge of weekly prime support at $0.6968-0.7242). For those who read recent technical reports might recall the following (italics):

Prime support at $0.7236-0.7266 may interest bullish eyes—a base arranged to receive downside momentum derived from sell-stops below stacked demand.

The technical picture from the H1 timeframe reveals the unit slipped below $0.73 heading into US hours, establishing a decision point at $0.7308-0.7299 (structure seen clearer on M15). Also of technical relevance is Quasimodo resistance-turned support at $0.7271. Additional levels to be mindful of on the H1 are trendline resistance, extended from the high $0.7469, and Quasimodo resistance parked at $0.7339.

Observed Levels:

Focus is on the H4 timeframe’s prime support at $0.7236-0.7266, as buyers potentially gear up to take advantage of selling pressure (sell-stops) south of stacked demand.

Before reaching $0.7236-0.7266, nonetheless, traders are urged to pencil in a possible whipsaw above $0.73 into the H1 timeframe’s decision point at $0.7308-0.7299. This may provide enough to fuel moves to H1 Quasimodo resistance-turned support at $0.7271 (falls in just north of H4 prime support).

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance could eventually emerge to familiar supply at ¥113.81-112.22.

The uninspiring vibe out of weekly demand is demonstrated by way of a clear-cut consolidation on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. The reluctance to commit outside of these areas toughens the consolidation; range limits, therefore, are likely to remain on the watchlist.

A robust pickup in USD demand elevated USD/JPY on Thursday, pulling back to highs of ¥109.83. Overall, however, chart studies indicate a bearish vibe following the breach of a double-top pattern’s (¥110.44) neckline, drawn from ¥109.59. The pattern’s target sits around ¥108.71, plotted alongside a 1.618% Fibonacci projection at ¥108.86. Continued interest to the upside, nonetheless, is likely to close in on supply at ¥110.82-110.39—the base entertaining the noted double-top configuration.

From the H1 timeframe, a ¥109.84-109.79 decision point elbowed into the spotlight going into US trading on Thursday, prompting a shooting star candlestick pattern (frequently viewed as a bearish signal). Air space above the aforementioned zone channels focus towards the ¥110 figure, closely shadowed by prime resistance at ¥110.15-110.12. To the downside from current levels, Quasimodo resistance-turned support is seen at ¥109.45, followed closely by Quasimodo support at ¥109.31.

Observed Levels:

Recognising weekly demand in play at ¥108.40-109.41, joined by range support on the daily timeframe at ¥108.96-109.34, signals the H1 decision point at ¥109.84-109.79 is perhaps fragile and could lead to ¥110 making a show today.

Another option, of course, prior to reaching for higher levels, is a retracement to bring in buyers off either H1 Quasimodo resistance-turned support at ¥109.45, or Quasimodo support at ¥109.31.

 

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone remains active, welcoming an additional test mid-August. Yet, pattern traders will also note August’s move closed south of a double-top pattern’s neckline at $1.3664, broadcasting a bearish vibe. Conservative pattern sellers, however, are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Britain’s pound journeyed south versus a stronger US dollar Thursday, pressured following August’s optimistic US retail sales figures. This helped reinforce a bearish setting beneath the 200-day simple moving average at $1.3828. This raises the possibility of further underperformance to Quasimodo support at $1.3609.

It was also aired in recent writing that the daily chart communicates a rangebound environment. Since late June, buyers and sellers have been squaring off between a 61.8% Fib retracement at $1.3991 and the noted Quasimodo support. Directly above the consolidation, two tight-knit 100% Fib projections are seen around $1.4017—a double AB=CD bearish configuration for any harmonic traders. Momentum studies, according to the relative strength index (RSI), made its way above the 50.00 centreline early September and retested the barrier (average gains exceed average losses).

H4 prime resistance at $1.3940-1.3888 has proved a stubborn area. Sellers have since strengthened their grip and has price fast approaching prime support at $1.3689-1.3724. This area may interest those looking at price taking out stops beneath lows around $1.3730 (blue oval).

Elsewhere. Short-term action based on the H1 chart has the pair circling the lower side of $1.38, as we write. Interestingly, supply at $1.3837-1.3812 lurks directly overhead and could help facilitate what many traders will recognise as a stop-run after the event. Chart space below $1.38 shifts attention to Quasimodo support from $1.3751.

Observed Levels:

Technical studies from the H4 timeframe suggests bears are likely to remain in the driving seat for the time being, at least until we touch gloves with prime support at $1.3689-1.3724. Prior to any downside move, H1 sellers may welcome a whipsaw north of $1.38 to supply at $1.3837-1.3812. Conservative sellers out of the aforesaid supply will perhaps wait for a DECISIVE H1 close to form beneath $1.38 before committing, targeting H1 Quasimodo support at $1.3751 and the upper edge of H4 prime support from $1.3724.

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.

September 14th 2021: USD/JPY Eyes Space North of ¥110, Targeting Daily Resistance at ¥110.86-110.27

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Prime support on the weekly timeframe resides at $1.1473-1.1583—sharing space with a 100% Fib projection at $1.1613 as well as a 1.27% Fib extension at $1.1550. Interestingly, long-term stops likely rest south of the $1.1640ish lows and perhaps accommodate enough energy to fill $1.1473-1.1583 bids. To the upside, the spotlight is on supply at $1.2412-1.2214. With respect to trend, we can see the market has largely been higher since the early months of 2020.

Based on the daily timeframe, the US dollar—measured by the US dollar index—eased off two-week tops Monday, developing what many candlestick enthusiasts refer to as a shooting star. This, in light of the inverse correlation between the DXY and EUR/USD, witnessed the latter establish a hammer candlestick formation: a bullish signal within the candlestick domain. The daily chart remains languishing beneath late July tops at $1.1909. North of here, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside. The flip side, of course, is a run south back to Quasimodo support at $1.1689. The relative strength index (RSI) recently retested the upper side of the 50.00 centreline. Rebounding from here underpins upside momentum, whereas slipping lower echoes a bearish cue.

For those who read Monday’s technical briefing you may recall the following in regards to H4 and H1 timeframes (italics):

H4 demand at $1.1783-1.1810, as expected, delivered little at the tail end of the week. Prime support inhabits $1.1764-1.1776, with sell-stops beneath the aforementioned demand potentially fuelling willing $1.1764-1.1776 bids. The H1 chart shares a similar energy. The chart’s focus has shifted to $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, Quasimodo resistance-turned support at $1.1775 (unites with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

As evident from H4 and H1 charts, the whipsaw to both H4 prime support at $1.1764-1.1776 and H1 Quasimodo resistance-turned support at $1.1775 delivered, as anticipated.

Going forward, the next upside objective, according to the technical landscape on the H4 chart, rests at $1.1851-1.1840: a prime resistance zone. In terms of the H1 chart, Quasimodo resistance calls for attention at $1.1841, which aligns with a mild Fibonacci retracement cluster (resistance).

Observed Levels – #EURUSD

Yesterday’s hammer candlestick configuration on the daily chart, in addition to the H1 printing a meaningful break above $1.18, casts a bullish light over the market. Couple this with space for buyers to stretch their legs north of $1.18 to H1 Quasimodo resistance at $1.1841 and H4 prime resistance at $1.1851-1.1840, this could be sufficient to inspire a short-term bullish setting above $1.18.

Should the unit rally, H4 sellers will likely be watching $1.1851-1.1840 closely.

AUD/USD:

(Italics: previous analysis)

Despite printing solid gains out of prime support at $0.6968-0.7242 on the weekly timeframe, buyers took a back seat last week. Should buyers regain consciousness, prime resistance at $0.7849-0.7599 calls for attention. With respect to trend, we’ve been higher since early 2020. Therefore, the response from $0.6968-0.7242 could be a dip-buying attempt.

In tandem with the weekly picture, prime support on the daily timeframe at $0.7286-0.7355 put in an appearance in the second half of last week. This followed a one-sided drop from prime resistance at $0.7506-0.7474. Although Monday emphasised a muted session, the currency pair eked out modest gains. In the event this fails to spark bullish follow-through, the 1.618% Fib projection calls for action at $0.7126. What’s also interesting is the relative strength index (RSI) retested the 50.00 centreline. Deriving support from this level entertains the idea of positive momentum, yet a break lower underlines a bearish image.

Meanwhile, price movement on the H4 timeframe discovered support from stacked demand between $0.7282 and $0.7343. This followed Friday’s one-way move from the decision point at $0.7395-0.7410. Prime support at $0.7236-0.7266 may interest bullish eyes—a base arranged to receive downside momentum derived from sell-stops below stacked demand.

From a shorter-term perspective, H1 demand at $0.7331-0.7350 remains operational, albeit upside attempts currently hampered by local resistance at $0.7375. Recent selling underscores the possibility of a whipsaw through current demand to prime support at $0.7310-0.7322 (joined by a decision point at $0.7307-0.7324).

Observed Levels:

Monday taking control of local resistance at $0.7375 on the H1 scale, seats H1 demand at $0.7331-0.7350 on the radar and, by extension, a whipsaw of the area to prime support at $0.7310-0.7322. This is reinforced by prime support on the daily timeframe at $0.7286-0.7355, which houses the H1 prime zone.

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance is likely to welcome familiar supply at ¥113.81-112.22.

The lacklustre vibe out of weekly demand is established through a range on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. The reluctance to commit outside of these areas toughens the consolidation. Range limits, therefore, are likely to remain on the watchlist.

Relatively large-scale supply exists on the H4 timeframe at ¥110.82-110.39, an area capping upside since mid-July. With this zone making an entrance twice in September thus far and price developing a possible double-top pattern around ¥110.44, a break of the formation’s neckline at ¥109.59 could spark bearish movement. The caveat, of course, is Quasimodo support at ¥109.48. This level—technically speaking—informs traders that a bear trap could be in the making. This means a whipsaw through the neckline (which forms support alongside the ¥109.59 31st August low) may fill sell-stops that subsequently feed ¥109.48 bids.

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

The H1 timeframe has ¥110 in sight, an objective base that many traders will be watching early week. The interesting thing here is the prime resistances situated above between ¥110.15-110.12 and ¥110.13-110.07. Round numbers such as ¥110 often attract attention and when coming from below has traders attempting to fade the number and also play any breakout above. With prime resistance located directly higher, this has ‘stop run’ written all over it.

As you can see, Monday did indeed make its way above ¥110 and react from the aforementioned prime resistances. With short-term flow making a stand off ¥109.90 lows, price reclaimed the round number in recent hours and shines light on a possible run above ¥110.15-110.12 to challenge the daily timeframe’s prime resistance at ¥110.86-110.27, followed by the lower edge of H4 prime resistance at ¥110.82-110.39.

Observed Levels:

If H1 preserves bullish status north of ¥110, keep the possibility of moves to daily prime resistance at ¥110.86-110.27 under watch. The absence of buyers above the round number, on the other hand, sets the stage for a bearish theme to H1 support at ¥109.59 (essentially representing the H4 double-top’s pattern neckline).

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone, as you can see, remains active, welcoming an additional test mid-August. Yet, pattern traders will note August’s move closed south of a double-top pattern’s neckline at $1.3664, consequently broadcasting a long-term bearish warning. Conservative pattern sellers, however, are likely to seek a candle close beneath $1.3629-1.3456 before pulling the trigger.

A closer reading of price action on the daily timeframe reveals buyers and sellers have been battling for position around the 200-day simple moving average at $1.3821 since the beginning of September. It was also recently aired in Monday’s technical briefing that the daily chart communicates a rangebound environment. Since late June, buyers and sellers have been squaring off between a 61.8% Fib retracement at $1.3991 and a Quasimodo support from $1.3609. Directly above the consolidation, two tight-knit 100% Fib projections are seen around $1.4017—a double AB=CD bearish configuration for any harmonic traders reading. Momentum studies, according to the relative strength index (RSI), made its way above the 50.00 centreline and retested the barrier: average gains exceed average losses.

As we already highlighted in Monday’s analysis, H4 prime resistance at $1.3940-1.3888 put in another appearance on Friday, forcing buyers to step aside. Although this implies a bearish follow-through—targeting prime support at $1.3689-1.3724—the fact we tested (and possibly weakened) $1.3940-1.3888 early September (orange arrow) might discourage further selling. What’s technically interesting on the H4 scale is above $1.3940-1.3888 we have the upper edge of the daily range at $1.3991 and the 100% Fib projections seen around $1.4017. Understanding this, traders could get the impression a medium-term stop run may materialise, taking stops not only from the H4 prime resistance, but also daily range resistance at $1.3991. The 100% Fib projections, therefore, could be an area we see healthy sellers attack the market from in the near future.

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

Leaving $1.39 unchallenged Friday, sterling pared earlier gains off one-week tops versus the greenback. The session wrapped up exploring space south of the $1.3832 low—an important short-term level forming prior to Friday’s high $1.3888. Breaking beneath this has likely tripped intraday sell-stops, which perhaps contain enough fuel to fill bids at prime support from $1.3803-1.3819 early week, with an initial target of $1.3838.

As can be seen from the H1 chart this morning, buyers made an entrance from $1.3803-1.3819 on Monday (albeit clipping the lower side of the base and bringing in Fibonacci support around $1.3803). The initial target of $1.3838 was easily achieved, extending to $1.3851 before easing off.

Observed Levels:

Observing price movement on the daily timeframe marginally close above the 200-day simple moving average at $1.3821 is action traders perhaps view as an early bullish signal. This, along with what appears a fragile H4 prime resistance at $1.3940-1.3888 and the H1 timeframe showing elbow room to reach $1.39, puts forward a bullish theme. Though before price explores higher levels, a retest of the H1 prime support at $1.3803-1.3819 may come about.

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: 13th – 17th September 2021

Charts: Trading View

US Dollar Index:

The US dollar—according to the US dollar index—staged a comeback last week, snapping a two-week bearish phase.

Supply-turned demand at 91.13-87.76 remains the centre of attention on the monthly timeframe, underpinning this year’s USD advance. In terms of trend, the greenback has been higher since bottoming in 2008. Though minimising the chart highlights the longer-term trend is in fact south, meaning the 2008 up move could simply be a pullback. Breaching 91.13-87.76 would help confirm a bearish standpoint.

A closer interpretation of price action on the daily timeframe shows that since mid-June the DXY has demonstrated a lack of interest to the upside. This is further confirmed by the relative strength index (RSI) displaying bearish divergence: average losses exceeding average gains. In addition, the indicator voyaged south of the 50.00 centreline, highlighting the bearish vibe and throwing light on the possibility of a price move towards support at 91.42 this week.

EUR/USD:

(Italics: previous analysis)

Europe’s single currency finished the week on the back foot against the buck, paring a portion of the recent two-week advance.

Technically speaking, prime support on the weekly timeframe resides at $1.1473-1.1583—sharing space with a 100% Fib projection at $1.1613 as well as a 1.27% Fib extension at $1.1550. Interestingly, long-term stops likely rest south of the $1.1640ish lows and perhaps accommodate enough energy to fill $1.1473-1.1583 bids. To the upside, the spotlight is on supply at $1.2412-1.2214. With respect to trend, we can see the market has largely been higher since the early months of 2020.

Lower on the curve, the daily chart remains languishing beneath late July tops at $1.1909. North of here, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside. The flip side, of course, is a run south back to Quasimodo support at $1.1689.

Against the backdrop of higher timeframes, H4 demand at $1.1783-1.1810, as expected, delivered little at the tail end of the week. Prime support inhabits $1.1764-1.1776, with sell-stops beneath the aforementioned demand potentially fuelling willing $1.1764-1.1776 bids.

The H1 chart shares a similar energy. Topping just ahead of a Fibonacci cluster around $1.1855ish, Friday took on lower price levels amidst a DXY recovery off session lows, reinforced by a solid US PPI print at 0.7 percent in August versus a 0.6 percent forecast. The chart’s focus has shifted to $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, Quasimodo resistance-turned support at $1.1775 (unites with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

Observed Levels:

Long term:

Higher timeframe analysis points to stops and possible breakout buying interest north of late July tops at $1.1909 on the daily scale. Chart studies, nonetheless, indicate breakout buying above $1.1909 may be short-lived as prime resistance at $1.2115-1.1990 is within touching distance.

Short term:

Lower timeframes show H4 demand at $1.1783-1.1810 and the $1.18 base (H1) merging. Both echo vulnerability this week, underpinning a possible whipsaw to H1 Quasimodo resistance-turned support at $1.1775, which overlaps with H4 prime support at $1.1764-1.1776.

AUD/USD:

(Italics: previous analysis)

Despite printing solid gains out of prime support at $0.6968-0.7242 on the weekly timeframe, buyers took a back seat last week. Should buyers regain consciousness, prime resistance at $0.7849-0.7599 calls for attention. With respect to trend, we’ve been higher since early 2020. Therefore, the response from $0.6968-0.7242 could be a dip-buying attempt.

In tandem with the weekly picture, prime support on the daily timeframe at $0.7286-0.7355 put in an appearance in the second half of the week. This followed a one-sided drop from prime resistance at $0.7506-0.7474. Candlestick movement out of current support, as you can see, implies a lack of buying interest, re-opening the risk of a decline back to the 1.618% Fib projection at $0.7126 this week.

Out of the H4 timeframe, technicians may argue the decision point from $0.7395-0.7410 aided Friday’s sell-off. Clear decision points commonly serve as resistance upon failing to deliver support at the initial test. Stacked demand is now close by between $0.7282 and $0.7343, and prime support rests at $0.7236-0.7266.

