Technical View for 18th October

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Monday was a rough session for the greenback; the US dollar index shed more than 1.0% amid upbeat risk sentiment. Consequently, Europe’s single currency welcomed a healthy bid on the back of the dollar’s decline. Downbeat US data also added to EUR/USD strength; general business conditions in the New York index fell eight points to -9.1, its third consecutive decline (Empire State Manufacturing Index).

Despite EUR/USD upside, a technical headwind remains: the trend. Pullbacks have been few and far between since 2021 as sellers have taken control. This is evident from the daily timeframe trading comfortably under its 200-day simple moving average ($1.0569), in addition to weekly price action chalking up a series of lower lows/highs since topping at $1.2350 in early 2021. Underpinning a technical bid, nevertheless, is weekly support from $0.9606. A break of daily trendline resistance, drawn from the high $1.1495, would help confirm some bullish colour.

Across the page on the H1 scale, things are a little simpler. Monday’s run north, inspired by a rebound from a decision point at $0.9711-0.9726, yanked the unit above $0.98 and Quasimodo resistance at $0.9812. Scope to explore higher is visible until reaching a key prime resistance at $0.9984-0.9938.

Technical Expectation:

Although the longer-term trend favours bears at the moment, short-term bulls (H1) could attempt to find some grip above $0.98 and target prime resistance from $0.9984-0.9938 (a retest of the $0.98 region, for example, could attract dip-buyers). It is here, however, that chart studies suggest sellers might materialise.

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AUD/USD:

The safe-haven US dollar was propelled lower on Monday as risk sentiment markedly improved. Procyclical currencies such as the Canadian dollar, the New Zealand dollar and the Australian dollar benefitted from the session’s risk-on impulse.

The bullish showing, as evident from the weekly timeframe, unfolded a touch north of long-term demand from $0.5975-0.6166, a base that houses a 1.618% Fibonacci projection ratio at $0.6024 (an ‘alternate’ AB=CD pattern). Weekly resistance is not expected to appear until $0.6673, though daily resistance can be seen from $0.6401. This, therefore, will be a test for current bulls, in a market trending southbound since February 2021.

Against the backdrop of the higher timeframes, H1 price is shaking hands with $0.63, and the area just south of Quasimodo resistance coming in from $0.6313. To the upside, another resistance is present in the shape of a Quasimodo support-turned resistance from $0.6352, with a break drawing light to $0.64.

Technical Expectation:

The $0.64 figure on the H1 timeframe might interest short-term technical traders, in view of its close connection with daily resistance at $0.6401. As such, given the room to nudge higher on the daily timeframe until the said resistance, H1 resistances, including $0.63, $0.6313 and $0.6352 are unlikely to deliver much of a ceiling. With that, short-term breakout buyers are likely to engage north of the aforementioned levels until $0.64 (a platform that sellers could favour in light of the noted daily resistance and downtrend).

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USD/JPY:

Despite Monday’s risk-on environment, one that usually guides the USD/JPY higher, the currency pair meandered between gains and losses to end the session unmoved at Friday’s session top.

Price action on the weekly timeframe is inching closer to a 100% projection at ¥149.66 (an AB=CD bearish pattern) after forcefully clearing Quasimodo resistance at ¥146.79 (now a marked support level). Trending since the early months of 2021, consisting of parabolic upside in March and April (2022), long-term price action favours further buying and a potential test of ¥149.66.

On the H1 timeframe, price action recently visited a short-term decision point at ¥148.26-148.47 and formed a temporary technical floor. Above—beyond yesterday’s session high of ¥148.89—calls for ¥149, while removing the current decision point casts light towards ¥148.

Technical Expectation:

The H1 decision point at ¥148.26-148.47 is likely to maintain its position, persuading a test of ¥149. Technically, sellers are unlikely to put up much of a defence from ¥149, as traders will likely be looking at the weekly 100% projection of ¥149.66. Therefore, a phase of breakout buying above ¥149 should not surprise.

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GBP/USD:

Sterling gained across the board on Monday, adding more than 200 pips against its US counterpart, or 2.0%, and gained 0.8% against the euro. The bullish setting was bolstered on the back of a mini-budget U-turn; newly appointed chancellor Jeremy Hunt tore apart a large portion of the tax changes proposed in the largely controversial mini-budget and noted that energy bill support is to come to an end in April.

GBP/USD strength, as can be seen from the weekly scale, has lifted the currency pair back to its resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413. You will note that daily price is also on the verge of crossing swords with trendline resistance (intersecting with the weekly areas), drawn from the high $1.3639.

Note that this market is also entrenched within a 20-month downtrend since topping at $1.4241 in February 2021. Those who follow the relative strength index (RSI) on the daily timeframe will note we’re retesting indicator resistance forged from 60.00 and 50.00 (resistance between these values is common in downtrends).

For those who read recent writing on the H1 chart, you may recall the following (itallics):

1.14 will be an interesting line for sellers if tested, complemented closely by the weekly decision point at $1.1751-1.1413 and $1.1410. H1 resistance from $1.1463 is also a possible level for bears, largely due to the connection forged with weekly resistances mentioned above.

Overall, despite the recent outperformance, chart studies suggest sellers are likely to materialise between $1.1463/00.

As you can see from the H1 timeframe, price is reacting from $1.1463/00. If we continue to move lower from current price, $1.13 is seen as logical support.

Technical Expectation:

Given the overall technical position, we are at heavyweight resistance, in a market that’s been trending lower since 2021. Hence, continued interest from sellers out of $1.1463/00 on the H1 in the direction of $1.13 could take shape.

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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.

Technical View for 14th October

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Consumer prices in the US accelerated to the upside. Year on year annual inflation in September rose 8.2%, versus a market consensus print of 8.1%. Core year-on-year annual inflation, which excludes food and energy, also recorded a 6.6% reading, versus expectations of a 6.5% increase. The aftermath of the release provided fresh USD impetus; the US Dollar Index, in the space of 5 minutes, rallied nearly 1.0% before tapering off at a high of 113.92 to rotate lower and extend beyond pre-announcement levels.

Recent action out of the EUR/USD pencilled in an unmistakable bullish outside reversal candle on the daily timeframe, which, in light of the retracement slide from parity ($1.00), could ignite further buying. This is somewhat reinforced by the recent reaction from weekly support priced at $0.9606 (even though follow-through buying has been lacklustre thus far). Yet, how far are buyers willing to commit is the question.

Yes, we do have a bullish candlestick signal on the daily timeframe, but the overall trend (some would label this as the primary bear trend) is resolutely south. This is evident from the daily timeframe trading comfortable under its 200-day simple moving average ($1.0585), in addition to weekly price action chalking up a series of lower lows/highs since topping at $1.2350 in early 2021.

Drilling down to the lower timeframes shows price action is within striking distance of testing the mettle of $0.98, with nearby Quasimodo resistance from $0.9812 calling for attention north of the line. Further outperformance shines light on prime resistance at $0.9984-0.9938. To the downside, a decision point is seen from $0.9711-0.9726, arranged just ahead of $0.97.