Risk aversion took hold Friday, weighing on risk currencies. Earlier, though, short-term flow on the H1 carved a picture-perfect stop run north of $0.74 into Fibonacci resistance between $0.7416 and $0.7409. Not only did this snare breakout buyers (bull trap), it tripped a portion of stops from sellers attempting to fade $0.74. Recent selling underlines the possibility of a whipsaw through demand at $0.7331-0.7350 to prime support at $0.7310-0.7322 (joined by a decision point at $0.7307-0.7324) this week.

Observed Levels:

Long term:

Despite a dull reception, prime support on the daily timeframe at $0.7286-0.7355 remains a focal point, braced by the fact weekly price exited prime support at $0.6968-0.7242. Consequently, long term suggests a bullish picture until daily prime resistance at $0.7506-0.7474.

Short term:

Focus is on the H1 timeframe early week. Friday nosediving below $0.74 renews the potential for a whipsaw below demand at $0.7331-0.7350 to prime support coming in at $0.7310-0.7322. Assuming the setup comes to fruition and $0.7310-0.7322 bids respond, this is in line with higher timeframe direction.

USD/JPY:

(Italics: previous analysis)

Since mid-July, ¥108.40-109.41 demand has failed to stir much bullish energy on the weekly timeframe. Nevertheless, recognising the area derives additional backing from neighbouring descending resistance-turned support, extended from the high ¥118.61, an advance is likely to welcome familiar supply at ¥113.81-112.22.

The lacklustre vibe out of weekly demand is established through a range on the daily timeframe between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27. The reluctance to commit outside of these areas toughens the consolidation. Range limits, therefore, are likely on the watchlist this week.

Relatively large-scale supply exists on the H4 timeframe at ¥110.82-110.39, an area capping upside since mid-July. With this area making an entrance twice in September thus far and price developing a possible double-top pattern around ¥110.44, a break of the formation’s neckline at ¥109.59 could spark bearish movement. The caveat, of course, is Quasimodo support at ¥109.48. This level—technically speaking—informs traders that a bear trap could be in the making. This means a whipsaw through the neckline (which forms support alongside the ¥109.59 31st August low) may fill sell stops that feed ¥109.48 bids.

The H1 timeframe has ¥110 in sight, an objective base that many traders will be watching early week. The interesting thing here is the prime resistances situated above between ¥110.15-110.12 and ¥110.13-110.07. Round numbers such as ¥110 often attract attention and when coming from below has traders attempting to fade the number and also play any breakout above. With prime resistance located directly above, this has ‘stop run’ written all over it, as per the black arrows.

Observed Levels:

Long term:

The daily timeframe’s range between prime support at ¥108.96-109.34 and resistance from ¥110.86-110.27 offers clear perimeters this week. Knowing the weekly timeframe has price modestly holding demand at ¥108.40-109.41, daily range support is interesting.

Short term:

The H4 timeframe emphasises either a decline this week based on the double-top configuration at ¥110.44, or a bullish scene in the form of a whipsaw through the formation’s neckline at ¥109.59 to Quasimodo support at ¥109.48. Prior to this occurring (if at all), H1 suggests a whipsaw through ¥110 into prime resistances between ¥110.15-110.12 and ¥110.13-110.07 to set up a potential short-term bearish theme early week.

GBP/USD:

(Italics: previous analysis)

In the shape of a hammer candlestick formation (bullish signal), supply-turned demand at $1.3629-1.3456 on the weekly timeframe stepped forward in July. The aforementioned zone, as you can see, remains active, welcoming an additional test mid-August. Yet, pattern traders will note August’s move closed south of a double-top pattern’s neckline at $1.3664, consequently broadcasting a long-term bearish warning. Conservative pattern sellers, however, are likely to seek a candle close beneath $1.3629-1.3456 before pulling the trigger.

More of a detailed view on the daily timeframe communicates a rangebound atmosphere. Since late June, buyers and sellers have been squaring off between a 61.8% Fib retracement at $1.3991 and a Quasimodo support from $1.3609. Directly above the consolidation, two tight-knit 100% Fib projections are seen around $1.4017—a double AB=CD bearish configuration for any harmonic traders reading. Momentum studies, according to the relative strength index (RSI), made its way above the 50.00 centreline and retested the barrier: average gains exceed average losses.

H4 prime resistance at $1.3940-1.3888 put in another appearance on Friday, forcing buyers to step aside. Although this implies a bearish follow-through this week, targeting prime support at $1.3689-1.3724, the fact we tested this area early September (orange arrow) might discourage further selling. What’s technically interesting on the H4 scale is above $1.3940-1.3888 we have the upper edge of the daily range at $1.3991 and the 100% Fib projections seen around $1.4017. Understanding this, traders could get the impression a medium-term stop run may materialise, taking stops not only from the H4 prime resistance, but also daily range resistance at $1.3991. The 100% Fib projections, therefore, could be an area we see healthy sellers attack the market this week.

Leaving $1.39 unchallenged Friday, sterling pared earlier gains off one-week tops versus the greenback. The session wrapped up exploring space south of the $1.3832 low—an important short-term level forming prior to Friday’s high $1.3888. Breaking beneath this has likely tripped intraday sell-stops, which perhaps contain enough fuel to fill bids at prime support from $1.3803-1.3819 early week, with an initial target of $1.3838.

Observed Levels:

Long term:

It’s a bit of a mixed bag on the weekly timeframe. On the one hand, supply-turned demand at $1.3629-1.3456 is in play, though on the other hand, price recently closed beneath a double-top pattern’s neckline at $1.3664 (bearish signal). In addition, we’re rangebound on the daily scale between $1.3991 and $1.3609.

Ultimately, longer-term traders are likely to keep a close eye on the daily chart’s range limits this week.

Short term:

In terms of the H1 timeframe, prime support at $1.3803-1.3819 is a key watch early week. A rebound from here targets at least $1.3838ish. Further upside may also hinder downside movement out of the H4 timeframe’s prime resistance at $1.3940-1.3888.

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.

September 10th 2021: Technical Market Insight

Charts: Trading View

Brief Economic Review:

  • The European Central Bank left interest rates unchanged, though did state that over the coming quarter it would ‘moderately’ cut back on PEPP purchases. The question is what is moderate?
  • Weekly initial unemployment claims out of the US slipped to 310,000 versus economist forecasts of around 335,000.

EUR/USD:

(Unchanged from previous analysis) Technical observations out of the monthly chart reveals large-scale support at $1.1816-1.1299 welcomed buyers in recent trade, with prime support resting at $1.1473-1.1583 which happens to share chart space with a 100% Fib projection at $1.1613. This, alongside a clear uptrend since early 2020, echoes a technically bullish picture, placing the retracement slide on the daily timeframe from late July tops at $1.1909ish in question. North of $1.1909, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside.

Meanwhile, H4 demand at $1.1783-1.1810 remains active, yet appears brittle. Prime support inhabits $1.1764-1.1776, with sell-stops beneath the aforementioned demand potentially helping to fuel willing $1.1764-1.1776 bids.

The H1 chart has the currency pair within reach of a Fibonacci cluster around $1.1844—a base with enough energy to possibly draw short-term bearish interest. The chart also centres focus on $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, Quasimodo resistance-turned support at $1.1775 (unites with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

AUD/USD:

(Unchanged from previous analysis) According to the weekly timeframe, August dipped a toe in prime support at $0.6968-0.7242—an area inspiring a two-week bullish phase. Chart studies point to $0.7849-0.7599 as a potential upside objective. In terms of trend, the unit has been higher since the beginning of 2020. Interestingly, the daily timeframe shows a prime support/target made an entrance at $0.7286-0.7355 this week, following a dip from prime resistance at $0.7506-0.7474.

The H4 continues to languish south of the decision point from $0.7395-0.7410. Stacked demand is close by between $0.7282 and $0.7343, and prime support rests at $0.7236-0.7266. H1 carved out a fresh short-term peak Thursday, touching $0.7395. While current price encourages a bullish setting, the possibility of a whipsaw lower through demand at $0.7331-0.7350 to prime support at $0.7310-0.7322 (joined by a decision point at $0.7307-0.7324) is an alternative bullish scenario worth noting.

A $0.7331-0.7350 whipsaw to $0.7310-0.7322 dovetails not only with daily prime support at $0.7286-0.7355, but also direction out of monthly prime support at $0.6968-0.7242.

USD/JPY:

Since mid-July, ¥108.40-109.41 demand has been in focus on the weekly timeframe. Though the lacklustre bullish vibe from the area is clearly visible on the daily scale by way of a range between prime resistance at ¥110.86-110.27 and support coming in at ¥108.96-109.34. Until a decisive break outside either of these areas materialises, we’re dealing with a rangebound market on the daily timeframe.

¥110.82-110.39 supply on the H4 chart has proven stubborn. Quasimodo support at ¥109.48 calls for attention, should sellers remain in the driver’s seat. With this on board, sellers welcoming the H1 decision point at ¥109.84-109.76 and targeting support from ¥109.59 could be in the offing. Note that below the latter, H4 Quasimodo support is seen at ¥109.48.

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.

September 9th 2021: Technical Market Insight

Charts: Trading View

EUR/USD:

Technical observations out of the monthly chart reveal large-scale support at $1.1816-1.1299, though prime support rests at $1.1473-1.1583 which happens to share chart space with a 100% Fib projection at $1.1613. This echoes a technically bullish picture, placing the retracement slide on the daily timeframe from late July tops at $1.1909ish in question. North of $1.1909, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside.

Shorter-term flow has H4 shaking hands with demand at $1.1783-1.1810, following a three-day long decline from $1.1939-1.1902 supply. The chart has labelled this area as brittle, as prime support inhabits the $1.1764-1.1776 neighbourhood and sell-stops beneath the aforementioned demand could help fuel willing $1.1764-1.1776 bids. In conjunction with the H4, the H1 chart centres its attention on $1.18. Although $1.18 joins hands with a 61.8% Fib retracement and a 1.618% Fib projection at $1.1797, the Quasimodo resistance-turned support at $1.1775 (which converges with prime H4 support at $1.1764-1.1776) is positioned to welcome any $1.18 whipsaw.

AUD/USD:

According to the weekly timeframe, August dipped a toe in prime support at $0.6968-0.7242—an area encouraging a two-week bullish phase. Despite this week turning lower, chart studies point to $0.7849-0.7599 as a potential upside objective. Consequently, further upside could be in the offing. Interestingly, from the daily timeframe, prime resistance made an entrance at $0.7506-0.7474 and recently hit its support target at $0.7286-0.7355. This could see longer-term movement attempt to scale through stacked supply between $0.7617 and $0.7408 to $0.7621: a Quasimodo support-turned resistance.

Against the backdrop of the bigger picture, the H4 scale, as expected, took hold of the lower side of the decision point from $0.7395-0.7410. Stacked demand is close by between $0.7282 and $0.7343, though prime support rests at $0.7236-0.7266. Lower on the curve, the H1 timeframe shows what appears feeble demand at $0.7331-0.7350, open to a possible whipsaw into prime support from $0.7310-0.7322, which is joined by a decision point at $0.7307-0.7324. A $0.7331-0.7350 whipsaw to $0.7310-0.7322 would be in line with the daily timeframe ‘hitting target’ and possibly reversing, as well as monthly direction.

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.

September 8th 2021: GBP/USD Bid Between $1.3774 and $1.3787; Possibly Eyes Space North of $1.38

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.3 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Against a basket of six foreign currencies, the US dollar index remained on the winning side of the table on Tuesday amid rising US Treasury yields. The DXY climbing 0.3 percent into the European close weighed on EUR/USD, extending its retracement from late July tops at $1.1909ish.

Quasimodo support calls for attention around $1.1688 in the event sellers remain in the driving seat. Though buyers regaining consciousness could witness resistance between $1.2033 and $1.1994 eventually make an entrance.

Interestingly, the relative strength index (RSI) recently stabilised within striking distance of resistance at 64.93, which elbows support at 53.19 back in view.

H4 timeframe:

$1.1907 resistance has proven a tenacious ceiling since late June. Chart studies indicate a run above $1.1907 could still be in the offing, as buy-stops above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase.

Nevertheless, prior to the above coming to fruition, if at all, drawing in buyers from support at $1,1785-1.1823 is a possible scenario.

H1 timeframe:

Latest developments out of the H1 reveal the currency pair slipped below the 100-period simple moving average at $1.1865, a move shining the technical spotlight on a decision point at $1.1812-1.1824. While the aforesaid zone lacks freshness, it invites Fibonacci confluence between $1.1817 and $1.1831.

In addition to the decision point and Fibonacci influence, the relative strength index (RSI) is likely to record oversold conditions.

Observed levels:

The combination of monthly support from $1.1857-1.1352 and H4 support at $1,1785-1.1823 seats the H1 decision point at $1.1812-1.1824 and associated Fibonacci ratios in a strong light if tested today.

Any upside attempts from the H1 base is likely to INITIALLY zero in on the 100-period simple moving average at $1.1865.

AUD/USD:

Monthly timeframe:

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

Month to date, September is higher by 1.1 percent, trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

Trend studies (despite the trendline resistance [drawn from the high $1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Following the breach of 4th August high at $0.7427, and despite an early pop higher in response to the RBA’s policy announcements, Tuesday delivered a bearish outside reversal.

The broad-based USD bid aided recent declines, unlocking the possibility of a continuation lower back to the 1.618% Fib projection at $0.7114.

Addressing resistance between $0.7665 and $0.7590 is still an option provided buyers make a stand. $0.7665-0.7590 consists of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7605 and another 61.8% Fib retracement at $0.7590.

Focus on the relative strength index (RSI) remains on trendline resistance, taken from the high 80.12. Also of note is overbought space, in particular resistance at 80.19.

H4 timeframe:

In light of Tuesday’s downside, AUD/USD gnawed through a decision point at $0.7393-0.7410 and the channel support, taken from the low $0.7107.

Withdrawing lower positions the currency pair in a short-term bearish space. $0.7393-0.7410 serving as resistance tempts a potential move to support at 0.7339 which happens to join hands with a 38.2% Fib retracement.

H1 timeframe:

A closer reading of price action on the H1 scale places price action south of $0.74 as we look to wrap up Tuesday’s session.

The demand at $0.7356-0.7368 is a zone worthy of interest in the event sellers maintain a bearish position sub $0.74, with a break lower directing focus towards $0.73.

The relative strength index (RSI) shook hands with support at 27.02, situated within oversold territory.

Observed levels:

Short-term action reveals a possible bearish theme emerging beneath $0.74, aided by the $0.7393-0.7410 H4 decision point and the daily timeframe’s bearish outside reversal.

Reasonable downside objectives fall in at the H1 timeframe’s demand from $0.7356-0.7368, followed by $0.73.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.3 percent in the green.

Daily timeframe:

Demand for the Japanese yen waned Tuesday as US Treasury yields rallied. Continued interest to the upside on USD/JPY throws light on resistance at ¥111.88-111.20.

Technical support remains evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

The relative strength index (RSI) shows the value attempting to exit the upper edge of its range between 40.94 and 54.43, an area forming since early July. This—coupled with the indicator pushing above the 50.00 centreline—informs traders momentum to the upside is gaining traction: average gains exceed average losses.

H4 timeframe:

As you can see, supply at ¥110.56-110.29 re-entered the fray on Tuesday, leaving Quasimodo support at ¥109.48 unchallenged.

Air space north of ¥110.56-110.29 unmasks additional supply coming in from ¥110.99-110.80.

H1 timeframe:

According to the H1 scale, we’re closing in on resistance at ¥110.32, a level sharing a connection with the relative strength index (RSI) joining resistance at 78.38.

Although ¥110.32 resides within the lower edge of H4 supply mentioned above at ¥110.56-110.29, technicians will note Quasimodo resistance at ¥110.48 as the next upside target if buyers take on ¥110.32.

Observed levels:

H1 resistance at ¥110.32, the H1 RSI resistance at 78.38 and H4 supply at ¥110.56-110.29 highlights confluence to be mindful of.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.2 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Analysis largely unchanged from previous writing.

Aside from fluctuating around the 200-day simple moving average at $1.3812, areas to be cognisant of are resistance at $1.4003 and Quasimodo support at $1.3609.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Momentum to the upside is slowing, according to the relative strength index (RSI). The value turned off 56.14 and is now attempting to explore water below the 50.00 centreline.

H4 timeframe:

On the back of a USD bid, GBP/USD drilled into the $1.3766-1.3799 decision point on Tuesday, a downside objective underlined in Tuesday’s technical briefing. Despite uninspiring bullish action thus far, this is an area buyers may put in an appearance heading into London today. Failure to hold, however, could bring in $1.3732 support.

H1 timeframe:

For those who read Tuesday’s technical briefing you might recall the following (italics):

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

As evident from the chart, $1.38 did indeed welcome a whipsaw on Tuesday and bids were present between $1.3774 and $1.3787. Yet, the inability to reclaim position above $1.38 (which has the 100-period simple moving average to target at $1.3822 if price trades higher) is concerning and may see the unit dip into support at $1.3737-1.3774.

Supporting a recovery attempt is the relative strength index (RSI), dipping its toe in oversold waters and exiting the range.

Observed levels:

The H4 timeframe working with the $1.3766-1.3799 decision point, and H1 bids filled south of $1.38 between $1.3774 and $1.3787, could bring about a short-term bullish scene, targeting at least the 100-period simple moving average at $1.3822.

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.

September 7th 2021: AUD/USD Eyeing Possible Test of H4 Decision Point at $0.7393-0.7410

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.5 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Analysis largely unchanged from previous writing.

Monday observed the greenback trim losses sustained on Friday, following disappointing headline US non-farm payrolls. Ultimately, though, markets welcomed a narrow range as a result of US banks closing in observance of Labour Day.

Buyers and sellers, as you can see, remain squaring off around late July tops at $1.1909ish. Cementing a close north of the latter seats resistance between $1.2033 and $1.1994 in the firing range, organised by way of a 61.8% Fib, the 200-day simple moving average and Quasimodo support-turned resistance. What’s interesting here is a break of $1.1909 highs likely trips buy-stops, perhaps generating enough upside oomph to fill $1.2033-1.1994 offers.

With regards to long-term trend, 2021 has been directionless, despite healthy gains in 2020.

As for momentum, the relative strength index (RSI) is on the verge of crossing swords with trendline resistance just ahead of overbought territory. Also of note is resistance plotted at 80.39. This shows momentum is perhaps gearing up to level off.

H4 timeframe:

Analysis unchanged from previous writing.

$1.1907 resistance, a level holding back buyers since late June, called for attention Friday, with Monday touching $1.1856. The interesting feature, however, is the stops above $1.1907, and the zone of resistance at $1.1955-1.1933. Also seen is Quasimodo resistance at $1.1956.

Buy-stops above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase back to at least $1.1907.

H1 timeframe:

Monday shook hands with a minor Fibonacci cluster, made up of a 100% Fib projection at $1.1860 and a 61.8% Fib retracement at $1.1863. Buyers established a tentative defence off the noted floor amid London hours and remains supportive ahead of the closing bell.

Pursuing higher levels shifts focus back to $1.19, a psychological barrier aligned with a 100% Fib projection at $1.1904, a longer-term 38.2% Fib retracement at $1.1896 (taken from the $1.2266 May 25th high) as well as a 1.618% Fib expansion at $1.1913.

From the standpoint of the relative strength index (RSI), the indicator grasped the lower limits of its two-week range between 40.00 and 50.00 in recent movement. It is common to watch the 40.00-50.00 region serve as a temporary oversold threshold during rising markets. And this is what we’re seeing here.

Observed levels:

Seeing H1 defending the $1.1860ish zone—reinforced by a H1 RSI oversold signal and monthly support from $1.1857-1.1352—puts forth a bullish vibe, targeting north of $1.19 to H4 resistance at $1.1955-1.1933.

AUD/USD:

Monthly timeframe:

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

Month to date, September is higher by 1.6 percent, consequently trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

Trend studies (despite the trendline resistance [drawn from the high $1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Analysis unchanged from previous writing.

AUD/USD bulls strengthening their grip and overthrowing Quasimodo resistance at $0.7414 emphasises a bullish setting.

Addressing resistance between $0.7665 and $0.7590, therefore, is possible, an area made up of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7605 and another 61.8% Fib retracement at $0.7590.

Interestingly, in conjunction with the resistance breach, the relative strength index (RSI) climbed above trend line resistance, taken from the high 80.12. This places overbought space in range, in particular resistance at 80.19.

H4 timeframe:

Analysis unchanged from previous writing.

Short-term volatility thinned Monday thanks to US banks shutting for Labour Day. In light of the muted start to the week, the technical background remains unaltered.

Under the influence of channel resistance, drawn from the high $0.7271, Friday concluded a touch off best levels. Earlier, however, commanded a bullish presence and formed a clear-cut decision point at $0.7393-0.7410 to drive through daily Quasimodo resistance mentioned above at $0.7414 (now a serving support).

Dip-buyers are likely to show interest in $0.7393-0.7410 should a test form, aided by channel support, taken from the low $0.7107, and neighbouring daily support at $0.7414. A realistic upside objective resides at $0.7494: a Quasimodo resistance joined by a 1.618% Fib projection at $0.7497.

H1 timeframe:

The decision point underlined in Monday’s technical briefing at $0.7429-0.7438 had its limits challenged yesterday, possibly concerning longs at this base.

Below the area is $0.74, which shares chart space with the 100-period simple moving average at $0.7392. North of the decision point, nonetheless, draws attention to Quasimodo resistance at $0.7472 and the $0.75 region.

The relative strength index (RSI) is seen crawling along the lower edge of its range between overbought and the 50.00ish level. The 40.00-50.00 area acting as oversold is common during lengthy moves higher. Therefore, it’s worth keeping a close eye on this area.

Observed levels:

In light of the lacklustre performance Monday, the observed levels remain unchanged.

From the bigger picture, observing daily price manoeuvre north of Quasimodo resistance at $0.7414 communicates a bullish vibe towards resistance between $0.7665 and $0.7590.

With this in mind, the H4 decision point at $0.7393-0.7410 offers a primary area of support. Not only joined closely by daily support at $0.7414, the H4 zone also works closely with H4 channel support.

Chart studies, therefore, suggest the H1 decision point at $0.7429-0.7438 echoes a precarious tone. This places $0.74 in the line of fire as a possible support, joined by the noted H4 supports underlined above.

Ultimately, any bullish scenario may take aim at $0.75ish, based on the H4 technical picture.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.1 percent in the red.

Daily timeframe:

Analysis unchanged from previous writing.

Technical support is evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

From the relative strength index (RSI), a range has been in process between 40.94 and 54.43 since early July. This tells traders that upside momentum is weak: average losses exceed average gains.

H4 timeframe:

Analysis unchanged from previous writing.

Last week witnessed the unit cross swords with supply at ¥110.56-110.29 and subsequently explore lower levels.

Upside momentum, as demonstrated through the three blue arrows, has been diminishing since mid-August, which alerted traders to a possible bearish theme from the aforementioned supply.

Continued interest to the downside faces Quasimodo support at ¥109.48, with a break uncovering two Quasimodo support levels at ¥108.88 and ¥108.83.

H1 timeframe:

Despite Monday’s thin trading conditions, the currency pair extended recovery gains north of a mild Fibonacci cluster around ¥109.62ish (61.8% and 78.6%).

The decision point at ¥109.97-109.90, which connects with the 100-period simple moving average at $109.96 and is situated just south of $110, also made an entrance. There was very little on the charts suggesting a whipsaw above $110, hence the decision point standing firm.

Voyaging beneath the noted Fibonacci cluster underlines the ¥109 figure as a possible downside objective.

As for the relative strength index (RSI), we are testing the mettle of the 50.00 centreline, following a recent move out of oversold.

Observed levels:

From a shorter-term perspective, H4 Quasimodo support at ¥109.48 is unlikely to provide much of a floor if tested. A more realistic downside target is two Quasimodo support levels at ¥108.88 and ¥108.83, as they align closely with the daily timeframe’s 61.8% Fib retracement at ¥109.07.

As a result of the above, the H1 may welcome a bearish theme, with sellers possibly looking to take action south of the decision point at ¥109.97-109.90 for a potential break through the Fibonacci cluster between ¥109.58 and ¥109.63, targeting ¥109ish.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.6 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Analysis unchanged from previous writing.

The key technical move on the daily chart to be mindful of is the recent price cross above the 200-day simple moving average at $1.3808, a move some technicians label as bullish. This follows August 23rd recovery from Quasimodo support at $1.3609.

Overhead, resistance resides at $1.4003.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum is gaining traction, according to the relative strength index (RSI) crossing above the 50.00 centreline. This shows average gains exceed average losses.

H4 timeframe:

Analysis unchanged from previous writing.

$1.3939-1.3887 resistance made an appearance heading into the close Friday.

The $1.3766-1.3799 decision point is now in range as a possible downside objective, a base underpinning the 200-day simple moving average on the daily at $1.3808.

H1 timeframe:

Analysis unchanged from previous writing.

Situated a handful of pips beneath $1.39, Quasimodo resistance put in an appearance at $1.3890 a few hours ahead of the close on Friday. With that, a bout of profit taking emerged, and, with Monday’s modest decline, highlights a possible retest of $1.38.

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

From the relative strength index (RSI), we are now below the 50.00 centreline, meaning average losses exceed average gains. The break of 50.00 helps confirm short-term bearish intent.

Observed levels:

Outlook unchanged from previous writing.

The daily timeframe making its way above the 200-day simple moving average at $1.3808 is considered a bullish signal among many technical traders, and could encourage buying.

The H4 decision point at $1.3766-1.3799 is well placed to receive sellers. In addition to this, the H1 timeframe’s $1.38 base is positioned nearby, which is calling for a whipsaw to the H1 area marked in yellow between $1.3774 and $1.3787.

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: 6th – 10th September 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

The US dollar—measured by the US dollar index—extended losses last week, down 0.6 percent.

Back-to-back weekly declines, south of a Fibonacci cluster (resistance) between 94.07 and 93.90, pulled the benchmark to within reach of July 30th low at 91.78. A subsequent drop this week (taking out 91.78 stops) exposes the 200-day simple moving average at 91.33 (mean price), grouped together with substantial support at 90.64-91.40 and neighbouring demand at 90.32-90.70.

From a trend perspective, the buck has exhibited a modest bullish phase since the beginning of the year, following sizeable declines in 2020. After realising support at 89.34 (a level displaying historical significance since early 2009), the index eventually clocked fresh highs at 93.73 in late August this year. Of note, year-to-date movement is higher by 2.4 percent.

The relative strength index (RSI), a popular momentum gauge, muscled through key support between 40.76 and 47.49 last week. This informs technicians average losses exceed average gains; momentum is, therefore, to the downside, unlocking the likelihood of oversold space making an entrance, in particular support at 21.36.

  • Technically speaking, a test of support at 90.64-91.40 emerging this week should not surprise. Tripping sell-stops south of July 30th low at 91.78 is likely to exacerbate any selling. Efforts to hold 90.64-91.40 may also fuse with an RSI oversold signal.

EUR/USD:

Monthly timeframe:

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

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.6 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technically underpinned by Quasimodo support priced in from $1.1688, the currency pair—with the exception of one session—has shaped a series of daily gains since August 20th.

Friday, as you can see, touched gloves with late July tops at $1.1909ish, though closed considerably off the high. Cementing a close north of the latter this week seats resistance between $1.2033 and $1.1994, arranged by way of a 61.8% Fib, the 200-day simple moving average and a Quasimodo support-turned resistance. What’s interesting here is a break of $1.1909 highs likely trips buy-stops, fuelling $1.2033-1.1994 offers.

With regards to long-term trend, 2021 has been directionless, despite healthy gains in 2020.

As for momentum, the relative strength index (RSI) is on the verge of crossing swords with trendline resistance just ahead of overbought territory. Also of note is resistance plotted at 80.39. This shows momentum is perhaps gearing up to level off.

H4 timeframe:

$1.1907 resistance, a level holding back buyers since late June, called for attention Friday. The interesting feature, however, is the stops above this level, and clear zone of resistance at $1.1955-1.1933.

Buy-stops arranged above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase back to at least $1.1907.

H1 timeframe:

Following Friday’s mammoth job’s miss, EUR/USD initially popped higher and challenged $1.19, which predictably served as resistance.

$1.19 is joined by a number of key technical levels, including a 100% Fib projection at $1.1904, a longer-term 38.2% Fib retracement at $1.1896 (taken from the $1.2266 May 25th high), a 1.618% Fib expansion at $1.1913, as well as channel resistance, extended from the high $1.1845.

Should sellers govern control early week, channel support, taken from the low $1.1735, is a key watch, an ascending base sharing chart space with a 100% Fib projection at $1.1860 and a 61.8% Fib retracement at $1.1863. South of here, demand—albeit not fresh—falls in at $1.1812-1.1824.

In terms of where we stand on the relative strength index (RSI), the indicator is establishing an oversold threshold between 40.00 and 50.00, which is common in rising markets. In effect, we’re now working with a range between the aforesaid values and overbought.

Observed levels:

Long term:

Recognising monthly flow testing support at $1.1857-1.1352, downside movement on the daily timeframe could be limited from late July tops at $1.1909.

Any upside attempts on the daily scale shines the technical spotlight on resistance between $1.2033 and 1.1994.

Short term:

Against the backdrop of longer-term action, the H1 chart, after defending $1.19 resistance, suggests a test of channel support at the $1.1860ish zone, which may align with a H1 RSI oversold signal around 40.00-50.00.

The above could send the unit higher from $1.1860, in line with the H4 technical projection: breaching $1.1907 resistance to tackle $1.1955-1.1933 offers.

AUD/USD:

Monthly timeframe:

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

Month to date, September is higher by 1.9 percent, consequently trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

Trend studies (despite the trendline resistance [drawn from the high $1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

AUD/USD bulls remained on the offensive last week, rising through Quasimodo resistance at $0.7414. Note should a $0.7414 retest emerge this week, and the barrier develops support, addressing resistance between $0.7665 and $0.7590 is possible (made up of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7604 and another 61.8% Fib retracement at $0.7590).

Interestingly, the relative strength index (RSI) climbed above trend line resistance, taken from the high 80.12. This places overbought space in range.

H4 timeframe:

Under the influence of channel resistance, drawn from the high $0.7271, Friday concluded a touch off best levels. Earlier, however, commanded a bullish presence and formed a clear-cut decision point at $0.7393-0.7410 to drive through daily Quasimodo resistance at $0.7414 (now a serving support).

Dip-buyers are likely to show interest in $0.7393-0.7410 should a test form, aided by channel support, taken from the low $0.7107, and neighbouring daily support at $0.7414. A realistic upside objective resides at $0.7494: a Quasimodo resistance joined by a 1.618% Fib projection at $0.7497.

H1 timeframe:

Friday, on the back of a much lower-than-expected NFP print, welcomed upside, a move establishing a decision point at $0.7429-0.7438 that penetrated supply coming in from $0.7450-0.7436.

Quasimodo resistance at $0.7472 also made an entrance, which persuaded a $0.7429-0.7438 test.

With buyers and sellers likely to square off between $0.7472 and $0.7429-0.7438 early week, additional levels to be mindful of are $0.74 and $0.75.

The relative strength index (RSI), similar to EUR/USD, recently launched a consolidation between overbought and the 50.00ish range. This is common during lengthy moves higher. Consequently, it’s worth keeping a close eye on these barriers.

Observed levels:

Long term:

Observing daily price manoeuvre north of Quasimodo resistance at $0.7414 last week communicates a bullish vibe towards resistance between $0.7665 and $0.7590.

Short term:

With the bigger picture in mind, the H4 decision point at $0.7393-0.7410 offers a primary area of support this week. Not only joined closely by daily support at $0.7414, the H4 zone also works closely with H4 channel support.

Chart studies, therefore, suggest the H1 decision point at $0.7429-0.7438 echoes a precarious tone. This places $0.74 in the line of fire as a possible support this week, joined by the noted H4 supports underlined above.

Ultimately, though, any bullish scenario may take aim at $0.75ish, based on the H4 technical picture.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.3 percent in the red.

Daily timeframe:

Weighed by NFP-induced USD softness, USD/JPY ended Friday marginally off session lows.

Technical support is evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

From the relative strength index (RSI), a range has been in process between 40.94 and 54.43 since early July. This tells traders that upside momentum is weak: average losses exceed average gains.

H4 timeframe:

Mid-week trading witnessed the unit cross swords with supply at ¥110.56-110.29 and subsequently explore lower levels.

Upside momentum, as demonstrated through the three blue arrows, has been diminishing since mid-August, which alerted traders to a possible bearish theme from the aforementioned supply. Continued interest to the downside this week faces Quasimodo support at ¥109.48, with a break uncovering two Quasimodo support levels at ¥108.88 and ¥108.83.

H1 timeframe:

Friday’s thinly bid market allowed short-term action to challenge an interesting Fibonacci cluster between ¥109.58 and ¥109.63.

On top of this, the relative strength index (RSI) registered an oversold signal, and price developed a reasonable decision point at ¥109.97-109.97, situated just south of $110 and the 100-period simple moving average at $109.97.

Voyaging beneath the noted Fib structure underlines the ¥109 figure as a possible downside objective.

Observed levels:

Long term:

Monthly price occupying area above descending resistance-turned support delivers a bullish tone, long term.

The 61.8% Fib retracement at ¥109.07 on the daily timeframe, therefore, could accommodate buyers this week, as may the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41.

Short term:

From a shorter-term perspective, H4 Quasimodo support at ¥109.48 is unlikely to provide much of a floor if tested. A more realistic downside target is two Quasimodo support levels at ¥108.88 and ¥108.83, as they align closely with the daily timeframe’s 61.8% Fib retracement at ¥109.07.

As a result of the above, the week may welcome a bearish theme, with H1 sellers possibly looking to take action south of the Fibonacci cluster between ¥109.58 and ¥109.63, targeting ¥109ish.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.7 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

The key technical move on the daily chart last week was price engulfing the 200-day simple moving average at $1.3808. This follows August 23rd recovery from Quasimodo support at $1.3609.

Overhead, resistance resides at $1.4003.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum is gaining traction, according to the relative strength index (RSI) crossing above the 50.00 centreline, a move that underlines average gains exceed average losses.

H4 timeframe:

We’re faced with a reasonably simple setting on the H4 scale early week.