Technical Expectation:

Snapping above $0.98 on the H1 scale could detonate a stop-run scenario, in which short-term sellers emerge from Quasimodo resistance from $0.9812. A solid whipsaw seen here may pull the currency pair to as far south as the H1 decision point at $0.9711-0.9726.

Should we rupture the aforementioned resistance levels, on the other hand, the path of least resistance appears north until H1 prime resistance at $0.9984-0.9938 (a robust base of resistance). Therefore, breakout buying opportunities might also unfold above $0.9812. But, do remember to take into consideration where we are trading on the bigger picture; the overall trend favours sellers.

AUD/USD:

Post the US inflation release on Wednesday, risk sentiment abruptly reversed course to reconnect with pre-announcement levels. As evident from the H1 timeframe, this observed price movement probe orders around $0.62 to touch a low of $0.6170, no doubt swallowing a number of sell-stop orders in the process (bear trap?). Interestingly, we are now trading unchanged, and, thanks to the earlier spike south, established what is referred to as a dragonfly doji (bullish candlestick signal usually void of a real body) at Quasimodo support on the daily timeframe from $0.6263.

Price testing daily support in the shape of a bullish candlestick signal, together with the daily chart’s relative strength index (RSI) on the verge of forming bullish (positive) divergence, and the weekly timeframe’s price action coming within a whisker of demand from $0.5975-0.6166 is likely to interest technicians. The caveat, of course, is the trend, clearly demonstrating a downside bias since mid-February on the weekly (2021), with daily flow trading under its 200-day simple moving average ($0.7035) since April.

The H1 timeframe has buyers and sellers battling for position ahead of $0.63, following the sharp U-turn in price action earlier in the US session. What’s interesting from a technical perspective is the Quasimodo resistance sheltering the psychological level at $0.6314. Snapping north of $0.63, therefore, could provoke a stop-run, price movement that may witness sellers make a show from $0.6314. But, given the bullish technical elements in play, any stop-run might be short-lived with a short-term push to at least $0.6352 possibly decorating the chart.

Technical Expectation:

The active support in this market is likely a concern for sellers and is perhaps sufficient to motivate partial profit taking.

This may draw the currency pair beyond $0.6314 on the H1 to test $0.6352: Quasimodo support-turned resistance. As such, short-term breakout bulls might take up position above $0.6314, based on higher timeframe support putting in an appearance.

USD/JPY:

Sellers were once again on the ropes on Thursday. The latest US inflation print saw the USD/JPY currency pair scale to a fresh 24-year top, challenging the August 1998 top at ¥147.67. Though higher up on the curve, we have weekly Quasimodo resistance at ¥146.79 echoing a vulnerable tone, positioning the unit for additional outperformance to the weekly 100% projection at ¥149.66 (an AB=CD bearish pattern).

Trending since the early months of 2021, consisting of parabolic upside in March and April (2022), long-term price action favours further buying. Does this mean we’ll soon be seeing the weekly 100% projection at ¥149.66 make a show?

Lower on the curve, price action on the H1 timeframe forcefully pushed beyond ¥147 and subsequently gave back a portion of the upside to retest the psychological level as support. Nearby the aforesaid level is trendline support, extended from the low ¥143.53, together with Quasimodo support coming in at ¥146.66. Beyond the August 1998 top at ¥147.67, of course, we have ¥148 to look forward to as possible resistance.

Technical Expectation:

H1 price action retesting (and holding) ¥147 as support, the weekly timeframe threatening to engulf Quasimodo resistance at ¥146.79, in addition to the clear-cut long-term uptrend, favours buyers at ¥147 to eventually take on ¥147.67.

GBP/USD:

News of a potential change to the UK government’s fiscal plan, alongside a USD sell-off shortly after nudging higher post US CPI data, saw the pound surge more than 2.0% against its US counterpart on Thursday. This extended Wednesday’s modest recovery from $1.0923 lows and firmly placed candle action within a stone’s throw of substantial resistance on the higher timeframes.

Resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 on the weekly timeframe, together with the 20-month downtrend since topping at $1.4241 in February 2021, and daily trendline resistance intersecting with the weekly areas, drawn from the high $1.3639, represent key upside objectives.

Those who also follow the relative strength index (RSI) on the daily timeframe, you will note we’re retesting indicator resistance forged from 60.00 and 50.00 (resistance between these values is common in downtrends).

From the H1 timeframe, Quasimodo resistance at $1.1357 and a 78.6% Fibonacci retracement at $1.1373 recently welcomed price action. Directly overhead calls attention towards $1.14 and a 1.618% Fibonacci projection at $1.1398. While lower we can see price respecting area nearby $1.13; dropping below here helps pave the way for sellers to reconnect with $1.12.

Technical Expectation:

$1.14 will be an interesting line for sellers if tested, complemented closely by the weekly decision point at $1.1751-1.1413 and $1.1410. H1 resistance from $1.1463 is also a possible level for bears, again largely due to the connection forged with weekly resistances mentioned above.

Overall, despite the recent outperformance, chart studies suggest sellers are likely to materialise between $1.1460/00.

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.

US Inflation Data Eyed: Technical View for 13th October

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Overall, it was a muted session for EUR/USD on Wednesday, despite hotter-than-anticipated US PPI data and Minutes from September’s FOMC meeting hitting the wires.

Things have been vague for the EUR/USD on the H1 timeframe since Monday, punishing short-term traders around the $0.97 figure (swarming the psychological level with bull and bear traps). Sub $0.97 uncovers Quasimodo support from $0.9655, and clearing this base could unlock the door for an approach towards $0.96 (and neighbouring Quasimodo support at $0.9584). Decisively reclaiming space above $0.97—unlikely, technically speaking—shifts attention to short-term peaks at $0.9745, followed by $0.98 and nearby Quasimodo resistance from $0.9812.

Higher up on the curve, not much has changed. Therefore, the following analysis on weekly and daily timeframes will echo thoughts drawn from Wednesday’s technical briefing (italics):

EUR/USD continues to reflect a bearish story in the medium term. Sellers, aside from a handful of paltry medium-term pullbacks, possess a secure grip on things at the moment. In addition to the daily timeframe’s price action sitting comfortable south of its 200-day simple moving average, currently fluctuating around $1.0593, the trend has been southbound since 2021 topped at $1.2350 (visible from the weekly timeframe).

This, coupled with the daily relative strength index (RSI) rejecting the lower side of resistance at 60.00-50.00, highlights weakness at current higher timeframe supports: weekly support from $0.9606 and daily Quasimodo resistance-turned support at $0.9573.

Technical Expectation:

$0.97 is technically in a vulnerable position. Breakout sellers under the level, nonetheless, are unlikely to commit in view of the number of bear traps seen. For sellers to pull the trigger beneath the round number, a H1 close beneath $0.97 and a subsequent retest of the level as resistance is likely to be required, with bears then expected to try for at least H1 Quasimodo support from $0.9655.

AUD/USD:

Following the Minutes from September’s FOMC meeting, a modest AUD/USD bid emerged on Wednesday, conveniently aligning with support on the daily timeframe at $0.6263: Quasimodo formation.

In spite of the moderate outperformance, it remains an unfavourable environment for buyers. I communicated the following in Wednesday’s technical report in terms of the bigger picture (weekly and daily timeframes), which remains valid as we step into Thursday’s session (italics):

The weekly timeframe, clearly demonstrating a downside bias since mid-February (2021), appears poised to cross swords with a demand area from $0.5975-0.6166. For any harmonic traders reading, you may also acknowledge the ‘Alternate’ AB=CD pattern housed within the lower boundary of the demand, displayed by way of a 1.618% Fibonacci projection at $0.6024 (Golden Ratio [Phi]).

For that reason, the weekly timeframe expresses a strong bearish vibe at the moment. However, before connecting with the aforesaid areas, Quasimodo support on the daily timeframe at $0.6263 could have something to say.

With the daily chart’s relative strength index (RSI) roaming around oversold territory and threatening to form positive (regular) divergence, a recovery attempt from the daily level may continue to unfold (a combination of profit taking and [some might say] courageous counter-trend longs).

A closer inspection of price action on the H1 scale has price threatening to test the lower boundary of $0.63. What’s interesting from a technical perspective is the Quasimodo resistance sheltering the psychological level at $0.6314. Snapping north of $0.63, therefore, could provoke a stop-run, price movement that may witness sellers make a show from $0.6314.

Clearance of the aforementioned level, nevertheless, calls for a run to Quasimodo support-turned resistance at $0.6352. Though if sellers, once again, assume control, as suggested by the weekly timeframe, tunnelling lower to attack $0.6240ish lows is likely to inspire further selling to the $0.62 region and place the currency pair within striking distance of weekly demand mentioned above at $0.5975-0.6166.

Technical Expectation:

Yes, daily Quasimodo support is in play at $0.6263. But is it enough for bulls?

Having noted scope to navigate south on the weekly timeframe to at least the decision point at $0.5975-0.6166, whipsawing above $0.63 into H1 Quasimodo resistance at $0.6314 could be enough to motivate a bearish scenario.

USD/JPY:

The USD/JPY regained consciousness on Wednesday, climbing to a fresh 24-year top, movement boosted by an increase in US producer prices; PPI data jumped 0.4% MoM versus the 0.2% forecasted print.

Weekly Quasimodo resistance at ¥146.79 put in an appearance, a level which if surrenders, favours an approach to a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). Policy divergence between the US Federal Reserve and the Bank of Japan is likely to continue to pressure the safe-haven Japanese yen, consequently reinforcing a USD/JPY bid. In the event of a retracement, nonetheless, higher timeframe support is located around a daily Quasimodo formation at ¥141.60, marked a touch under daily support from ¥139.55.

Across the page on the H1 timeframe, The European morning session (and early US) witnessed decent numbers, rallying for six consecutive hours. This followed a to-the-pip retest of ¥146 amid Asia, a psychological base accompanied closely by support from ¥145.90 and trendline support, extended from the low ¥143.53. As evident from the H1 scale, ¥147 now warrants attention.

Technical Expectation:

¥147 is likely to get messy.

While the trend favours buyers and supports a break north, weekly Quasimodo resistance at ¥146.79 should not be disregarded (drawn from as far back as June 1998). Thus, breakout buyers above ¥147 are likely to seek additional confirmation before pulling that trigger. A common method of filtering false breakout signals, of course, is to simply wait for a (in this case) H1 close above the big figure that’s followed up with a retest that holds, preferably in the shape of a bullish (Japanese) candlestick pattern.

GBP/USD:

It was a good day for sterling on Wednesday, snapping a five-day losing streak. GBP/USD added 1.2% on the day, but this in no way does anything to the current technical bearish view for the pound (not to mention many desks forecasting parity by November amidst the current market turmoil we’re seeing at the moment).

I wrote about the weekly and daily timeframes in Wednesday’s technical briefing (italics):

Last week’s spike into resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 on the weekly timeframe, together with the 20-month downtrend since topping at $1.4241 in February 2021, continues to favour sellers.

A closer reading of price action on the daily timeframe displays a similar bearish picture, with price action sheltered by two trendline resistances (drawn from highs of $1.2277 and $1.3639). In addition to this, the currency pair has been working under the 200-day simple moving average, fluctuating around $1.2498, since August 2021, as well as the relative strength index (RSI) rejecting indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends).

With respect to support on the higher timeframes, I remain focussed on the February 1985 low at $1.0520 (and the record low of $1.0357).

Against the backdrop of the bigger picture, short-term price action rebounded from the $1.0920-50ish neighbourhood early yesterday—a combination of a 100% Fibonacci projection, a 1.618% Fibonacci projection and a nearby 50.0% retracement value as well as a 78.6% Fibonacci retracement. Subsequent action overthrew sellers around $1.10 to touch gloves with $1.11 into the closing bell.

The earlier test of the big figure during the London session, and the test seen amid US hours that spiked to $1.1134, delivers sufficient (technical) evidence to suggest seller weakness here. As such, a break of $1.11 should not surprise, which could have buyers pull things as far north as Quasimodo resistance at $1.1191 and $1.12.

Technical Expectation:

According to chart studies, a break above $1.11 is potentially on the table today. This may appeal to short-term breakout players, targeting the $1.12ish region. The caveat, of course, is the higher timeframes pointing to lower levels in the medium term. For that reason, strict trade management on any long positions executed above $1.11 will likely be seen, reducing risk to breakeven as soon as logically possible.

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.

Technical View for 12th October: US Inflation Data and the Latest FOMC Minutes in Sight

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

As evident from the H1 chart, buyers and sellers continued to square off around the $0.97 figure on Tuesday with either side failing to abandon their position.

Down 0.4% week to date, EUR/USD continues to reflect a bearish story in the medium and short term. Sellers, aside from a handful of paltry medium-term pullbacks, possess a secure grip on things at the moment. In addition to the daily timeframe’s price action sitting comfortable south of its 200-day simple moving average, currently fluctuating around $1.0600, the trend has been southbound since 2021 topped at $1.2350 (visible from the weekly timeframe).

This, coupled with the daily relative strength index (RSI) rejecting the lower side of resistance at 60.00-50.00, highlights weakness at current higher timeframe supports: weekly support from $0.9606 and daily Quasimodo resistance-turned support at $0.9573.

Short-term price action on the H1, given the sour demand out of the higher timeframes, delivers a gloomy picture for any $0.97 longs. In fact, recent advances from the psychological level have been restricted at around $0.9735. Should sellers dethrone $0.97, limited support is seen until we shake hands with H1 Quasimodo support from $0.9655, which if breached, could have the unit call in on $0.96.

Technical Expectation:

$0.97 is technically in a vulnerable position.

Technical studies indicate buyers are likely to take a back seat, with thin $0.97 bids evident. Short-term breakout traders are perhaps positioned under the figure, anticipating a run for at least H1 Quasimodo support from $0.9655.

AUD/USD:

We’re at an interesting technical juncture on the weekly and daily timeframes.