$1.3939-1.3887 resistance made an appearance heading into the close Friday, following an earlier advance that was sponsored on the back of a huge NFP miss.

The $1.3766-1.3799 decision point is now in range as a possible downside objective, a base underpinning the 200-day simple moving average on the daily at $1.3808.

H1 timeframe:

Situated a handful of pips beneath $1.39, Quasimodo resistance put in an appearance at $1.3890 a few hours ahead of the close on Friday. With that, a bout of profit taking emerged, and highlights a possible retest of $1.38 early week.

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

Additional observations out of the relative strength index (RSI) show the indicator chalked up bearish divergence and is now within striking distance of the 50.00 centreline. A break beneath the latter helps confirm bearish intent.

Observed levels:

Long term:

The daily timeframe making its way above the 200-day simple moving average at $1.3808 is considered a bullish signal among many technical traders, and could encourage a bullish scene this week.

Short term:

The H4 decision point at $1.3766-1.3799 is well placed to receive sellers. In addition to this, the H1 timeframe’s $1.38 base is positioned nearby, which is calling for a whipsaw to the H1 area marked in yellow between $1.3774 and $1.3787.

The combination of a bullish cue on the daily timeframe, along with H4 and H1 timeframes working in somewhat harmony at the moment, signals buyers may be drawn to the $1.38ish range this week.

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.

August 12th 2021: AUD/USD Daily Resistance at $0.7453-0.7384 Remains a Key Watch

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 1.0 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

In conjunction with monthly support, Wednesday steadied off the upper edge of a breached falling wedge (between $1.1847 and $1.1975) in the shape of a bullish outside reversal—plotted north of Quasimodo support at $1.1688. Aside from technical forces, the US dollar index (ticker: DXY) retreating on the back of lower US inflation numbers aided the bullish vibe.

Continued pressure to the upside on EUR/USD shines the technical spotlight on the falling wedge pattern take-profit level at $1.1943.

With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020. From the relative strength index (RSI), the value spun higher ahead of oversold territory in recent trading, which could eventually see the indicator take on trendline resistance, taken from the low 27.11, and resistance at 51.36.

H4 timeframe:

Albeit suffering a breach, Quasimodo support at $1.1720 maintained position on Wednesday and hauled the currency pair to within touching distance of resistance at $1.1763. Air space north of here shifts attention towards resistance at $1.1800.

Below Quasimodo support, a 100% Fib projection at $1.1680 (represents an AB=CD bullish pattern) and a 1.618% Fib extension at $1.1650 is observed.

H1 timeframe:

Violating trendline resistance, drawn from the high $1.1900, and subsequently retesting Quasimodo support from $1.1711 witnessed bulls enter an offensive phase heading into US hours yesterday. As of current price, buyers and sellers are battling for position just south of supply at $1.1766-1.1754, an area accompanied by the 100-period simple moving average.

36.94 holding as support on the relative strength index (RSI) propelled the value through the 50.00 centreline to within close reach of overbought space and neighbouring resistance at 78.97. The aforementioned resistance, therefore, is a level to be mindful of going into Thursday’s session.

Observed levels:

Recognising monthly flow testing support at $1.1857-1.1352 and daily price forging a bullish candlestick off the upper edge of a breached falling wedge places a bullish theme in a favourable light.

However, before short-term flow navigates higher levels, sellers could make a show from H1 supply at $1.1766-1.1754, an area not only joined by the 100-period simple moving average, but also H4 resistance at $1.1763.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.

Month to date, August is up 0.4 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis

In spite of the Australian dollar launching a one-way move higher against a softer dollar across the board—influenced by lower US inflation data—resistance at $0.7453-0.7384 remains central focus, capping upside since 22nd July.

The next downside objective falls in around a 1.272% Fib projection at $0.7273, followed by support at $0.7204. Ground above the aforementioned resistance area brings light to the 200-day simple moving average at $0.7603, a dynamic value sheltered south of resistance at $0.7626.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July. Momentum, as per the relative strength index (RSI), is on the verge of overthrowing resistance at 41.63, a move drawing attention to the 50.00 centreline.

H4 timeframe:

Tuesday confronting the head and shoulder’s profit objective at $0.7328 (the pattern emerged around the lower side of a 38.2% Fib retracement at $0.7408), and whipsawing to Fibonacci structure between $0.7293 and $0.7315, observed a bullish phase materialise on Wednesday.

Sustained bullish interest shifts attention back to $0.7408, with a break pointing to a 61.8% Fib retracement value at $0.7482.

H1 timeframe:

Quasimodo support at $0.7323 served well, elevating short-term action above the 100-period simple moving average at $0.7356 Wednesday. $0.74 now calls for attention as possible resistance, with supply residing at $0.7450-0.7436 should price overrun the psychological base.

Interestingly, the relative strength index (RSI) exited overbought territory, leaving resistance at 78.26 unchallenged. Dropping from overbought is recognised as a bearish cue by some analysts, which may motivate a bearish scene should $0.74 enter the frame.

Observed levels:

Daily resistance at $0.7453-0.7384 is a key watch on the bigger picture, particularly as the monthly timeframe exhibits scope to tunnel lower. This positions the H4 timeframe’s 38.2% Fib retracement value at $0.7408 in the line of fire as feasible resistance, sharing chart space with $0.74 on the H1. Note both levels inhabit the aforementioned daily resistance.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, August trades 0.7 percent in the green.

Daily timeframe:

Technical structure unchanged from previous analysis

Persuaded by US Treasury yields trimming gains—benchmark 10-year note down 2.0 percent—following the US inflation release, USD/JPY wrapped up Wednesday considerably off best levels.

Technically speaking, however, we remain north of local trendline resistance-turned support, forged from the high ¥111.66, movement that could eventually pull in resistance from ¥111.88-111.20 and neighbouring supply at ¥112.68-112.20.

When it comes to trend, USD/JPY has been higher in 2021.

Resistance at 54.00 is under pressure, according to the relative strength index (RSI), showing traders that momentum is directed to the upside and overbought terrain may be on the cards.

H4 timeframe:

Although already welcoming sellers early July, supply at ¥110.99-110.80 was tested to the pip yesterday and offered a bearish platform for sellers to work with.

Stacked demand between ¥109.42-109.68 and ¥109.69-109.89 demand attention should sellers remain in the driving seat. In the event current supply is taken out, nonetheless, resistance exists at ¥111.56.

H1 timeframe:

Arranged within the lower limits of H4 supply at ¥110.99-110.80, H1 supply at ¥110.92-110.81 came within a whisker of making an appearance on Wednesday before price slumped back to support at ¥110.38. Technical elements reveal the aforesaid level brings with it a nearby 100-period simple moving average at ¥110.28.

Voyaging beneath noted supports shows $110 psychological support.

Relative strength index (RSI) resistance at 78.38—located within overbought—has proved stubborn since mid-June. Yesterday had the value step through the 50.00 centreline and join space just ahead of oversold and support at 18.76.

Observed levels:

H1 support at ¥110.38 offers a potential floor for dip-buying scenarios, having seen the base align closely with the 100-period simple moving average. However, the majority of interested traders here will likely pursue additional confirmation before pulling the trigger, given the H4 chart demonstrates room to move to as far south as stacked demand between ¥109.42-109.68 and ¥109.69-109.89.

An alternative bullish theme, of course, is a run beneath ¥110.38 to test ¥110, which is open to a whipsaw into H4 demand mentioned above at ¥109.69-109.89.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, August trades 0.3 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Since early August, the daily candles have been busy carving out a bullish flag between $1.3983 and $1.3888. Having seen the relative strength index (RSI) modestly defend the 50.00 centreline as support (showing average gains in this market exceed average losses), and Wednesday establish a bullish outside reversal, a push higher could be in the offing. Rupturing the upper edge of the current bullish flag, however, faces resistance at $1.4003. Breaking this base helps validate a bullish existence, targeting Quasimodo resistance at $1.4250.

To the downside, the 200-day simple moving average at $1.3765 is visible, followed by Quasimodo support at $1.3609.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

H4 timeframe:

Fibonacci support between $1.3813 and $1.3826 entered the picture yesterday and served buyers well.

Supply at $1.3933-1.3917 is recognised as the next upside target available on this scale, an important decision point that breached $1.3875ish lows.

H1 timeframe:

Confirmed by the relative strength index (RSI) chalking up bullish divergence within the oversold region (movement showing downside momentum slowing), along with a waning USD, lifted cable higher on Wednesday.

Guiding the unit above the 100-period simple moving average at $1.3866 led to a test of Quasimodo resistance at $1.3882. Above this point, we’re then likely looking at touching gloves with H4 supply underlined above at $1.3933-1.3917.

Additional RSI observations show the indicator levelling off a whisker below overbought territory, currently engaging with 60.00.

Observed levels:

The daily timeframe’s bullish flag is likely to interest a number of longer-term traders, though many will seek a close above resistance at $1.4003 before committing.

As far as the short-term picture goes, H1 Quasimodo resistance at $1.3882 holds for the time being. Though having seen the 100-period simple moving average around $1.3866 in place to perhaps serve as support, and the H4 displaying room to move for supply at $1.3933-1.3917, a short-term bullish setup may emerge upon breaking $1.3882.

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.

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 1.3 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis

The US dollar—as measured by the US dollar index—extended recovery gains on Tuesday, underpinned amid speculation the US Federal Reserve could begin tapering its bond buying activities.

EUR/USD, therefore, explored deeper terrain and eked out additional losses. Consequently, the currency pair is shaking hands with the upper edge of a breached falling wedge (between $1.1847 and $1.1975), plotted nearby Quasimodo support at $1.1688.

It’s important to recognise 31st March low at $1.1704 is arranged above the Quasimodo—sell-stops, therefore, are likely positioned below here and may entice buyers into the market from the aforesaid Quasimodo and falling wedge base.

With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020.

Drawing on the relative strength index (RSI), we can see the indicator threatening to enter oversold territory. This follows the recent trendline support breach, taken from the low 27.11. Movement into oversold unlocks a potential bullish comeback.

H4 timeframe:

After ousting 21st July low at $1.1751 on Monday, in addition to Tuesday puncturing Quasimodo support at $1.1720, this unmasks a 100% Fib projection at $1.1680 (represents an AB=CD bullish pattern) and a 1.618% Fib extension at $1.1650.

It must be noted that should the unit cross swords with $1.1650-1.1680, willing buyers will be potentially in short supply having seen an established downside bias since June.

H1 timeframe:

Latest technical developments out of the H1 scale reveal EUR/USD addressed Quasimodo support from $1.1711, and established a minor close north of trendline resistance, drawn from the high $1.1900. Of note is $1.17 plotted directly beneath the support.

Upstream, assuming buyers attack space above trendline resistance, exhibits scope to approach supply coming in at $1.1766-1.1754.

Despite the relative strength index (RSI) struggling to find acceptance above resistance at 36.94, the indicator is chalking up bullish divergence which shows decreased average losses versus average gains. This is a signal buyers might be gearing up to make a show. Crossing above 36.94, of course, would help validate this observation.

Observed levels:

The monthly timeframe testing support at $1.1857-1.1352 may drive bullish interest from the daily timeframe’s breached falling wedge. This—coupled with H1 action rebounding from Quasimodo support at $1.1711 and breaching trendline resistance, taken from the high $1.1900—could encourage a short-term pullback to H1 supply at $1.1766-1.1754. However, traders are urged to pencil in the possibility of a dip to $1.17 before buyers attempt to climb.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.

Month to date, August is up 0.1 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis

Resistance at $0.7453-0.7384 remains central focus, capping upside since 22nd July. The next downside objective falls in around a 1.272% Fib projection at $0.7273, followed by support at $0.7204.

Ground above the aforementioned resistance area brings light to the 200-day simple moving average at $0.7602, a dynamic value sheltered south of resistance at $0.7626.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July. Concerning momentum, the relative strength index (RSI) is on the doorstep of resistance at 41.63, which if a break comes to pass shines light on the 50.00 centreline.

H4 timeframe:

Meanwhile, lower on the technical curve, H4 movement confronted the head and shoulder’s profit objective at $0.7328 (the pattern emerged around the lower side of a 38.2% Fib retracement at $0.7408) yesterday, and, with the help of Fibonacci structure between $0.7293 and $0.7315, staged a minor pullback into the close.

Sustained bullish interest shifts attention back to $0.7408.

H1 timeframe:

Quasimodo support at $0.7323 made a show on Tuesday, action motivating a short-term bullish phase to within touching distance of trendline support-turned resistance, extended from the low $0.7289, and the 100-period simple moving average at $0.7366.

The relative strength index (RSI) made its way above the 50.00 centreline in recent trading and is bound for a potential test of overbought space. Above 50.00 informs traders that momentum, or relative strength, is to the upside: average gains exceed average losses.

Observed levels:

Similar to Tuesday’s technical briefing, higher timeframes reveal the monthly chart has space to attack lower price levels, placing daily resistance at $0.7453-0.7384 in a favourable light. The daily timeframe’s 1.272% Fib projection at $0.7273, therefore, could call for attention.

With the bigger picture in mind, a test of H1 trendline support-turned resistance, extended from the low $0.7289, could bring about technical selling interest, refocusing attention on H1 Quasimodo support at $0.7323 and possibly $0.73.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, August trades 0.8 percent in the green.

Daily timeframe:

Technical structure unchanged from previous analysis

In response to Monday preserving a bullish position north of local trendline resistance-turned support, forged from the high ¥111.66, Tuesday, boosted amidst rising US Treasury yields, unearthed a healthy bullish close.

As aired in Tuesday’s technical briefing, upside targets can be seen at resistance from ¥111.88-111.20 and neighbouring supply at ¥112.68-112.20.

When it comes to trend, USD/JPY has been higher in 2021.

Resistance at 54.00 was overrun yesterday, according to the relative strength index (RSI), showing traders that momentum is directed to the upside and a move to overbought could come about.

H4 timeframe:

As anticipated, continued upside made contact with the lower limit of stacked supply between ¥110.99-110.80 and ¥110.73-110.58 on Tuesday.

While a rejection from the aforesaid supply may direct price towards stacked demand between ¥109.42-109.68 and ¥109.69-109.89, each noted supply has already been tested and are susceptible to breaking. North of current supply, resistance exists at ¥111.56.

H1 timeframe:

Early London hours on Tuesday manoeuvred price action through resistance at ¥110.38 and crossed paths with 23rd July high at ¥110.59. Interestingly, above this top, Quasimodo resistance resides at ¥110.65, with subsequent buying uncovering ¥111.

Upside momentum, according to the relative strength index (RSI), is slowing, forging early bearish divergence from overbought resistance at 78.38.

Observed levels:

Knowing H4 stacked supply between ¥110.99-110.80 and ¥110.73-110.58 is perhaps fragile, in addition to monthly and daily charts displaying room to discover higher levels, this signals selling interest from H1 Quasimodo resistance at ¥110.65 is thin.

In light of the above, a bullish scenario is in the offing, taking aim at ¥111 and the lower edge of daily resistance at ¥111.20.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, August trades 0.5 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Technical structure largely unchanged from previous analysis

Quasimodo support at $1.3609 welcoming buyers on 21st July not only elevated the currency pair above the 200-day simple moving average at $1.3761, technicians will also note price elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250). Therefore, subsequent recovery gains to highs just ahead of resistance at $1.4003 have likely drawn in sellers in search of better pattern entry levels.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum, according to the relative strength index (RSI), has diminished since August, shown by way of the indicator dropping through the 50.00 centreline: average losses exceeding average gains.

H4 timeframe:

Despite sterling dropping for a third consecutive session against a modestly stronger US dollar, Fibonacci support between $1.3813 and $1.3852 is unbroken.

Any upside attempts could take aim at 38.2% and 61.8% Fib retracement levels drawn from $1.3983 (this can only be applied once a firm bottom has materialised).

South of $1.3813-1.3852, demand falls in at $1.3687-1.3723.

H1 timeframe:

Demand at $1.3803-1.3827—represents a decision point to push north of $1.38 and take local highs at $1.3833—is within range of entering the fray. Note this area unites with the lower part of H4 support at $1.3813.

Higher up on the curve, Quasimodo resistance can be seen from $1.3882, currently sharing chart space with the 100-period simple moving average.

Regarding the relative strength index (RSI), we’re seeing bullish divergence take shape, though it should be noted that the value has failed to find grip north of the 50.00 centreline in recent moves.

Observed levels:

Support between $1.3813 and $1.3852 on the H4 (green) may still produce bullish interest. An additional area to be mindful of is H1 demand at $1.3803-1.3827, which, as highlighted above, dovetails with the lower edge of H4 support at $1.3813.

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.

USD/JPY H1 Resistance at ¥110.38 Vulnerable; ¥110.65 Echoes Possible Target

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 1.1 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Amidst increasing USD demand and higher US Treasury yields, EUR/USD eked out modest losses on Monday.

Maintaining a bearish trajectory lands the currency pair within a stone’s throw from the upper edge of a breached falling wedge (between $1.1847 and $1.1975), and a neighbouring Quasimodo support at $1.1688. It’s important to recognise 31st March low at $1.1704 is arranged above the Quasimodo—sell-stops, therefore, are likely positioned below here and could entice buyers into the market from the aforesaid Quasimodo base.

With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020. As for momentum, the relative strength index (RSI) shows the value extending position below trendline support, taken from the low 27.11, and recently navigating beneath the 50.00 centreline. This, according to the indicator, unlocks a bearish scene and possible movement to oversold space.

H4 timeframe:

Latest developments out of the H4 scale reveal the unit punctured 21st July low at $1.1751, consequently absorbing sell-stop orders around this base.

Quasimodo support at $1.1720 is a noticeable barrier and may, knowing sell-stops are perhaps present, contain sufficient oomph to drive EUR/USD back to $1.1800 resistance, a prior Quasimodo support level. $1.1720 failing to deliver will uncover a 100% Fib projection at $1.1680 (represents an AB=CD bullish pattern) and a 1.618% Fib extension at $1.1650.

H1 timeframe:

Early US hours Monday greeted trendline resistance, drawn from the high $1.1900, consequently attracting sellers. H4 Quasimodo support at $1.1720 is viewed as a reasonable downside target, closely shadowed by H1 Quasimodo support from $1.1711.

Also of technical note is supply at $1.1766-1.1754, which might welcome sellers if challenged.

Alternatively, above current supply we have resistance to work with at $1.1783, which, at current price, dovetails with a 100% Fib projection (AB-CD bearish pattern) and a nearby 38.2% Fib retracement value from $1.1791.

In terms of the relative strength index (RSI), the value is engaging resistance at 36.94, threatening a break higher to shake hands with the 50.00 centreline. Violating the latter is considered a bullish signal, informing traders that average gains exceed average losses.

Observed levels:

Between daily Quasimodo support at $1.1688 and H4 Quasimodo support from $1.1720, this is an area—given monthly price is seen trading within support at $1.1857-1.1352—which may pull in bullish interest if tested.

A potential short-term bearish scenario to also be aware of is a whipsaw through H1 trendline resistance, extended from the high $1.1900, to test H1 resistance at $1.1783, a base accompanied by AB=CD bearish structure. Shorts are likely to take aim at H4 Quasimodo support from $1.1720.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.

Month to date, August is unchanged.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis

July carving a bottom ahead of a 1.272% Fib projection at $0.7273 placed resistance at $0.7453-0.7384 in the frame early August. Territory above brings light to the 200-day simple moving average at $0.7600, a dynamic value sheltered south of resistance at $0.7626.

Friday observed sellers step forward, with Monday extending the bearish presence. This could lead to a test of $0.7273.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July.

In terms of momentum, the relative strength index (RSI) remained under the 50.00 centreline last week, and is currently testing the mettle of support at 41.63.

H4 timeframe:

Technical structure unchanged from previous analysis

A closer reading of price action on the H4 scale shows Monday came within a whisker of testing a head and shoulder’s profit objective at $0.7328 (the pattern emerged around the lower side of a 38.2% Fib retracement at $0.7408).

Fibonacci structure between $0.7293 and $0.7315 is visible just south of $0.7328 (green base). This is an area housing a 100% Fib projection at $0.7313 which is a level harmonic traders recognise as an AB=CD bullish formation. Harmonic AB=CD traders commonly set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. The 38.2% Fib retracement at $0.7408, as you can see, has proven stubborn resistance.

H1 timeframe:

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

Following an earlier retest of $0.74, downside gained speed and linked with trendline support, taken from the low $0.7289. Dethroning the aforementioned trendline support, as the H4 timeframe suggests, directs awareness to Quasimodo support at $0.7323, closely followed by $0.73.

As evident from the chart, the noted trendline formation posed little threat to sellers and subsequently witnessed price dip to a low of $0.7328 and retest the ascending barrier to establish resistance. This places Quasimodo support at $0.7323 and $0.73 in the line of fire today.

With regards to the relative strength index (RSI), the indicator rebounded from support at 27.02 in early trading on Monday and tested the spirit of the 50.00 centreline heading into US trading. As you can see, the level remains a ceiling for now, showing us that momentum is to the downside for the time being.

Observed levels:

Scope to navigate deeper water on the monthly timeframe places any bearish wave from daily resistance at $0.7453-0.7384 in a favourable light. The daily timeframe’s 1.272% Fib projection at $0.7273, therefore, could call for attention.

Higher timeframe pressure will likely override any upside attempt from the H4 head and shoulder’s profit objective at $0.7328 and H1 Quasimodo support at $0.7323. This suggests short-term bearish movement towards $0.73 and, by extension, H4 support at Fibonacci structure between $0.7293 and $0.7315.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥ 126.10-122.66.

Month to date, August trades 0.6 percent in the green.

Daily timeframe:

Following Friday’s move above local trendline resistance, forged from the high ¥111.66, Monday maintained a bullish spot and further cemented a possible move to resistance at ¥111.88-111.20, which happens to merge closely with neighbouring supply at ¥112.68-112.20.

When it comes to trend, USD/JPY has been higher in 2021.

Momentum studies out of the relative strength index (RSI) shows the value remains above the 50.00 centreline, displaying average gains outweigh average losses. Despite this, the indicator has resistance around 54.00 to overcome before reaching for overbought territory. As such, 54.00 should be monitored.

H4 timeframe:

Demand at ¥109.42-109.68 resides to the downside, while upstream has stacked supply between ¥110.99-110.80 and ¥110.73-110.58 on the list. However, it must be noted that each supply has already been tested and are susceptible to breaking.

H1 timeframe:

Technical structure largely unchanged from previous analysis

Short-term flow caught a bid going into US trading on Monday, forming support just north of ¥110. Resistance is seen overhead at ¥110.38, accompanied by Quasimodo resistance at ¥110.65.

Should we retreat and challenge ¥110, demand at ¥109.77-109.84 is in a unique position. Not only is it located south of ¥110—a psychological level prone to whipsaws—it’s situated in line with market direction (each higher timeframe analysed displays scope to navigate higher terrain).

From the relative strength index (RSI), the indicator is bound for overbought territory after forging support off the 50.00 centreline. Resistance is seen at 78.38.

Observed levels:

Recognising room to advance on the monthly, daily and H4 timeframes, breaching H1 resistance at ¥110.38 is perhaps in the offing, targeting H1 Quasimodo resistance at ¥110.65, which is plotted within H4 supply underlined above at ¥110.73-110.58.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, August trades 0.4 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Technical structure largely unchanged from previous analysis

Quasimodo support at $1.3609 welcoming buyers on 21st July not only elevated the currency pair above the 200-day simple moving average at $1.3747, technicians will also note price elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250). Therefore, subsequent recovery gains have likely drawn in sellers in search of better pattern entry levels.

The flipside, of course, is last week introduced the possibility of a bullish pennant, formed between two converging descending lines taken from $1.3983 and $1.3888.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

As for momentum studies, we’re seeing upside momentum diminish, with the value edging slightly under the 50.00 centreline.

H4 timeframe:

A 100% Fib projection at $1.3851 and a corresponding 1.27% BC Fib extension at 1.3852 made an entrance on Monday and attempted to chalk up support. Yet, in recent hours we have observed sellers take the wheel and challenge bullish interest. Any upside attempts could take aim at 38.2% and 61.8% Fib retracement levels drawn from $1.3983 (this can only be applied once a firm bottom has materialised).

South of here we can see an additional gathering of Fibonacci ratios between $1.3813 and $1.3826.

H1 timeframe:

In light of Monday’s mild decline, weighed by increased USD demand, price movement wrapped up the session on the doorstep of support at $1.3840—a previous Quasimodo resistance level. You will note the barrier is fixed above demand at $1.3803-1.3827, which represents a decision point to push north of $1.38 and take local highs at $1.3833.

Higher up on the curve, Quasimodo resistance can be seen from $1.3882, sheltered under the 100-period simple moving average at $1.3900.

With reference to the relative strength index (RSI), we’re seeing mild bullish divergence emerge (price action forming lower lows while the indicator produces higher lows). This shows traders that momentum to the downside is slowing and buyers could be gearing up to take control.

Observed levels:

Support between $1.3813 and $1.3852 on the H4 (green) may still produce bullish interest, and ultimately reinforce bulls alongside the lower edge of the daily timeframe’s bullish pennant pattern. Additional areas to be mindful of, as highlighted in recent analysis, are H1 demand at $1.3803-1.3827, which happens to unite with the lower part of H4 support at $1.3813.

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: 9th – 13th August 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Against a basket of six foreign currencies, the US dollar index (ticker: DXY) advanced 0.8 percent last week and retrieved a hefty share of the previous week’s downside.

Friday’s 0.6 percent climb seats 21st July high at 93.19 and 31st March high at 93.44 in the firing range this week, with continued interest to the upside directed towards Quasimodo resistance from 93.90. Notably, this level is accompanied by several Fibonacci ratios between 94.07 and 93.90. Commanding attention here is the 100% Fib projection at 93.90. Harmonic traders will acknowledge this level as an AB=CD barrier, a base also bringing a 1.13% BC Fib extension at 94.03 to the table.

To the downside, focus is on the 200-day simple moving average at 91.31, grouped together with substantial support at 90.64-91.40 which is parked on top of demand at 90.32-90.70.

Trend studies, as noted in previous weekly writing, reveal the greenback has echoed a recovery phase since the beginning of 2021, following a sizeable decline during 2020. After realising support at 89.34 (a level displaying historical significance), 2021 trades higher by 3.2 percent year to date.

In terms of momentum, the relative strength index (RSI) rebounded from support at 40.76-47.49 at the beginning of August and wrapped up last week toying with space ahead of overbought. Of note within this range is resistance at 73.00.

  • The index reveals resistance between 93.44 and 93.19 tops this week, though overpowering this area shines light on Quasimodo resistance from 93.90—an area active sellers likely inhabit. Therefore, bullish interest could be seen until around the 94.00 neighbourhood.

EUR/USD:

Monthly timeframe:

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

Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 0.9 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Upbeat US non-farm payrolls kept the US dollar and US Treasury yields on the winning side of the table Friday, weighing on EUR/USD.

The one-sided decline (0.6 percent) has the currency pair within range of retesting the upper edge of a breached falling wedge (between $1.1847 and $1.1975), which happens to be set just north of Quasimodo support at $1.1688. It’s important to recognise 31st March low at $1.1704 is arranged above the Quasimodo—sell-stops are likely positioned below here.

With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020.

The technical picture out of the relative strength index (RSI) shows the value shook hands with resistance at 51.36 as we transitioned into August and subsequently ruptured trendline support, taken from the low 27.11. This unlocks a bearish scene and possible movement to oversold space.

H4 timeframe:

Friday, as you can see, stepped through Quasimodo support at $1.1800 and landed the unit within striking distance of two Quasimodo supports at $1.1720 and $1.1749.

Earlier in the week, price rejected resistance between a 38.2% Fib retracement and a 61.8% Fib retracement at $1.1903 and $1.1889, respectively, and established supply at $1.1857-1.1831.

H1 timeframe:

Prior to sweeping through $1.18 on Friday, price action generated supply at $1.1809-1.1800—a decision point. The day concluded with the pair touching gloves with Quasimodo support at $1.1757 (plotted above a 1.618% Fib projection at $1.1744), a move that was accompanied by a deep oversold signal within the relative strength index (RSI), off support at 16.14.

Observed levels:

Long term:

From the monthly timeframe, price is engaging support at $1.1857-1.1352, a technical zone that may motivate a bullish scenario between Quasimodo support at $1.1688 and the upper edge of a breached falling wedge (between $1.1847 and $1.1975) on the daily timeframe this week.

Short term:

From a short-term perspective, technical flow on the H1 shows support forming between a 1.618% Fib projection at $1.1744 and Quasimodo support at $1.1757. Note this base houses H4 Quasimodo support at $1.1749.

Therefore, a bullish scene emerging from $1.1744-1.1757 early week, targeting at least H1 resistance at $1.1783, should not surprise.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.

Month to date, August is up 0.1 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

July carving a bottom ahead of a 1.272% Fib projection at $0.7273 has placed resistance at $0.7453-0.7384 in the frame in early August. Territory above brings light to the 200-day simple moving average at $0.7598, a dynamic value sheltered south of resistance at $0.7626.

Friday observed sellers step forward, boosted on the back of optimistic US non-farm payrolls data. This could lead to a test of $0.7273 this week.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July.

In terms of momentum, the relative strength index (RSI) remained under the 50.00 centreline last week, and is currently testing the mettle of support at 41.63.

H4 timeframe:

Technical elements on the H4 scale recently forged a head and shoulder’s top formation around the underside of a 38.2% Fib retracement at $0.7408. Technicians will note the head and shoulder’s neckline was absorbed on Friday, consequently unlocking downside towards the pattern’s profit objective at $0.7328.

Fibonacci structure between $0.7293 and $0.7315 is visible just south of $0.7328 (green base). This is an area housing a 100% Fib projection at $0.7313 which is a level harmonic traders recognise as an AB=CD bullish formation. Harmonic AB=CD traders commonly set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. The 38.2% Fib retracement at $0.7408, as you can see, has proven stubborn resistance.

H1 timeframe:

Following an earlier retest of $0.74, downside gained speed and linked with trendline support, taken from the low $0.7289. Dethroning the aforementioned trendline support, as the H4 timeframe suggests, directs awareness to Quasimodo support at $0.7323, closely followed by $0.73.

Meanwhile, the relative strength index (RSI) welcomed oversold status on Friday, bumping heads with support at 27.02. Oversold is considered a range where selling interest could diminish.

Observed levels:

Long term:

Scope to navigate deeper water on the monthly timeframe places daily resistance at $0.7453-0.7384 in a favourable light, technically speaking. As a result, bearish flow targeting the daily timeframe’s 1.272% Fib projection at $0.7273 is potential movement to be mindful of this week.

Short term:

The H4 timeframe dropping through the head and shoulder’s neckline on Friday—revealing the pattern’s profit objective at $0.7328—suggests H1 trendline support, drawn from the low $0.7289, may be fragile.

A trendline breach, therefore, opens up possible moves to H1 Quasimodo support at $0.7323, stationed just under the head and shoulder’s pattern objective at $0.7328 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 April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥ 126.10-122.66.

Month to date, August trades 0.5 percent in the green.

Daily timeframe:

A mid-week bullish outside reversal off support at ¥108.75 (and 61.8% Fib retracement at ¥109.07), followed by Friday’s healthy USD bid—influenced by strong US employment numbers—absorbed local trendline resistance, forged from the high ¥111.66.

Charging higher this week throws resistance at ¥111.88-111.20 back into the mix, which happens to merge closely with neighbouring supply at ¥112.68-112.20.

When it comes to trend, USD/JPY has been higher in 2021.

Momentum studies out of the relative strength index (RSI) shows the value elbowed above the 50.00 centreline last week, a move displaying average gains outweigh average losses. Despite this, the indicator has resistance around 54.00 to overcome before reaching for overbought territory. As such, 54.00 should be monitored this week.

H4 timeframe:

Mid-week watched price movement whipsaw through demand at ¥109.02-109.20 and test Quasimodo support at ¥108.83 as well as trendline resistance-turned support, extended from the high ¥111.66. This was a textbook stop run to seize sell-stops to fuel ¥108.83 bids.

Demand at ¥109.42-109.68 resides to the downside, while upstream has stacked supply between ¥110.99-110.80 and ¥110.73-110.58 on the list. However, it must be noted that each supply has already been tested and are susceptible to breaking.

H1 timeframe:

Early US hours on Friday welcomed a high-spirited advance, shifting price action above ¥110 and shaping a clear-cut demand area from ¥109.77-109.84. Upstream, resistance exists at ¥110.38, accompanied by Quasimodo resistance at ¥110.65.

Noted demand at ¥109.77-109.84 is in a unique position, from a technical standpoint. Not only is it located south of ¥110—a psychological level prone to whipsaws—it’s situated in line with market direction (each higher timeframe analysed displays scope to navigate higher terrain).

From the relative strength index (RSI), however, the indicator exited overbought space on Friday after making contact with resistance at 78.38. This shows that despite Friday ending on the front foot, momentum to the upside has begun to slow and could be a red flag for buyers at current prices.

Observed levels:

Long term:

The monthly timeframe unveiling space to climb higher after April retested the descending resistance-turned support, taken from the high ¥118.66, and Friday ousting local trendline resistance, forged from the high ¥111.66, signals bulls have the advantage going into the new week.

Short term:

In conjunction with the bigger picture, the H4 timeframe also displays air space until stacked supply between ¥110.99-110.80 and ¥110.73-110.58.

With the above, two bullish scenarios may surface this week:

  1. H1 forms a breakout above resistance at ¥110.38 and targets H1 Quasimodo resistance at ¥110.65, which is plotted within H4 supply underlined above at ¥110.73-110.58.
  2. H1 extends Friday’s mild retracement, whipsaws through ¥110 and connects with demand at ¥109.77-109.84 to possibly chalk up a bullish theme.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, August trades 0.3 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

The technical landscape on the daily chart is interesting.

Quasimodo support at $1.3609 welcoming buyers on 21st July not only elevated the currency pair above the 200-day simple moving average at $1.3747, technicians will also note price elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250). Therefore, subsequent recovery gains have likely drawn in sellers in search of better pattern entry levels.

The flipside, of course, is last week introduced the possibility of a bullish pennant, formed between two converging descending lines taken from $1.3983 and $1.3888.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

As for momentum studies, we’re seeing upside momentum diminish north of the 50.00 centreline. This is understandable given price spent last week carving out a potential pennant formation. Ultimately, pennant traders will be watching for the RSI 50.00 centreline to hold ground.