Shedding 1.2% week to date, it’s fair to say the AUD/USD has seen better days. The weekly timeframe, clearly demonstrating a downside bias since mid-February (2021), appears poised to cross swords with a demand area from $0.5975-0.6166. For any harmonic traders reading, you may also acknowledge the ‘Alternate’ AB=CD pattern housed within the lower boundary of the demand, displayed by way of a 1.618% Fibonacci projection at $0.6024 (Golden Ratio [Phi]).

However, before connecting with the aforesaid areas, Quasimodo support on the daily timeframe at $0.6263 could have something to say. With the daily chart’s relative strength index (RSI) roaming around oversold territory and threatening to form positive (regular) divergence, a recovery attempt from the daily level may unfold (a combination of profit taking and [some might say] courageous counter-trend longs).

Shorter term, the H1 timeframe shifted attention to Quasimodo support from $0.6264 and the lower side of $0.63. Interestingly, Quasimodo support on the daily scale at $0.6263 aligns almost to-the-pip with H1 Quasimodo support. Whether this will be sufficient to encourage a bullish takeover of $0.63 is difficult to estimate, in light of the longer-term downtrend.

Should buyers regain consciousness, nevertheless, a run to H1 Quasimodo support-turned resistance is not out of the question at $0.6352. Though if sellers, once again, assume control, as suggested by the weekly timeframe, tunnelling through $0.6246 is likely to inspire further selling to the $0.62 region and place the currency pair within striking distance of weekly demand mentioned above at $0.5975-0.6166.

Technical Expectation:

This remains a sellers’ market.

Yes, price is responding from daily Quasimodo support at $0.6263 (and H1 Quasimodo support from $0.6264), yet reaching for counter-trend trading strategies at this point is considered precarious until weekly demand makes a show at $0.5975-0.6166.

As such, sellers are likely monitoring short-term (H1) resistances at $0.6352 and $0.63.

USD/JPY:

It was a mundane day for the USD/JPY on Tuesday, with buyers and sellers asleep at the wheel a touch south of ¥146.

The H1 timeframe, nonetheless, did drop in on a steep trendline support, extended from the low ¥143.53, and for the time being price has reacted in favour of longs. Overhead calls attention at ¥145.90—22nd September high, while navigating under the current trendline reveals H1 resistance-turned support coming in at ¥145.32.

¥145.90 is an important barrier to have noted; ascending north of this level not only throws light on ¥146, but it refreshes a 24-year high. Notably, clearing ¥146 also favours an approach to weekly Quasimodo resistance at ¥146.79.

Trending higher since the early months of 2021, consisting of parabolic upside in March and April (2022), the unit is now within a stone’s throw of not only the aforementioned weekly Quasimodo resistance, but also a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). Higher timeframe support can be found at ¥139.55 (daily), followed by weekly support at ¥137.23.

I noted the following in support of the current uptrend in recent analysis (italics):

Further adding to trend identification, price has been trading north of the 200-day simple moving average, currently around ¥128.99, since February 2021. Additionally, the SMA has pointed higher since April 2021: a widely used trend-following technique.

Technical Expectation:

Thanks to the current uptrend, 22nd September high at ¥145.90 is likely to be challenged on the H1, bolstered by the recent short-term rebound from H1 trendline support, taken from the low ¥143.53. A push through the aforementioned level exposes ¥146, though it is above here that is likely to appeal to bullish breakout buyers, zeroing in on the weekly Quasimodo resistance level at ¥146.79.

GBP/USD:

Snapping a four-day bearish phase, GBP/USD bulls went on the offensive Tuesday.

However, last week’s spike into resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 on the weekly timeframe, together with the 20-month downtrend since topping at $1.4241 in February 2021, continues to favour sellers.

A closer reading of price action on the daily timeframe displays a similar bearish picture, with price action sheltered by two trendline resistances (drawn from highs of $1.2277 and $1.3639). In addition to this, the currency pair has been working under the 200-day simple moving average, fluctuating around $1.2512, since August 2021, as well as the relative strength index (RSI) rejecting indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends).

With respect to support on the higher timeframes, I remain focussed on the February 1985 low at $1.0520 (and the record low of $1.0357).

Out of the H1 timeframe, support formed between the $1.10 psychological figure and an ‘Alternative’ AB=CD bullish structure at $1.1046 (the 1.272% Fibonacci projection) put in an appearance in recent trading. Recent flow engulfed $1.11 to the upside and cast light on $1.12 and a neighbouring Fibonacci cluster (50% retracement is not considered a Fibonacci ratio). North of here, though, is a decision point at $1.1287-1.1241, placed well to facilitate a stop-run above $1.12—a scenario likely to be welcomed by short-term bears.

Technical Expectation:

Short-term ‘eyes’ are likely to be positioned around the $1.12 figure, having noted the Fibonacci confluence supporting the level and, of course, the clear downtrend the pound is in. Nevertheless, as alluded to above, the H1 decision point from $1.1287-1.1241 is also an area of resistance which could arouse bearish interest if challenged.

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.

Technical View for 11th October: UK Jobs Data Eyed

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

It was another day of red for the common currency on Monday as the US dollar, according to the US Dollar Index, extended recovery gains. From a technical perspective, further deterioration in the EUR/USD should not surprise.

Since 2021, aside from momentary pullbacks, sellers have commanded a healthy presence. And, as detailed in Monday’s weekly technical briefing, price action continues to work under its 200-day simple moving average ($1.0608), which, for many trend followers, is consistent with a downtrend.

Last week’s weekly ‘shooting star’, albeit void of a meaningful prior advance, implies feeble demand. Weekly support from $0.9606, a base which facilitated a rebound from 20-year lows ($0.9536), is now back in the spotlight and echoes a vulnerable tone—south of here is weekly Quasimodo support at $0.9241. The outlook from the daily timeframe is not much brighter.

Last week’s rejection just ahead of trendline resistance, extended from the high $1.1495, and neighbouring Quasimodo resistance from $1.0090, opens the door back to Quasimodo resistance-turned support at $0.9573, closely shadowed by support at $0.9377. The daily timeframe’s relative strength index (RSI) resistance area at 60.00-50.00, which has been in place since 28th October 2021, also received the indicator’s value last week and has pivoted lower (resistance formed between 60.00 and 50.00 is common in downtrends).

I also noted in Monday’s weekly technical briefing that clearing $0.97 on the H1 scale may persuade follow-through breakout selling in the direction of Quasimodo support at $0.9655. As evident from the chart, buyers have attempted to rejuvenate a bid from $0.97 and thus far buyers and sellers are even.

Technical Expectation:

Overall, according to chart studies, sellers have the upper hand.

A break of weekly support from $0.9606 and daily Quasimodo resistance-turned support from $0.9573 is perhaps on the table. As a result, shorter-term flow, given the lack of interest from buyers at $0.97 on the H1 timeframe, discovering terrain south of the psychological figure is a possibility, pursuing at least H1 Quasimodo support from $0.9655.