H4 timeframe:

Aiding the lower wall of the daily timeframe’s bullish pennant is Quasimodo support at $1.3862 on the H4 scale. Technical observations also show a 100% Fib projection close by at $1.3851 and a corresponding 1.27% BC Fib extension at 1.3852. Interestingly, south of here we can see an additional gathering of Fibonacci ratios between $1.3813 and $1.3826.

In the event the aforesaid supports collapse this week, demand at $1.3687-1.3723 is likely on the hit list. While any upside attempts from current supports could take aim at 38.2% and 61.8% Fib retracement levels drawn from $1.3983 (this can only be applied once a firm bottom has materialised between $1.3813 and $1.3862).

H1 timeframe:

Friday, after breaking through the 100-period simple moving average at $1.3908, dropped through support at $1.3875 and subsequently retested the latter as resistance into the close. Lower on the curve, support can be found at $1.3840, fixed above demand at $1.3803-1.3827—a decision point to push north of $1.38 and take local highs at $1.3833.

Regarding the relative strength index (RSI), the indicator recently rebounded from oversold space and might form what’s known as a bullish failure swing if we hold above 30.00.

Observed levels:

Long term:

Based on the daily timeframe’s technical position: trading above the 200-day simple moving average at $1.3747 and in the process of forming a bullish pennant pattern, buyers could take control this week and approach resistance at $1.4003.

Short term:

Support between $1.3813 and $1.3862 on the H4 may generate interest early week, positioned alongside the lower edge of the daily timeframe’s bullish pennant pattern.

Additional areas to be mindful of are H1 demand at $1.3803-1.3827, which happens to unite with the lower part of H4 support at $1.3813.

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.

August 6th 2021: EUR/USD off Best Levels Ahead of NFP

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 0.3 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

A closer reading of price action on the daily chart reveals the unit rotated lower, south of a falling wedge (between $1.1847 and $1.1975) take-profit target at $1.1943. North of the aforesaid barrier, the 200-day simple moving average calls for attention at $1.2004, followed by clear-cut supply at $1.2148-1.2092. To the downside, Quasimodo support falls in around $1.1688.

With regards to long-term trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

The technical picture out of the relative strength index (RSI) shows the value shook hands with resistance at 51.36 as we transitioned into August. In the event a break of trendline support emerges, taken from the low 27.11, this unlocks a bearish scene and possible movement to oversold space.

H4 timeframe:

Thursday, as you can see, worked with a tight trading range as the market awaits July’s non-farm payrolls data.

In terms of the technical position, Quasimodo support is visible at $1.1800, accompanied by a 61.8% Fib retracement value at $1.1811 and a 1.618% Fib projection at $1.1806.

Near-term resistance stands between a 38.2% Fib retracement and a 61.8% Fib retracement at $1.1903 and $1.1889, respectively.

H1 timeframe:

Much of the activity on the H1 scale is located between resistances around $1.1850 (and the 100-period simple moving average at $1.1862) and support from $1.1828—a previous Quasimodo resistance level. Note the aforementioned level brought with it trendline support, extended from the low $1.1755.

Interestingly, the technical spotlight also falls on $1.18 and neighbouring Quasimodo support at $1.1783 (dovetailing with Fibonacci studies).

As can be seen from the relative strength index (RSI), the indicator has been defending support at 36.94 since 20th July. Ultimately, however, the value remains under the 50.00 centreline, informing traders that average losses exceed average gains at the moment. Should a 50.00 breach unfold, resistance is placed at 78.97.

Observed levels:

From a short-term perspective, technical flow could be drawn in the direction of $1.18 on the H1 scale. A whipsaw through the big figure would be interesting as larger players may attempt to take advantage of sell-stops below the round number and rebound from H1 Quasimodo support at $1.1783 and Fibonacci support.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, August is up 0.8 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

July carving a bottom ahead of a 1.272% Fib projection at $0.7273 places resistance at $0.7453-0.7384 under pressure in early August.

Thursday chalked up gains, boosted amidst risk flow. Sustained bullish interest shines light on the 200-day simple moving average at $0.7597, a dynamic value sheltered south of resistance at $0.7626.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July. As for momentum, the relative strength index (RSI) manoeuvred above resistance at 41.63 this week, clearing the path to the 50.00 centreline and trendline resistance, drawn from the high 80.12.

H4 timeframe:

Fibonacci structure between $0.7293 and $0.7315—an area housing a 100% Fib projection at $0.7313 which is a level harmonic traders recognise as an AB=CD bullish formation—held firm heading into the later stages of July.

Harmonic AB=CD traders commonly set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D.

The 38.2% Fib retracement at $0.7408, as you can see, is proving stubborn resistance. Though in light of an uninspiring bearish presence (green zone), unable to penetrate $0.7376, buyers perhaps maintain the upper hand. Voyaging beyond $0.7408, therefore, could land the currency pair at the 61.8% Fib retracement drawn from $0.7482.

H1 timeframe:

Using the 100-period simple moving average as dynamic support, currently circling $0.7382, bullish forces are attempting to overthrow $0.74. Supply exists nearby at $0.7450-0.7436, yet this zone has already welcomed selling mid-July and therefore may be fragile. This implies a run through tops around $0.7485 could be on the cards to cross swords with $0.75.

Momentum, according to the relative strength index (RSI), is seen engaging with the 50.00 centreline. This follows the indicator levelling off just south of overbought. Crossing below 50.00 highlights weakness, displaying average losses exceed average gains.

Observed levels:

Scope to navigate deeper water on the monthly timeframe places daily resistance at $0.7453-0.7384 in a favourable light, technically speaking.

Against the backdrop of higher timeframes, the H4 chart shows offers drying up around the 38.2% Fib retracement at $0.7408, which may lead to the 61.8% Fib retracement at $0.7482 making an entrance. Short term, therefore, the charts could witness H1 form bullish scenarios off either $0.74 or the nearby 100-period simple moving average around $0.7382. Ultimately, any upside attempt is likely to take aim at $0.75 on the H1 scale, arranged just above the H4 timeframe’s 61.8% Fib at $0.7482.

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: 26th – 30th July 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Versus six foreign currencies, the US dollar index (ticker: DXY) chalked up a second consecutive weekly gain last week, adding 0.2 percent within the parapets of a rising wedge configuration between 91.52 and 92.40.

Additional gains shine the spotlight on the 93.44 31st March high, followed by neighbouring Quasimodo resistance from 93.90—a level accompanied by a number of key Fibonacci ratios between 94.49 and 93.90. Deserving attention within this Fibonacci zone is the 100% Fib projection at 93.90. Harmonic traders will acknowledge this level as an AB=CD barrier, consequently also bringing the 1.13% BC Fib extension at 94.03 to the table.

To the downside, focus is on the 200-day simple moving average at 91.36, grouped together with substantial support at 90.64-91.40.

Trend studies, as noted in previous weekly writing, reveal the greenback has echoed a recovery phase since the beginning of 2021, following a sizeable decline during 2020. After realising support at 89.34 (a level displaying historical significance), 2021 trades higher by 3.3 percent year to date.

In terms of momentum, the relative strength index (RSI) shows bearish divergence, action informing traders of weakening momentum. This is in agreement with the price chart’s rising wedge formation. Indicator support is present at 55.67; resistance resides within overbought space at 73.00.

  • The rising wedge may continue to take shape until reaching Fibonacci resistance between 94.49 and 93.90 this week, in which case chartists are likely to anticipate a retracement. A breakout below the rising wedge prior to testing the aforesaid Fib resistance also unlocks the door to a bearish scenario, targeting support at 90.64-91.40.

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352 and erase 3.0 percent.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, July trades 0.8 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Since mid-June, the daily timeframe has been carving out a falling wedge between $1.1847 and $1.1975, structure displaying weakening downside momentum. Quasimodo support at $1.1688 making an entrance is a possibility this week, arranged south of 31st March low at $1.1704 (a place sell-stops are perhaps positioned).

Any breakout above the wedge pattern will reignite interest in the 200-day simple moving average, circling $1.2002, a dynamic value sheltered beneath supply at $1.2148-1.2092.

With regards to long-term trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

Out of the relative strength index (RSI), the indicator continues to occupy space south of trendline support-turned resistance (around 35.00-40.00), extended from the low 29.54. In spite of this, modest bullish divergence is taking shape. Indicator resistance is close by at 51.36, serving well since November 2020, and support falls in around the oversold threshold of 30.00.

H4 timeframe:

Quasimodo support from $1.1749 remains a key watch on the H4 as price movement drifts within a stone’s throw of the base. It’s reasonable to assume traders are cautious buyers at this point, having witnessed June’s decline. The flipside to this, of course, is the chart pencilling in a falling wedge between $1.1875 and $1.1772, which represents a potential reversal pattern forming within the walls of the daily timeframe’s falling wedge (see above).

Additional technical levels to be mindful of this week are Quasimodo support at $1.1720 and Quasimodo resistance from $1.1880.

H1 timeframe:

A closer reading of price action on the H1 chart guides attention to Fibonacci structure between $1.1745 and $1.1749, an area sharing chart space with H4 Quasimodo support underlined above at $1.1749.

Overhead, the 100-period simple moving average made a show around $1.1784 on Friday, delivering resistance heading into the early hours of London. Clearing the dynamic value this week will perhaps see $1.18 call for attention and resistance at $1.1821, joined alongside a 50.00% retracement value at $1.1817.

The relative strength index (RSI) defended support (36.94) at the back end of the week, and established minor bullish divergence. This tells traders that while Friday did indeed breach Thursday’s lows—albeit briefly—momentum is in the process of strengthening.

Observed levels:

Long term:

Monthly support at $1.1857-1.1352, and the anticipation of a breakout above the daily timeframe’s falling wedge between $1.1847 and $1.1975, places longer-term flow in a somewhat bullish light.

Short term:

A breakout above the H4 falling wedge between $1.1875 and $1.1772, supported by a Quasimodo formation from $1.1749, underscores the likelihood of a bullish reversal occurring.

Couple the above with the H1 timeframe’s Fibonacci structure between $1.1745 and $1.1749, chart studies suggest short-term flow is eyeballing higher terrain this week, targeting $1.18 as an initial upside objective.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, July is attempting to secure position south of support at $0.7394. Additional downside brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, July is down 1.8 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Chartists observed AUD/USD modestly trim recovery gains Friday, aided by resistance at $0.7453-0.7384. Knocking on the door of a 1.272% Fib projection at $0.7273 is possible should follow-through selling emerge this week, whereas consuming $0.7453-0.7384 targets the 200-day simple moving average at $0.7585, plotted a touch beneath resistance at $0.7626.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July.

As for momentum, limited change has been seen on the relative strength index (RSI), maintaining a narrow consolidation between resistance at 41.63 and the oversold perimeter 30.00.

H4 timeframe:

Fibonacci structure between $0.7293 and $0.7315—an area housing a 100% Fib projection at $0.7313 which is a level harmonic traders recognise as an AB=CD bullish formation—held firm mid-week, inspiring a $0.7364 resistance breach, a base shortly after welcoming a retest and holding support.

Harmonic AB=CD traders commonly set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. With $0.7364 attempting to forge support, 38.2% Fib retracement at $0.7408 is on the radar, with a break unmasking a 61.8% Fib retracement at $0.7482.

H1 timeframe:

Friday’s lacklustre vibe had the currency pair finish the week between $0.74 and nearby support at $0.7347 (previous Quasimodo resistance), a level currently working alongside the 100-period simple moving average.

As aired in Friday’s technical briefing, technicians will acknowledge that although $0.74 attracts limited (technical) confluence on the H1, H4 has the 38.2% Fib retracement organised above at $0.7408. With that being said, a whipsaw through $0.74—action not only tripping some sellers’ protective stops but also filling a portion of breakout buyers’ orders—into the H4 Fibonacci base could come to fruition.

Momentum, according to the relative strength index (RSI), dipped under the 50.00 centreline on Friday, underscoring average losses exceed average gains. Moves to oversold territory this week, therefore, may be on the cards.

Observed levels:

Long term:

While it’s too early to say monthly support at $0.7394 has reached its end, daily resistance at $0.7453-0.7384 may discourage bullish commitment at this point, perhaps forcing a bearish play to the daily timeframe’s 1.272% Fib projection at $0.7273 this week.

Short term:

A whipsaw above $0.74 into the H4 timeframe’s 38.2% Fib retracement at $0.7408 (an initial take-profit level derived from a H4 AB=CD formation) is a possible scenario on the table. Not only will the move fill buy-stops north of $0.74 and fuel willing $0.7408 sellers, additional resistance comes in at $0.7453-0.7384 on the daily timeframe.

USD/JPY:

Monthly timeframe:

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

March concluded up by 3.9 percent and cut through descending resistance, etched from the high ¥118.66. Although April finished lower by 1.3 percent and snapped a three-month winning streak, May (+0.2 percent) held the breached descending resistance and echoed support in June, higher by 1.4 percent.

Month to date, however, July trades 0.5 percent in the red.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

The USD/JPY exchange rate climbed 0.4 percent Friday, extending the week’s recovery from ¥109.06 lows.

Consequently, resistance at ¥111.88-111.20 has been thrown back into the mix, which happens to have teamed up with trendline support-turned resistance, taken from the low ¥102.59. Above the aforesaid resistances, supply at ¥112.68-112.20 commands attention.

Downriver, however, assuming price voyages beneath last week’s low, supply-turned demand at ¥107.58-106.85 offers an obvious floor in this market, aligning with the 200-day simple moving average at ¥107.02.

Interestingly, momentum studies out of the relative strength index (RSI) shows the value elbowed above the 50.00 centreline last week, a move displaying average gains outweigh average losses. Despite this, the indicator finished the session ahead of the lower side of a recently breached ascending channel between 58.82 and 47.51, which may provide resistance.

H4 timeframe:

Quasimodo resistance-turned support at ¥110.09—organised above trendline resistance-turned support, drawn from the high ¥111.66 (2021 highs)—served buyers well at the tail end of the week.

A bullish wind this week seats supply at ¥110.99-110.80 in the firing range, a base capping upside in early July. Of technical note is the supply is set just south of daily resistance from ¥111.88-111.20, therefore moves through this area to H4 resistance at ¥111.56 should not surprise.

H1 timeframe:

Following an earlier rebound from trendline support, acquired from the low ¥109.06, sellers came under attack around supply at ¥110.54-110.41 during US hours Friday, drawing attention to Quasimodo resistance at ¥110.65.

Navigating above ¥110.65, technically speaking, appears clear of major liquidity until ¥111. For that reason, a ¥110.65 breach is movement we could see breakout buyers welcome.

From the relative strength index (RSI), the indicator exited overbought space and is on track to form a bearish failure swing (blue level: 60.80), structure that can warn of a move to the downside.

Observed levels:

Long term:

With the monthly timeframe displaying scope to climb, and price action on the daily timeframe in pursuit of resistance at ¥111.88-111.20, buyers appear to have the upper hand for the time being.

Short term:

In conjunction with the bigger picture, a H1 close above Quasimodo resistance at ¥110.65 is a logical path, from a technical standpoint. Follow-through buying may also involve price action working its way into H4 supply at 110.99-110.80 as H1 targets ¥111.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, possibly serving as support if retested.

Month to date, July trades 0.6 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Quasimodo support at $1.3609 welcoming buyers mid-week triggered a recovery phase, snapping a four-day losing streak. Reclaiming the 200-day simple moving average at $1.3703 on Thursday shines light on tops around $1.3909, followed by resistance at $1.4003.

Technicians will also note the daily scale recently elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250), therefore an extension to the recent pullback this week might appeal to pattern sellers in search of better entry levels.

Trend on this chart has been somewhat rangebound since late February. As for momentum studies, the relative strength index (RSI) pencilled in bullish divergence, informing traders of strengthening momentum. Note the indicator’s value finished the week just beneath the 50.00 centreline.

H4 timeframe:

Mid-week trading brought about support from a 100% Fib projection at $1.3640 and a 1.618% Fib extension at $1.3613. This blend is recognised as an AB=CD harmonic formation, which benefits from forming at daily Quasimodo support highlighted above at $1.3609. Common take-profit objectives out of AB=CD areas are arranged at 38.2% and 61.8% Fib retracement values, derived from legs A-D. In this case, 38.2% is stationed at $1.3739, and 61.8% is found at $1.3842.

$1.3739, as you can see, was engulfed Friday and demand at $1.3687-1.3723—an important decision point that overthrew supply at 1.3762-1.3746 (black arrow)—made an entrance. Should the aforesaid demand continue to sponsor buyers, the AB=CD pattern’s 61.8% Fib target at $1.3842 may be in the offing this week.

H1 timeframe:

Aided by the relative strength index (RSI) arranging a bearish failure swing pattern (blue line at 60.89), the 61.8% Fib retracement value at $1.3780 (green) stood firm on Friday (set below $1.38) and encouraged sellers to take on $1.3750 support. $1.37 governs space south of the level, accompanied by the 100-period simple moving average at $1.3695 and a 38.2% Fib retracement at $1.3705.

Area above $1.38 brings light to Quasimodo resistances at $1.3867 and $1.3841.

Referring to the relative strength index (RSI), we can see following the formation of the bearish failure swing, the value dropped to within a whisker of indicator support at 39.68 and rebounded. Though it must be noted the value failed to find acceptance above the 50.00 centreline and consequently ended Friday at 46.33.