AUD/USD:

The Australian dollar extended losses against a broadly stronger greenback on Monday, refreshing a multi-year low at $0.6275. Following Friday tunnelling through support on the daily timeframe at $0.6401 and closing at session lows, I felt this was a ‘technical wake-up call’; weekly support from $0.6351-0.6468 (Fibonacci support: 1.272% Fibonacci projection [alternate AB=CD formation]) and a 61.8% Fibonacci retracement) was already hanging by a thread, and the daily close under support, technically, represented a sturdy warning sign that additional selling was around the corner. As evident from the weekly and daily chart, we are now under weekly support and within reach of shaking hands with daily Quasimodo support coming in at $0.6263.

On top of the support breach, direction has reflected a bear trend since $0.8007 (22nd Feb high [2021]). This is joined by daily candles working beneath the 200-day simple moving average at $0.7049 since April. The daily chart’s relative strength index (RSI) also remains south of its trendline resistance, drawn from the high 64.39, and has continued to explore space beneath 50.00 since August: negative momentum.

Against the backdrop of the higher timeframes, H1 price action slipped below $0.63 and directed the technical spotlight towards Quasimodo support at $0.6264. Rupturing the aforementioned level places interest in another Quasimodo support from $0.6209, and the $0.62 psychological figure. You may recall I also highlighted the bearish pennant pattern between $0.6363 and $0.6531 in recent writing. The profit objective for the pennant pattern is located beneath $0.62 at $0.6137.

Technical Expectation:

H1 sellers appear poised to settle below $0.63, informing short-term flow that the aforesaid round number could serve as resistance and continuation selling towards H1 Quasimodo supports from $0.6264 and $0.6209 may materialise. This bearish scenario is in line with the weekly and daily timeframes. In fact, Quasimodo support on the daily scale at $0.6263 (the next downside target on that timeframe) aligns almost to-the-pip with H1 Quasimodo support from $0.6264.

USD/JPY:

Latest developments for the USD/JPY has the currency pair on the brink of challenging year-to-date tops at ¥145.90—22nd September high. For many technicians, this was an expected move; and further outperformance is anticipated, with a ¥145.90 break refreshing a 24-year high.

Trending since the early months of 2021, consisting of parabolic upside in March and April (2022), the unit is now within a stone’s throw of weekly Quasimodo resistance at ¥146.79. Note that directly above ¥146.79 resides a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). In terms of supportive structure, daily support falls in at ¥139.55, closely followed by weekly support at ¥137.23.

Further adding to trend identification, price has been trading north of the 200-day simple moving average, currently around ¥128.84, since February 2021. Additionally, the SMA has pointed higher since April 2021: a widely used trend-following technique.

Shifting attention to the H1 timeframe, heading into the early hours of European trading, a shallow retest of resistance-turned support at ¥145.32 emerged. Renewed bidding subsequently developed and, as noted above, has placed price within reach of the ¥145.90 top (22nd September) and ¥146; a break of this region would see the currency pair refresh 24-month pinnacles and perhaps begin cutting a path towards the weekly timeframe’s Quasimodo resistance from ¥146.79.

Technical Expectation:

Thanks to the current uptrend, 22nd September high at ¥145.90 is likely to be challenged on the H1, with a push possibly igniting breakout buying to take on ¥146. It is above here that may also appeal to breakout buyers, zeroing in on the weekly Quasimodo resistance level at ¥146.79.

GBP/USD:

The British pound continued its slide versus the US dollar on Monday, extending last week’s retracement following the $1.1495 peak forged on Wednesday. The healthy dollar bid—underpinned amid bets that the Fed is to continue hiking rates—alongside the technical position, projects further GBP/USD weakness.

I noted the following in regards to the weekly timeframe in Monday’s technical briefing (italics):

The weekly timeframe’s price action emphasises a bearish environment. At the forefront of the technical observations, of course, is the clear-cut bearish trend seen since topping at $1.4250 in June 2021. I also drew attention to resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 in previous writing as a critical juncture for the currency pair. Price tested the aforementioned areas last week and chalked up a shooting star candlestick formation. For candlestick supporters, this bearish pattern, alongside the surrounding technical elements mentioned above, adds to the bearish atmosphere on the weekly scale.

Meanwhile on the daily timeframe, movement tested (and respected) trendline resistance last week, taken from the high $1.2278 (note that price topped within reach of trendline resistance, extended from the high $1.3639). This focusses the spotlight back on the February 1985 low at $1.0520 (and the record low of $1.0357). The daily chart also shows the relative strength index (RSI) rejected indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends).

From the H1 chart, buyers have moderately responded to the AB=CD ‘alternative’ bullish structure at $1.1046 (the 1.272% Fibonacci projection). Overhead is $1.11 (potential psychological resistance) while south of $1.1046 calls for $1.10. In Monday’s weekly technical briefing, I also communicated that beneath this base, limited support exists until $1.09.

Technical Expectation:

In light of the lacklustre price movement yesterday, the majority of my Technical Expectation remains in place (italics):

From a medium-term perspective, bearish players remain in the driving seat and, according to chart studies, may take aim at the February 1985 low at $1.0520 (and the record low of $1.0357).

This shifts attention to the possibility of a $1.10 break on the H1 timeframe, and the likelihood of continuation selling to at least $1.09. Therefore, a retest at the underside of $1.11 may unearth a bearish scenario for short-term sellers.

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: Week Ending 14th October 2022

Charts: Trading View

(Italics: Previous Analysis)

US Dollar Index:

Remarkably, aside from May, the US dollar has pencilled in successive monthly gains in every month this year, adding 17.5%, year to date. The month of September rallied 3.2%, the largest one-month rise behind April’s eye-popping 5.0% advance. The first full week of October also wrapped up considerably off session lows, up 0.2%.

Apart from a 7-year range (forming a pennant chart pattern [considered a continuation signal], taken from 103.82 and 88.25), monthly movement has been higher since early 2008. This is reinforced by the uptrend visible on the daily timeframe, exhibiting well-defined upward action since price made contact with support from 89.69 in May 2021. The upside bias is also shown through the 50-day simple moving average (current: 109.15) crossing above the 200-day simple moving average (current: 102.85) in August 2021 (‘Golden Cross’).

In terms of price, the monthly timeframe is comfortably north of support at 109.25 and communicates scope to reach Quasimodo resistance at 119.07. Rupturing the aforementioned barrier, together with the 121.02 July high (2001), unearths the pennant profit objective at an ‘ambitious’ 134.40. A closer reading of price on the daily timeframe shows we rejected space just south of a Quasimodo resistance level at 115.09 at the end of September, drawn from 2002.

Subsequent action witnessed a test of a well-placed decision point from 109.31-110.24, which welcomed buyers on Wednesday last week. Note that the decision point is situated near the 50-day simple moving average and an acceleration trendline support, drawn from the low 95.17. In terms of the daily chart’s relative strength index (RSI), the indicator rebounded from familiar support between 40.00 and 50.00 (active since August 2021).

Interestingly, however, the monthly timeframe’s RSI is seen nearing the March 2015 high at 82.87 within overbought territory (though it must be noted that the RSI can remain overbought for prolonged periods in trending environments).

Technical Expectation:

According to current action, technical evidence supporting buyers continues to surpass the chart’s bearish features.