Observed levels:

Long term:

Based on the daily timeframe’s technical position: trading above the 200-day simple moving average at $1.3703, buyers could remain in the driving seat this week, targeting tops around $1.3909, followed by daily resistance at $1.4003.

Short term:

The daily timeframe’s picture, alongside the H4 timeframe witnessing price bounce from demand at $1.3687-1.3723, could encourage shorter-term flow on the H1 to adopt a bullish position early week. A retest of $1.37, having seen this barrier merge with the 200-day simple moving average, may, therefore, serve as a platform for buyers to work with.

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.

July 23rd 2021: AUD/USD Poised to Whipsaw $0.74 to H4 38.2% Fib at $0.7408

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352 and erase 3.0 percent.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, July trades 0.7 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Since mid-June, the daily timeframe has been carving out a falling wedge ($1.1848/$1.1975). In the event price continues to compress within the falling wedge, Quasimodo support at $1.1688 is likely to make an entrance, arranged south of 31st March low at $1.1704 (a place sell-stops will be tripped).

Any upside attempts (a breakout above the current wedge pattern) reignites interest at the 200-day simple moving average, circling $1.2002 (sheltered beneath supply at $1.2148-1.2092).

With regards to trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

Out of the relative strength index (RSI), the indicator occupies space south of trendline support-turned resistance (around 40.00), extended from the low 29.54. Resistance is close by at 51.36, serving reasonably well since November 2020, whereas support is visible in the form of the oversold threshold around 30.00.

H4 timeframe:

Quasimodo support from $1.1749 is a key watch on the H4 scale as price movement threatens to challenge the base today.

South of the aforesaid level, another layer of Quasimodo support resides at $1.1720.

H1 timeframe:

Following an earlier whipsaw above $1.18 into Fibonacci structure between $1.1817 and $1.1808 (red zone)—potential movement to be aware of in Thursday’s technical briefing—price action subsequently forged a volatile $1.18 whipsaw which tested the mettle of resistance at $1.1812.

As you can see, EUR/USD concluded Europe on the back foot, ahead of H4 Quasimodo support mentioned above at $1.1749 and a collection of H1 Fibonacci studies (Fib cluster).

The relative strength index (RSI) aggressively rotated beneath overbought space and finished the session beneath the 50.00 centreline, indicating momentum is to the downside: average losses exceed average gains.

Observed levels:

Immediate support rests at the Quasimodo pattern from $1.1749 on the H4, accompanied by a number of key Fibonacci ratios on the H1. A bounce from this neighbourhood, therefore, should not surprise.

Should sellers overwhelm $1.1749, $1.17 could appeal (H1), a level closely sharing chart space with H4 Quasimodo support from $1.1720.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, July is attempting to secure position south of support at $0.7394. Additional downside pressure brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, July is down 1.5 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Wednesday, ahead of a 1.272% Fib projection at $0.7273, chalked up what’s known as a bullish outside reversal formation, a move snapping a four-day losing streak. As you can see, follow-through buying emerged yesterday, shaking hands with resistance at $0.7453-0.7384.

Overrunning current resistance potentially sets the technical stage for a push to the 200-day simple moving average currently seen at $0.7584.

In terms of trend, 2021 remains on the back foot. As for momentum, the relative strength index (RSI) continues to exhibit a narrow consolidation between resistance at 41.63 and the oversold perimeter 30.00.

H4 timeframe:

AUD/USD extending recovery gains on Thursday elevated the currency pair above resistance at $0.7364, a level shortly after welcoming a retest and holding support.

Fibonacci structure between $0.7293 and $0.7315—an area housing a 100% Fib projection at $0.7313, a level harmonic traders will recognise as an AB=CD bullish formation—held firm mid-week. Harmonic AB=CD traders traditionally set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. 38.2% Fib resistance resides at $0.7408 and may welcome a test today.

H1 timeframe:

The picture from the H1 scale has the unit within a stone’s throw from $0.74. Technicians will acknowledge that although $0.74 attracts limited confluence on the H1, H4 has the 38.2% Fib retracement at $0.7408. With that being said, a whipsaw above the round number into the H4 base could come to fruition.

Out of the relative strength index (RSI), we can see the value hovering south of overbought territory, consequently calling attention to resistance at 78.26.

Observed levels:

A whipsaw above $0.74 into the H4 timeframe’s 38.2% Fib retracement at $0.7408 (an initial take-profit level derived from a H4 AB=CD formation) is a possible scenario on the table today. Not only will the move fill buy-stops north of $0.74 and fuel willing $0.7408 sellers, additional resistance comes in at $0.7453-0.7384 on the daily timeframe.

USD/JPY:

Monthly timeframe:

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

March concluded up by 3.9 percent and cut through descending resistance, etched from the high ¥118.66. Although April finished lower by 1.3 percent and snapped a three-month winning streak, May (+0.2 percent) held the breached descending resistance and echoed support in June, higher by 1.4 percent.

Month to date, however, July trades 0.9 percent in the red and is on track to chalk up a bearish outside reversal.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

USD/JPY remains languishing south of trendline support-turned resistance, taken from the low 102.59. This follows the early breach on 7th July.

Having Tuesday and Wednesday forge two consecutive bullish sessions, resistance at ¥111.88-111.20 has been thrown back into the mix. To the downside, supply-turned demand at ¥107.58-106.85 calls for attention as an obvious floor in this market, which happens to align with the 200-day simple moving average at ¥106.99.

Trend studies, despite the trendline support breach early July, reveals the pair has been trending higher since the beginning of the year. With reference to the relative strength index (RSI), attention is on the lower side of a recently breached ascending channel between 58.82 and 47.51, following the indicator recently forming a 41.32 low.

H4 timeframe:

Latest events on the H4 show price marginally withdrew on Thursday and tested Quasimodo resistance-turned support at ¥110.09—organised above trendline resistance-turned support, drawn from the high ¥111.66 (2021 highs).

Pursuing higher prices features supply at ¥110.99-110.80, a base capping upside in early July.

H1 timeframe:

Short-term sentiment is somewhat neutral heading into Friday’s session, wavering between supply at ¥110.54-110.41 and ¥110. Outside of the aforesaid zones, Quasimodo resistance rests at ¥110.65 and supply-turned demand falls in at ¥109.83-109.71. Note also we are comfortable above the 100-period simple moving average around ¥109.90.

In regards to the relative strength index (RSI), the indicator’s value has been circling the 50.00 centreline since US opened its doors yesterday. Oversold support at 18.76 remains on the radar and resistance can be seen at 78.38.

Observed levels:

The test of H4 Quasimodo resistance-turned support at ¥110.09 is likely to interest traders, knowing trendline resistance gave way earlier in the week. What this may also trigger is a test of ¥110 on the H1 to draw in additional buyers (with the possibility of a whipsaw forming to the 100-period simple moving average at ¥109.90 or supply-turned demand at ¥109.83-109.71).

The above takes support from the daily timeframe exhibiting scope to approach resistance at ¥111.88-111.20.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, possibly serving as support if retested.

Month to date, July trades 0.5 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Quasimodo support at $1.3609 welcoming buyers Wednesday triggered additional bullish flow Thursday and cemented position north of the 200-period simple moving average at $1.3699. Additional interest to the upside shines light on tops around $1.3909, followed by resistance at $1.4003.

Technicians may note the daily scale recently elbowed under a double-top neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250).

Trend on this chart has been somewhat rangebound since late February. As for momentum studies, the relative strength index (RSI) pencilled in bullish divergence, informing traders of strengthening momentum.

H4 timeframe:

Thursday’s almost one-sided advance overthrew a number of key resistances, including the 38.2% Fib retracement value at $1.3739, derived from legs A-D of the AB=CD harmonic formation (100% Fib projection at $1.3640 and 1.618% Fib extension at $1.3613).

With $1.3739 in the rear-view mirror and price attempting to secure support off a recently engulfed resistance at $1.3761, the 61.8% Fib retracement value at $1.1842 is in the line of fire: the second take-profit target out of the AB=CD pattern, followed by obvious resistance at $1.3901.

H1 timeframe:

Early hours Thursday watched short-term flow retest $1.37—accompanied by the 100-period simple moving average—and subsequently challenge the lower side of $1.3750 heading into the London open, which eventually gave way.

US trading retested $1.3750 and held support, following a test of the 61.8% Fib retracement value at $1.3780 (green). $1.38, therefore, demands attention on this timeframe.

In terms of where we stand on the relative strength index (RSI), the value exited overbought amid US hours yesterday and recently shaped a bearish failure swing (blue line at 60.89). Independent of price action, a bearish failure swing warns of a possible change in momentum, which in this case is to the downside.

Observed levels:

With all four charts taken into account, it appears buyers have an edge. Establishing support from $1.3750 on the H1, therefore, could be a scene that materialises, targeting at least $1.38, and possibly the 61.8% Fib retracement value at $1.1842 on the H4 scale.

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.

July 22nd 2021: Upbeat Risk Sentiment Lifts Euro and Pound; EUR/USD Fading $1.18

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352 and erase 3.0 percent.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, July trades 0.5 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Since mid-June, the daily timeframe has been carving out a falling wedge ($1.1848/$1.1975), a pattern accommodating two tests at either side of the structure. Note some technical analysts prefer wedge formations to display at least three tests.

Nevertheless, in the event price continues to compress within the falling wedge, Quasimodo support at $1.1688 is likely to make an entrance, arranged south of 31st March low at $1.1704 (a place sell-stops will be tripped).

Any upside attempts (a breakout above the current wedge pattern) reignites interest at the 200-day simple moving average, circling $1.2002 (sheltered beneath supply at $1.2148-1.2092).

With regards to trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

Out of the relative strength index (RSI), the value occupies trendline support-turned resistance (around 40.00), extended from the low 29.54. Resistance is also close by at 51.36, serving reasonably well since November 2020. A breakout above 51.36 signals momentum is to the upside (average gains surpass average losses) and, therefore, traders could observe a breakout above the noted falling wedge.

H4 timeframe:

Technical Structure Unchanged from Previous Analysis.

Aside from June’s downside bias, technical areas to be mindful of remain at Quasimodo support from $1.1749 and Quasimodo resistance coming in at $1.1880.

Fibonacci studies reveal a 61.8% Fib retracement at $1.1890, plotted south of a 38.2% Fib retracement at $1.1906.

H1 timeframe:

Wednesday observed the dollar index (ticker: DXY) snap a four-day winning streak amidst a recovery in risk appetite. The benchmark 10-year US Treasury yield rose more than 5 percent, testing 1.29%. Additionally, risk sensitive currencies rose and major equity benchmarks voyaged north.

Technically, H1 finished European trading at the lower side of $1.18, a handful of pips above the 100-period simple moving average around $1.1794. Above the round number, traders will note Fibonacci structure between $1.1817 and $1.1808 (red zone), situated just beneath resistance at $1.1821.

Alongside current price, the relative strength index (RSI) is bound for overbought settings, loitering around 60.00. A test of overbought—in particular resistance at 78.97—considering the downside bias since June, is likely to capture the attention of bears.

Observed levels:

Short term, based on H1 chart studies, a whipsaw through $1.18 into Fibonacci resistance between $1.1817 and $1.1808 is enough to perhaps gather sellers on the back of buy-stops fuelling willing offers.

How much of a bearish presence a $1.18 whipsaw yields is tough to estimate. Although current sentiment favours lower levels, the monthly timeframe trading from support at 1.1857-1.1352, together with the daily timeframe in the process of chalking up a falling wedge reversal pattern ($1.1847/$1.1975), and space for H4 buyers to explore higher, could weigh on any downside attempt from $1.1817-1.1808.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, July elbowed through support at $0.7394. Additional downside pressure brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, July is down 1.9 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

Ahead of the 1.272% Fib projection at $0.7273 (and neighbouring support from $0.7204), the Australian dollar trimmed a four-day bearish phase against the buck on Wednesday. Underpinned amid improved risk sentiment, AUD/USD is on the doorstep of resistance at $0.7453-0.7384.

In terms of trend, 2021 is on the back foot.

As for momentum, the relative strength index (RSI) exhibits a narrow consolidation phase between resistance at 41.63 and the oversold threshold 30.00.

H4 timeframe:

Fibonacci structure between $0.7293 and $0.7315—within this area, a 100% Fib projection at $0.7313 exists, a level harmonic traders will recognise as an AB=CD bullish formation—entertained buyers on Wednesday and lifted price to within striking distance of resistance at $0.7364, closely shadowed by supply at $0.7390-0.7371 (glued to the lower side of daily resistance at $0.7453-0.7384).

Harmonic AB=CD traders traditionally set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. As you can see, 38.2% Fib resistance resides at $0.7408.

H1 timeframe:

A closer analysis of price movement on the H1 chart reveals early European hours $0.73 rejuvenated a strong bid. Upside engulfed Quasimodo resistance at $0.7347, with subsequent buying landing the currency pair at the door of the 100-period simple moving average around $0.7363.

Territory above the SMA brings light to $0.74, a level plotted north of H4 supply at $0.7390-0.7371.

The relative strength index (RSI) finished the session at 65.00. Although somewhat levelling off, the value threatens a test of overbought space and associated resistance at 78.26.

Observed levels:

The daily chart shows technical space to advance until $0.7453-0.7384. This—coupled with H1 price displaying scope to advance to $0.74 north of the 100-period simple moving average at $0.7363—could prompt a short-term bullish scenario above the SMA, taking out H4 resistance at $0.7364 and drilling into H4 supply at $0.7390-0.7371.

USD/JPY:

Monthly timeframe:

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

March concluded up by 3.9 percent and cut through descending resistance, etched from the high ¥118.66. Although April finished lower by 1.3 percent and snapped a three-month winning streak, May (+0.2 percent) held the breached descending resistance and echoed support in June, higher by 1.4 percent.

Month to date, however, July trades 0.7 percent in the red and is on track to chalk up a bearish outside reversal.

Daily timeframe:

The Japanese yen, a perceived safe-haven currency, fell sharply on Wednesday, reinforced on the back of upbeat risk sentiment.

Despite a lack of support until supply-turned demand at ¥107.58-106.85, further upside on this chart has resistance at ¥111.88-111.20 to target—intersects with trendline support-turned resistance, taken from the low 102.59.

Trend studies, despite the trendline support breach early July, reveals the pair has been trending higher since the beginning of the year.

With reference to the relative strength index (RSI), attention is on the lower side of a recently breached ascending channel between 58.82 and 47.51, following the indicator recently pasting a 41.32 low.

H4 timeframe:

Buyers strengthening grip in recent movement had trendline resistance, drawn from the high ¥111.66 (2021 highs), together with Quasimodo resistance at ¥110.09, abandon position, both of which now stand for support in the event of a retracement.

Pursuing higher prices on the H4 features supply at ¥110.99-110.80, a base capping upside in early July.

H1 timeframe:

Supply at ¥110.54-110.41 entered the frame in recent hours, following a run from ¥110 and subsequent break of nearby Quasimodo resistance at ¥110.22 (now serving as support). Of interest, Quasimodo resistance rests above supply at ¥110.65.

As of writing, the relative strength index (RSI) recently engaged with overbought terrain and—leaving resistance at 78.38—exited the area (a bearish signal).

Observed levels:

According to technical studies, buyers appear to have an edge.

As a result, H1 maintaining position off Quasimodo resistance-turned support at ¥110.22 exposes a possible attack on H1 supply at ¥110.54-110.41 and Quasimodo at ¥110.65. This is bolstered by daily and H4 timeframes demonstrating space to advance, targeting H4 supply at ¥110.99-110.80.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, possibly serving as support if retested.

Month to date, however, July trades 0.8 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Quasimodo support at $1.3609 welcomed a bullish tone on Wednesday, snapping a four-day losing streak amidst a softer dollar across the board. The marginal close back above the 200-period simple moving average, circling $1.3699, also deserves notice. Additional interest to the upside shines light on tops around $1.3909, followed by resistance at $1.4003.

Technicians may note the daily scale recently elbowed under a double-top neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250).

Trend on this chart has been somewhat rangebound since late February. As for momentum studies, the relative strength index (RSI) pencilled in bullish divergence, informing traders of strengthening momentum.

H4 timeframe:

Wednesday witnessed a pullback develop off the aforesaid daily Quasimodo support and H4 Fibonacci support between a 100% Fib projection at $1.3640 and a 1.618% Fib extension at $1.3613. Harmonic traders will acknowledge the Fibonacci formation represents an AB=CD bullish configuration, and as such the 38.2% Fib retracement value at $1.3739, derived from legs A-D, is likely targeted as an initial upside objective.

However, before reaching $1.3739, resistance at $1.3712 must be overthrown.

H1 timeframe:

Latest movement out of the H1 chart shows price made its way above $1.37 and tested the mettle of the 100-period simple moving average at $1.3708. As of writing, the currency pair is poised to retest $1.37, which if support comes to pass, a rally to $1.3750 is not out of the question.

In terms of where we stand on the relative strength index (RSI), the indicator turned ahead of overbought space in recent hours, currently trading at 65.00. Whether this affects $1.37 serving as support remains to be seen.

Observed levels:

Daily Quasimodo support at $1.3609 underpinning a firm floor yesterday, elevating the currency pair back above the 200-period simple moving average, could help deliver confidence to a $1.37 retest.

A bullish theme emerging from the aforementioned big figure, nonetheless, faces resistance at $1.3712 on the H4 scale, closely tailed by the 38.2% Fib retracement value at $1.3739.

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.

July 21st 2021: Safe-Haven Bid Elevates Dollar Index to Three-Month Highs

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352 and erase 3.0 percent.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, July trades 0.6 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Since mid-June, the daily timeframe has been carving out a falling wedge ($1.1848/$1.1975), a pattern accommodating two tests at either side of the structure. Note some technical analysts prefer wedge formations to display at least three tests.

Nevertheless, in the event price continues to compress within the falling wedge, Quasimodo support at $1.1688 is likely to make an entrance, arranged south of 31st March low at $1.1704 (a place sell-stops will be tripped).

Any upside attempts (a breakout above the current wedge pattern) reignites interest at the 200-day simple moving average, circling $1.2002 (sheltered beneath supply at $1.2148-1.2092).

With regards to trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

Out of the relative strength index (RSI), the value occupies trendline support-turned resistance (around 40.00), extended from the low 29.54. Resistance is also close by at 51.36, serving reasonably well since November 2020. A breakout above 51.36 signals momentum is to the upside (average gains surpass average losses) and, therefore, traders could observe a breakout above the noted falling wedge.

H4 timeframe:

Technical Structure Unchanged from Previous Analysis.

Aside from June’s downside bias, technical areas to be mindful of remain at Quasimodo support from $1.1749 and Quasimodo resistance coming in at $1.1880.

Fibonacci studies reveal a 61.8% Fib retracement at $1.1890, plotted south of a 38.2% Fib retracement at $1.1906.

H1 timeframe:

Stationed just south of the 100-period simple moving average ($1.1806), $1.18 has proven robust resistance in recent trading, aided by the US dollar index (ticker: DXY) refreshing multi-month highs as the market remains cautious regarding the spread of the Delta variant. This also weighed on risk-sensitive currencies, such as the Australian dollar and New Zealand dollar.

As stated in previous writing, noting short-term flow residing south of $1.18, a 1.272% Fib expansion at $1.1745, a 100% Fib projection at $1.1747 and a 1.27% Fib extension at $1.1748 is seen uniting with H4 Quasimodo support underlined above at $1.1749.

Observed levels:

In light of recent price movement, the technical outlook remains unchanged.

From the monthly timeframe, support at 1.1857-1.1352 is in play. In conjunction with the monthly, the daily timeframe is chalking up a falling wedge ($1.1847/$1.1975), which, given June’s decline, highlights a potential reversal pattern.

Short-term flow is centred on a possible sell-off towards the H1 timeframe’s Fibonacci structure between $1.1745 and $1.1748, joined by H4 Quasimodo support from $1.1749.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, July recently elbowed through support at $0.7394. Additional downside pressure brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, July is down 2.2 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

The risk-sensitive Australian dollar staged a modest recovery off multi-month lows against the US dollar on Tuesday, finishing the session largely unmoved.

Resistance calls for attention at $0.7453-0.7384, whereas any downside interest shifts focus to support at $0.7204. That is assuming Fibonacci bids—the 1.272% Fib projection at $0.7273—is overthrown.

In terms of trend, 2020 was a respectable year for AUD/USD, though 2021 is on the back foot.

According to the relative strength index (RSI), oversold conditions remain. In light of sustained selling since early May, oversold readings are likely to remain, and between 50.00 and 40.00 could stand in as overbought signals.

H4 timeframe:

A closer reading from the H4 scale reveals the currency pair shook hands with interesting Fibonacci structure between $0.7293 and $0.7315. Note that within this area, a 100% Fib projection at $0.7313 exists, a level harmonic traders will recognise as an AB=CD bullish formation.

Bulls occupying position out of current Fibonacci support directs focus to resistance at $0.7364, closely shadowed by supply at $0.7390-0.7371.

H1 timeframe:

Interestingly, the technical landscape on the H1 scale has short-term action easing off $0.73, initially establishing what’s known as a hammer candle pattern—bullish cue. Further buying has Quasimodo resistance at $0.7347 to target, with subsequent bullish intent beyond here perhaps taking aim at $0.74 and the 100-period simple moving average around $0.7395.

The relative strength index (RSI), finding a floor off support at 27.02, is within striking distance of connecting with the 50.00 centreline. Moves north of the latter signal momentum gaining to the upside: average gains surpassing average losses.

Observed levels:

Knowing monthly price dropped through support at $0.7394, as well as daily flow exhibiting scope to approach at least a 1.272% Fib projection at $0.7273, any upside from $0.73 on the H1 and from Fibonacci structure between $0.7293 and $0.7315 on the H4 may be limited.

With that being said, this market echoes a sell-on-rally scenario, with sellers possibly targeting H1 Quasimodo resistance at $0.7347 as a base to work with. Alternatively, H4 resistance from $0.7364 (and a possible whipsaw into H4 supply at 0.7390-0.7371) could draw a bearish scenario.

USD/JPY:

Monthly timeframe:

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

March concluded up by 3.9 percent and cut through descending resistance, etched from the high ¥118.66. Although April finished lower by 1.3 percent and snapped a three-month winning streak, May (+0.2 percent) held the breached descending resistance and echoed support in June, higher by 1.4 percent.

Month to date, however, July trades 1.1 percent in the red and is on track to chalk up a bearish outside reversal.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Tuesday observed the US dollar recover ground against the Japanese yen, lifted amid improved risk sentiment and higher US Treasury yields. Despite this, absence of support until supply-turned demand at ¥107.58-106.85—an area sharing chart space with the 200-day simple moving average at 106.92—opens the risk of further selling from a technical standpoint. This follows early July tunnelling through trendline support (taken from the low 102.59).

Trend studies, despite the trendline support breach early July, reveals the pair has been trending higher since the beginning of the year.

Concerning momentum, the relative strength index (RSI) spun lower from within a whisker of a recently breached ascending channel between 58.82 and 47.51 last week, and finished Tuesday just ahead of 40.00.

H4 timeframe:

The latest advance—extending recovery gains out of demand coming from ¥109.02-109.20—shines light on trendline resistance, drawn from the high ¥111.66 (2021 highs), together with Quasimodo resistance at ¥110.09.

H1 timeframe:

Supply at ¥109.83-109.71 was a noted area in Tuesday’s analysis (considered an important zone, having it been within this base a decision was made to channel lower), which, as you can see, entertained a short-term bearish tone heading into London yesterday. Although triggering a 40-pip decline, bulls entered an offensive phase going into US trading and dethroned the aforementioned supply as well as the 100-period simple moving average at ¥109.83.

As of writing, you will note ¥109.83-109.71 is being retested as demand, a touch south of ¥110 and Quasimodo resistance coming in at ¥110.22.

From the relative strength index (RSI), the value is engaging with space above the 50.00 centreline and threatening moves into overbought, possibly targeting resistance at 78.38.

Observed levels:

Between H1 Quasimodo resistance at ¥110.22 and ¥110 (note that inside of this area intersects with H4 Quasimodo resistance at ¥110.09 and H4 trendline resistance) is a zone we may see sellers welcome today if tested.

This area is in line with daily and monthly timeframes showing space to move lower.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, possibly serving as support if retested.

Month to date, July trades 1.5 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Recording a fourth successive daily loss on Tuesday, cable cemented position south of the 200-period simple moving average, circling $1.3695, and challenged Quasimodo support at $1.3609. Technicians may also note the daily scale recently elbowed under a double-top neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250).

Trend on this chart has been somewhat rangebound since late February. Though continuation moves to the downside beyond Quasimodo support at $1.3609 could trigger a bearish vibe.

As for momentum studies, the relative strength index (RSI) is pencilling in bullish divergence, informing traders of strengthening momentum.

H4 timeframe:

Out of the H4 chart, we are seeing the currency pair cross paths with a 100% Fib projection at $1.3640 and a 1.618% Fib extension at $1.3613. Harmonic traders will acknowledge the Fibonacci formation represents an AB=CD bullish configuration. What’s also technically interesting is daily Quasimodo support at $1.3609 connecting with the H4 levels.

H1 timeframe:

The modest $1.36 recovery seen into the close Tuesday, alongside the relative strength index (RSI) exiting oversold territory and breaching 39.68 indicator resistance, throws light on a possible run back to $1.37.

Observed levels:

Daily Quasimodo support at $1.3609, the $1.36 figure on the H1 and Fibonacci structure on the H4 between $1.3613 and $1.3640 may interest buyers in this market, at least until reaching $1.37. Do be aware that the 200-day simple moving average aligns closely with the round number at $1.3695, and therefore could be a location sellers make an entrance to take advantage of possible bearish flow below the daily timeframe’s double-top neckline at $1.3670.

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.

July 20th 2021: Souring Risk Appetite Provides Dollar Boost; DXY Refreshes Multi-Month Peaks

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Closing the book on the month of June had EUR/USD—in the shape of a near-full-bodied bearish candle—touch gloves with familiar support at $1.1857-1.1352 and erase 3.0 percent.

A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, July trades 0.5 percent lower.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technical Structure Unchanged from Previous Analysis.

Since mid-June, the daily timeframe has been carving out a falling wedge ($1.1848/$1.1975), a pattern accommodating two tests at either side of the structure. Note some technical analysts prefer wedge formations to display at least three tests.

Nevertheless, in the event price continues to compress within the falling wedge, Quasimodo support at $1.1688 is likely to make an entrance, arranged south of 31st March low at $1.1704 (a place sell-stops will be tripped).

Any upside attempts, a breakout above the current wedge pattern, reignites interest at the 200-day simple moving average, circling $1.2002 (sheltered beneath supply at $1.2148-1.2092).

With regards to trend, we have been somewhat rudderless since the beginning of the year, despite healthy gains in 2020.

Out of the relative strength index (RSI), the value occupies trendline support-turned resistance, extended from the low 29.54. Resistance is also close by at 51.36, serving reasonably well since November 2020. A breakout above 51.36 signals momentum is to the upside (average gains surpass average losses) and, therefore, traders could observe a breakout above the noted falling wedge.

H4 timeframe:

Technical Structure Unchanged from Previous Analysis.

Aside from June’s downside bias, technical areas to be mindful of are Quasimodo support from $1.1749 and Quasimodo resistance coming in at $1.1880.

Fibonacci studies reveal a 61.8% Fib retracement at $1.1893, plotted south of a 38.2% Fib retracement at $1.1912.

H1 timeframe:

Europe’s single currency refreshed monthly lows against the greenback on Monday. US Treasury yields plummeted amidst increased demand for safe-haven assets, elevating the US dollar, the Swiss franc and Japanese yen.

Technically, heading into early US hours, EUR/USD staged a recovery and whipsawed through $1.18 offers, a psychological barrier dovetailing with the 100-period simple moving average.

Noting short-term flow residing south of $1.18, a 1.272% Fib expansion at $1.1745, a 100% Fib projection at $1.1747 and a 1.27% Fib extension at $1.1748 is seen uniting with H4 Quasimodo support underlined above at $1.1749.

Those who study price momentum will note the relative strength index (RSI) dipped a toe under the 50.00 centreline on Monday after fading 61.00.

Observed levels:

From the monthly timeframe, support at 1.1857-1.1352 is in play. In conjunction with the monthly, the daily timeframe is chalking up a falling wedge ($1.1847/$1.1975), which, given June’s decline, highlights a potential reversal pattern.

Short-term flow is centred on a possible sell-off towards the H1 timeframe’s Fibonacci structure between $1.1745 and $1.1748, joined by H4 Quasimodo support from $1.1749.

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, July recently elbowed through support at $0.7394. Additional downside pressure brings demand at $0.7029-0.6664 to light (prior supply).

Month to date, July is down 2.3 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).

Daily timeframe:

The risk-sensitive Australian dollar fell sharply versus the US dollar on Monday, weighed on the back of risk aversion amidst concerns surrounding the spread of the Delta variant spread.

Supply-turned demand at $0.7453-0.7384 was overthrown, consequently exposing support at $0.7204. This may be interpreted as a warning sign of further weakness. Also of technical importance is the unit trading below its 200-day simple moving average at $0.7581, a dynamic value sheltered below resistance from $0.7626.

In terms of trend, 2020 was a respectable year for AUD/USD, though 2021 is on the back foot.

Momentum studies, according to the relative strength index (RSI), shows oversold conditions in this market. However, in light of the sustained downside bias since early May, oversold readings are likely to remain common for the time being, and between 50.00 and 40.00 standing in as overbought signals.

H4 timeframe:

Monday’s decline swept through Quasimodo support at $0.7364—a level now serving as resistance beneath supply at $0.7390-0.7371. Space to the downside throws light on Fibonacci studies between $0.7293 and $0.7315. Note that within this area we have a 100% Fib projection at $0.7313, a level harmonic traders will recognise as an AB=CD bullish formation. Yet, a buy from here involves going against current bias, potentially diminishing the pattern’s appeal.

H1 timeframe:

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

As evident from the chart, supply at $0.7450-0.7436 welcomed sellers on Friday and guided the currency pair under $0.74, as expected.

Having price action maintain a bearish theme beneath $0.74, the currency pair is on the doorstep of $0.73, a level residing within Fibonacci support on the H4 scale between $0.7293 and $0.7315.

As you would expect, the relative strength index (RSI) is crawling along the indicator’s oversold threshold, clinging to support at 27.02. In similar fashion to the daily timeframe’s RSI condition, between 50.00 and 40.00 traders are likely expecting this area to serve as temporary oversold space on the H1 scale.

Observed levels:

Chart studies indicate sellers have the upper hand.

Monthly support at $0.7394 is poised to step aside; daily price steamrolled through supply-turned demand at $0.7453-0.7384, and H4 and H1 timeframes exhibit scope to shake hands with the $0.73ish neighbourhood.

The above suggests a retest at H4 resistance from $0.7364 (and possible whipsaw into H4 supply at 0.7390-0.7371) could draw a bearish scenario, targeting $0.73 on the H1.

USD/JPY:

Monthly timeframe:

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

March concluded up by 3.9 percent and cut through descending resistance, etched from the high ¥118.66. Although April finished lower by 1.3 percent and snapped a three-month winning streak, May (+0.2 percent) held the breached descending resistance and echoed support in June, higher by 1.4 percent.

Month to date, however, July trades 1.5 percent in the red and is on track to chalk up a bearish outside reversal.

Daily timeframe:

Absence of well-defined support until supply-turned demand at ¥107.58-106.85—an area sharing chart space with the 200-day simple moving average at 106.92—opens the risk of further selling. This follows early July tunnelling through trendline support (taken from the low 102.59).

Trend studies, despite the trendline support breach early July, reveals the pair has been trending higher since the beginning of the year.

Concerning momentum, the relative strength index (RSI) spun lower from within a whisker of a recently breached ascending channel between 58.82 and 47.51 last week, and finished Monday just ahead of 40.00.

H4 timeframe:

Latest out of the H4 chart reveals price stabbed into the walls of demand coming from ¥109.02-109.20, a move enticing short-term recovery gains into the close.

Trendline resistance, extended from the high ¥111.66 (2021 highs), together with Quasimodo resistance at ¥110.09, could enter the frame.

H1 timeframe:

Spinning higher north of ¥109 as we transitioned into US trading on Monday lands Tuesday within a stone’s throw from resistance at ¥109.61, followed closely by supply at ¥109.83-109.71. The noted supply is considered an important zone, having it been within this base a decision was made to channel lower yesterday.

The picture from the relative strength index (RSI) shows the value rebounded from oversold in recent hours, missing support by a whisker at 18.76. Crossing above the 50.00 centreline informs traders that average gains exceed average losses: strengthening to the upside.

Observed levels:

Monthly flow is on the verge of revisiting descending resistance-turned support, pulled from the high ¥118.66. This is inline with the daily timeframe’s technical landscape, suggesting weakness until supply-turned demand at ¥107.58-106.85.

In terms of the short-term picture, H1 supply at ¥109.83-109.71 is likely a key watch. Whipsawing through H1 resistance at ¥109.61 into the aforesaid supply unlocks a possible bearish scene, in line with the higher timeframe direction.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, possibly serving as support if retested.

Month to date, July trades 1.1 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Sterling slumped to levels not seen since February against the US dollar on Monday as risk aversion took centre stage.

Price closed beneath the 200-period simple moving average, circling $1.3692, and is on the verge of crossing swords with Quasimodo support at $1.3609 (connected with a 38.2% Fib retracement at $1.3641).

Trend on this chart has been somewhat rangebound since late February. As for momentum studies, the relative strength index (RSI) is pencilling in bullish divergence, informing traders of strengthening momentum.

H4 timeframe:

Monday trading on the ropes directed the currency pair beneath Quasimodo support at $1.3712 (now serving resistance) to highlight a 100% Fib projection at $1.3640 and a 1.618% Fib extension at $1.3613. Harmonic traders will acknowledge the Fibonacci formation represents an AB=CD bullish configuration.

H1 timeframe:

Despite modest defence, $1.37 was brushed aside in early US Monday, a move which led price to lows ahead of support at $1.3652 (set above the H4 timeframe’s 100% Fib projection at $1.3640).

According to the relative strength index (RSI), bullish divergence is in the initial stages of forming. Confirmation of the divergence signal is movement above resistance at 36.98.

Observed levels:

Between Quasimodo support at $1.3609 and the 38.2% Fib retracement at $1.3641 on the daily timeframe, this is a floor that may draw bullish attention if tested. What’s interesting is the H4 100% Fib projection at $1.3640 and H1 support from $1.3652 aligns closely with the daily levels.

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.