The combination of monthly support at 109.25, the rebound from the daily decision point at 109.31-110.24, the long-term uptrend, and daily RSI support suggests further buying could be on the table this week (and likely throughout October). As a result, continued defence of the daily decision point is anticipated, followed by an eventual break of the daily Quasimodo resistance from 115.09 that could see the index refresh 20-year tops.

EUR/USD:

The first full week of October proved gloomy for Europe’s common currency. Against the US dollar, the euro concluded the week in the ‘shape’ of a weekly ‘shooting star’ (down 0.62%). Although a shooting star should form after a meaningful advance, its profile still indicates weak demand when the surrounding context is taken into consideration.

This places a bold question mark on weekly support from $0.9606 which held firm the prior week, facilitating a rebound from 20-year lows ($0.9536). Engulfing current support unearths a weekly Quasimodo formation at $0.9241.

I noted the following in recent research in respect to the trend (italics):

Price action on the weekly timeframe has been entrenched within an unmistakable primary bear trend since pencilling in a top in early 2021 with heavy-handed pullbacks in short supply. The daily timeframe’s price movement also continues to work under its 200-day simple moving average ($1.0616).

The outlook from the daily timeframe is not much brighter. In the second half of the week, through a series of three back-to-back bearish candles, the chart observed a rotation lower ahead of trendline resistance, extended from the high $1.1495, and neighbouring Quasimodo resistance from $1.0090. To the downside, Quasimodo resistance-turned support calls for attention at $0.9573, closely shadowed by support at $0.9377.

The daily chart’s relative strength index (RSI) resistance area at 60.00-50.00, which has been in place since 28th October 2021, also received the indicator’s value last week and has pivoted lower (resistance formed between 60.00 and 50.00 is common in downtrends). Oversold territory this week?

From the H1 timeframe, $0.98 is overhead, sheltered just south of Quasimodo resistance at $0.9812. Fibonacci enthusiasts may find interest in the Fibonacci cluster positioned to the downside at $0.9714, followed by $0.97. Less immediate, currency traders will likely acknowledge prime resistance at $0.9984-0.9938, while splitting $0.97 opens the door to a Quasimodo support from $0.9655.

Technical Expectation:

Medium term, bearish hands maintain control. According to weekly and daily timeframes, the absence of ‘energetic’ support and a long-term bearish trend, sellers will likely have the upper hand going forward, targeting weekly and daily supports this week at $0.9606 and $0.9573, respectively.

Shorter term, the H1 Fibonacci cluster at $0.9714 is likely to attract attention, though given it is positioned a touch ahead of $0.97, testing the resolve of bids around the psychological level (possible stop-run) could unfold. Nevertheless, I do not see any viable support to help facilitate such a whipsaw.

Taking into account the bearish environment the EUR/USD is in, upside efforts from the aforementioned H1 supports might be short-lived. As such, here’s another two possible (bearish) short-term scenarios to be mindful of:

  1. Clearing $0.97 this week may trigger a round of breakout selling to H1 Quasimodo support at $0.9655.
  2. Alternatively, a rebound to $0.98 could play out, and a whipsaw emerge to H1 Quasimodo resistance at $0.9812 to draw bearish attention.

AUD/USD:

Despite efforts at the beginning of the week, buyers lacked the resources to maintain an upside presence. Consequently, recent trading unwrapped a fourth consecutive weekly bearish candle and placed a bold question mark on weekly support from $0.6351-0.6468 (Fibonacci support: 1.272% Fibonacci projection [alternate AB=CD formation]) and a 61.8% Fibonacci retracement), casting light on possible follow-through selling to a weekly decision point at $0.5975-0.6166.

For those who regularly read my research, you might recall the following in regard to trend direction (italics):

Siding with the recent bout of selling is the currency pair’s trend: reflecting a bear trend since $0.8007 (22nd Feb high [2021]). The monthly timeframe has also portrayed a longer-term downtrend since August 2011, indicating the rally from the pandemic low of $0.5506 (March 2020) to a high of $0.8007 (February 2021) on the weekly timeframe is viewed as a deep pullback among chartists. Downside from the 2021 February top, therefore, might be seen as a move to explore lower over the coming weeks/months.

The daily timeframe’s price action tunnelled through support at $0.6401 on Friday, reinforcing the bearish posture observed on the weekly timeframe. The break of daily support implies current weekly support is in a vulnerable location and could relinquish position this week. In the context of the daily chart, the support breach calls attention to Quasimodo support coming in at $0.6263.

The daily chart’s relative strength index (RSI), a popular momentum gauge, also remains south of its trendline resistance, drawn from the high 64.39, and has continued to explore space beneath 50.00 since August: negative momentum.

The H1 timeframe penetrated $0.64 on Friday, action that appealed to breakout sellers towards Quasimodo support from $0.6352. You may recall I also turned the headlights to the bearish pennant pattern between $0.6363 and $0.6531 in recent writing. The profit objective for the pennant pattern is located as far south as $0.6137.

Recent analysis also highlighted the following possible scenarios (italics):

First, selling continues and H1 manoeuvres under $0.64, opening the door for breakout sellers to take aim at H1 Quasimodo support from $0.6352. Alternatively, a rebound from $0.64 unfolds and shakes hands with H1 prime resistance at $0.6446-0.6440, an area perhaps welcomed by short-term sellers.

As evident from the H1 chart, the former took command and Friday ended the session on the doorstep of Quasimodo support mentioned above at $0.6352.

Technical Expectation:

Technically speaking, a lack of bullish evidence exists on the bigger picture. Technical elements, therefore, suggest further selling could be seen.

On the H1 timeframe, this seats Quasimodo support at $0.6352 in a dismal position in early trading this week and a break directs flow towards $0.63. Although price movement is unlikely to reach this far north, prime resistance at $0.6446-0.6440 remains a noteworthy zone if tested; sellers may defend this base to ‘fade’ buy-stop momentum on the back of breaking above $0.64.

USD/JPY:

Impressively, the USD/JPY has climbed for eight consecutive weeks. August added 4.3% and September almost matched it, rallying 4.2%. The currency pair has been trending higher since early 2021. This is further strengthened by the monthly timeframe’s trend, higher since bottoming in late 2011.

Supporting trend direction, price has been trading north of the 200-day simple moving average since February 2021. Additionally, the SMA has pointed higher since April 2021: another widely used trend-following technique.

I noted the following on the weekly and daily timeframes in recent analysis (italics):

The weekly timeframe’s price action, however, continues to cement position north of support at ¥137.23, inching towards forging a fresh 24-year high with scope to climb to weekly Quasimodo resistance at ¥146.79 (in line with the current bull trend). Note that directly above the aforementioned resistance resides a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). In terms of supportive structure, daily support falls in at ¥139.55, closely followed by weekly support at ¥137.23.

The daily timeframe’s relative strength index (RSI) ventured outside of its overbought territory (70.00) and is establishing what I see as early bearish divergence (negative divergence). This informs market participants that upside momentum is slowing and that a spike into the current weekly Quasimodo resistance could trigger a bearish scenario. I also want to add that should the RSI fail to probe above the previous high (78.94), we may be gifted with a bearish failure swing and see the indicator tackle the 50.00 centreline.

Realised from the H1 timeframe, price action made its way above ¥145 on Friday (and a Quasimodo resistance at ¥145.08) to touch gloves with Quasimodo resistance at ¥145.40. Above points to the ¥145.90 top (22nd September); a break of this region this week would see the currency pair refresh 24-month pinnacles and perhaps begin cutting a path towards the weekly timeframe’s Quasimodo resistance from ¥146.79.

Technical Expectation:

Despite the slowdown in upside momentum—clear from both weekly and daily price action as well as the RSI negative divergence—weekly Quasimodo resistance at ¥146.79 is a level that’s within touching distance, thanks to the current uptrend.

In light of higher timeframe structure, H1 Quasimodo resistance from ¥145.40 is questionable structure. Any downside move from here is likely to find willing bids at the H1 Quasimodo resistance-turned support from ¥145.08. In fact, this level, combined with ¥145, could offer buyers a dip-buying platform if tested. Alternatively, running through ¥145.40—potential breakout opportunity, according to chart structure—signals 22nd September high at ¥145.90 is likely to be challenged.

GBP/USD:

Sterling finished the week lower versus the US dollar, following the prior week’s spirited recovery from record lows of $1.0357 in the final full week of September.

The weekly timeframe’s price action emphasises a bearish environment. At the forefront of the technical observations, of course, is the clear-cut bearish trend seen since topping at $1.4250 in June 2021. Furthermore, the monthly timeframe demonstrates that the overall long-term downtrend has been soft since late 2007 tops at $2.1161. I also drew attention to resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 in previous writing as a critical juncture for the currency pair.

Price tested the aforementioned areas last week and chalked up a shooting star candlestick formation. For candlestick supporters, this bearish pattern, alongside the surrounding technical elements mentioned above, adds to the bearish atmosphere on the weekly scale. Will follow-through selling materialise and retest $1.0357?

Meanwhile on the daily timeframe, movement tested (and respected) trendline resistance last week, taken from the high $1.2278 (note that price topped within reach of trendline resistance, extended from the high $1.3639). What followed from the respected trendline resistance was three consecutive daily bearish candles that firmly focussed the spotlight back on the February 1985 low at $1.0520 (and the record low of $1.0357).

The daily chart also shows the relative strength index (RSI) rejected indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends). Oversold territory this week?

I communicated the following in Friday’s technical briefing for the ‘Technical Expectation’ (italics):

The weekly decision point at $1.1751-1.1413 (merging with daily trendline resistance) and the $1.1410 resistance on the weekly chart, in addition to daily RSI resistance between 60.00 and 50.00 places a (technical) bearish light over this currency pair.

For that reason, any upside attempts from the H1 AB=CD bullish base ($1.1117) are likely to be fleeting, and could motivate bearish positions from the H1 Fibonacci retracements at $1.1264 and $1.1352 (targets).

As you can see from the H1 chart, the unit’s reaction from $1.1117 was indeed short-lived (failing to reach either $1.1264 or $1.1352) and exposed Quasimodo support at $1.1070 (mounted just ahead of a 1.272% Fibonacci projection at $1.1046 [alternate AB=CD pattern]). If we continue on this bearish trajectory, short-term flow is likely to zero in on $1.10. And seeing as there’s limited support beyond the psychological base until $1.09, a stop-run is unlikely. Therefore, a test of $1.10 could prove fruitless for bids and unlock the trapdoor for breakout selling.

Technical Expectation:

From a medium-term perspective, bearish players remain in the driving seat and, according to chart studies, may take aim at the February 1985 low at $1.0520 (and the record low of $1.0357). This shifts attention to the possibility of a $1.10 break this week on the H1 timeframe, and the likelihood of continuation selling to at least $1.09. So, taking on board the above analysis, the reaction from H1 Quasimodo support at $1.1070 is unlikely to be anything ‘to write home about’ and may struggle to find acceptance above $1.11.

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.

Technical View for 7th October: Non-Farm Payrolls Looms

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Bolstered by rising US Treasury yields, the US dollar wrapped up another day in positive territory, extending Wednesday’s 1.4 per cent recovery (according to the US Dollar Index). Consequently, Europe’s shared currency concluded Thursday in negative territory against the buck, as well as the Japanese yen (safe-haven currencies embraced a healthy bid).

From a technical perspective, daily and weekly timeframes emphasise a clear-cut downtrend—those who follow Dow Theory will likely label this as a primary bear trend (long term). The weekly timeframe’s current candle also demonstrates a well-defined upper wick, signifying strong selling pressure and placing a bold question mark on weekly support from $0.9606—held firm last week as price rebounded from 20-year lows ($0.9536). Engulfing current support unearths a Quasimodo formation at $0.9241.

The daily timeframe’s price movement continues to work under its 200-day simple moving average ($1.0625) and in recent days rotated south of trendline resistance, extended from the high $1.1495, and neighbouring Quasimodo resistance from $1.0090. To the downside, Quasimodo resistance-turned support calls for attention at $0.9573, closely shadowed by support at $0.9377.

Shorter term, the currency pair is on the doorstep of $0.98 on the H1 chart, threatening a break towards a H1 Fibonacci cluster, made up of between $0.9762 and $0.9779 (100% projection is not a Fibonacci ratio). The technically interesting thing about this Fibonacci cluster, aside from the number of ratios it houses, is its location: south of a psychological level which implies a stop-run could unfold.

Technical Expectation:

While the longer-term trend is decisively southbound, a whipsaw through $0.98 to test bid strength at the H1 Fibonacci cluster between $0.9762 and $0.9779 could be seen. How much of a bullish response the market sees from the aforementioned area of support is difficult to estimate for obvious (technical) reasons (trend), though a short-term reaction that reclaims $0.98 is not out of the question.

AUD/USD:

Against a broadly stronger US dollar, things turned sour for the Australian dollar on Thursday, in line with the current downtrend (lower since February 2021). Weekly support at $0.6351-0.6468 (Fibonacci support) and daily support at $0.6401 is currently under attack and communicating a vulnerable position. Higher timeframe resistance to be mindful of resides on the weekly timeframe at $0.6673 and on the daily scale from $0.6678.

According to the H1 timeframe, you will note buyers and sellers are battling for position around the $0.64 psychological figure. Prime resistance coming in at $0.6446-0.6440 is overhead and well positioned to receive sellers should short-term buyers continue to defend $0.64 (beneath here shines light on Quasimodo support at $0.6352).

Also of technical relevance, of course, is the bearish pennant pattern between $0.6363 and $0.6531. It had its lower side breached heading into US trading yesterday, action suggesting follow-through selling could be on the table. The profit objective for the pennant pattern is located as far south as $0.6137.

Technical Expectation:

A technically bearish vibe is evident in this market. Weekly and daily support areas are on the verge of ceding ground, together with the H1 timeframe tunnelling through the lower edge of its pennant pattern.

Therefore, traders will likely be monitoring the two following scenarios. First, selling continues and H1 manoeuvres under $0.64, opening the door for breakout sellers to take aim at H1 Quasimodo support from $0.6352. Alternatively, a rebound from $0.64 unfolds and shakes hands with H1 prime resistance at $0.6446-0.6440, an area perhaps welcomed by short-term sellers.

USD/JPY:

Although largely confined within a near-two-week trading band since 26th September between ¥145 and ¥144 on the H1 scale, price is seen testing the upper limit of this range, as we write. Outside of this area, Quasimodo support and resistance levels warrant attention at ¥143.67 and ¥145.40, respectively, with a 100% projection residing at ¥145.69 (an AB=CD bearish pattern).

The technical landscape on the bigger picture—the weekly and daily timeframes—remains unmoved. Therefore, the following text highlights where I left the charts heading into Thursday’s sessions (italics):

The weekly timeframe’s price action continues to cement position north of support at ¥137.23, inching towards forging a fresh 24-year high with scope to climb to weekly Quasimodo resistance at ¥146.79 (in line with the current primary bull trend). Note that directly above the aforementioned resistance resides a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). In terms of supportive structure, daily support falls in at ¥139.55, closely followed by weekly support at ¥137.23.

Interestingly, the daily timeframe’s relative strength index (RSI) ventured outside of its overbought territory (70.00) and is establishing what I see as early bearish divergence (negative divergence). This informs market participants that upside momentum is slowing and that a spike into weekly Quasimodo resistance could trigger a bearish scenario.

Technical Expectation:

Weekly Quasimodo resistance at ¥146.79 is a level that traders are likely to have on their watchlists in light of the slowdown in momentum.

More immediate, nonetheless, between H1 Quasimodo resistance at ¥145.40 and the H1 100% projection at ¥145.69, this area delivers a possible ceiling to be aware of in the event of a ¥145 breach to the upside (buy-stops tripped north of the psychological level could induce a stop-run and, by extension, a bearish scenario from ¥145.69-145.40). However, it is important to remember the overall trend faces north, thus any bearish assault may be short-lived.

GBP/USD:

Sterling posted a dismal performance against major G10 peers on Thursday, with GBP/USD extending Wednesday’s 1.3 per cent decline. Solid USD performance, rising US Treasury yields, upbeat Fed commentary, alongside the UK government tax U-turn and the recent Fitch downgrade all collectively weighed on the pound.

The technical positioning of the GBP/USD—longer term—reveals a bearish trend. The currency pair has been lower since February 2021 and recently touched gloves with the lower side of a resistance at $1.1410 and a neighbouring decision point at $1.1751-1.1413, which houses a daily trendline resistance, extended from the high $1.3639. The daily chart also shows the relative strength index (RSI) rejecting indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends).

Against the backdrop of the higher timeframes, the H1 timeframe has seen price action rebound from a 100% projection at $1.1117 (an AB=CD bullish pattern) and a 38.2% Fibonacci retracement from $1.1132. Those familiar with AB=CD patterns, the 38.2% and 61.8% Fibonacci retracements (at $1.1264 and $1.1352, respectively), are frequently employed as upside targets after a test of an AB=CD bullish base. As you can see, should we voyage beyond the noted Fibonacci levels, resistance is seen at $1.1463, whereas beneath the current AB=CD will likely see price call on $1.10.

Technical Expectation:

The weekly decision point at $1.1751-1.1413 (merging with daily trendline resistance) and the $1.1410 resistance on the weekly chart, in addition to daily RSI resistance between 60.00 and 50.00 places a (technical) bearish light over this currency pair.

For that reason, any upside attempts from the H1 AB=CD bullish base ($1.1117) are likely to be fleeting, and could motivate bearish positions from the H1 Fibonacci retracements at $1.1264 and $1.1352 noted above.

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.

Technical View for 5th October

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

The US dollar extended its decline on Tuesday, largely coinciding with the correction seen in US Treasury yields (albeit cooling somewhat in recent trading). Dollar softness, of course, aided EUR/USD’s recovery gains from 20-year troughs established last week ($0.9536). In terms of US risk events, US job openings shrank to 10.1 million in August, according to the US Bureau of Labour Statistics, which weighed on the US Dollar Index (trading 1.2 per cent in the red, as of writing). Markets, however, still expect the US Federal Reserve to push forward with a 75 basis-point hike in November (66 per cent probability), according to the CME Group’s FedWatch tool.

Technically, the daily timeframe’s relative strength index (RSI) voyaged above its 50.00 centreline (a move demonstrating positive momentum [average gains exceeding average losses]). Indicator resistance is seen overhead at 63.66. Price movement, following a sharp recovery from daily Quasimodo resistance-turned support at $0.9573, also exhibits scope to reach for Quasimodo resistance on the daily chart at $1.0090 and neighbouring trendline resistance, extended from the high $1.1495. Alongside daily flow, price action on the weekly timeframe reveals space to rally (or pullback) as far north as resistance at $1.0298.

Concerning trend direction, nonetheless, the bigger picture continues to reflect a bearish tone for EUR/USD. Shaped by way of a series of lower lows and lower highs, a primary bear trend has graced the chart since early 2021. You will also note that the monthly timeframe shows the currency pair has been bearish since mid-2008.

A little closer to home, shorter-term flow on the H1 chart is now within reach of parity ($1.00) after muscularly forcing above $0.99 on Tuesday. Directly above parity resides H1 prime resistance from $1.0048 and $1.0008. Note that this area is joined by H4 Quasimodo resistance at $1.0037, plotted a touch under H4 prime resistance at $1.0099-1.0070.

Technical Expectation:

Daily Quasimodo resistance at $1.0090, together with daily trendline resistance, are likely to be monitored.

Lower on the curve, however, prior to $1.0090, parity is on the table as probable resistance. $1.00, H1 prime resistance drawn from $1.0048-1.0008, and H4 Quasimodo resistance at $1.0037 represent obvious technical headwinds in this market.

AUD/USD:

Tuesday witnessed the Reserve Bank of Australia (RBA) increase the cash rate target by 25 basis points to 2.6 per cent—25 basis points short of market consensus. This momentarily directed AUD/USD aggressively south, touching a low of $0.6451. Yesterday’s risk-on environment, in addition to lower-than-anticipated US job openings data, weighed on the US dollar and ultimately provided some support for the currency pair.

I noted the following in regards to the weekly and daily timeframes in recent analysis (italics):

Working with a support area on the weekly timeframe—made up of a 1.272% Fibonacci projection from $0.6351 and a 61.8% Fibonacci retracement at $0.6468—the AUD/USD staged an impressive rebound on Monday and trimmed a portion of last month’s 6.5 per cent decline; resistance warrants consideration at $0.6673.

Aligning with weekly support is a daily support barrier at $0.6401, assisted by the (daily) relative strength index (RSI) exiting oversold territory (eyeing trendline resistance, drawn from the high 64.39). Daily resistance is seen at $0.6678 (nearby weekly resistance at $0.6673), whereas a bearish offensive throws light on daily Quasimodo support from $0.6263.

In similar fashion to Monday’s analysis, we can see H4 price action continues to nibble at the lower side of Quasimodo support-turned resistance at $0.6528, which shares chart space with an AB=CD bearish pattern (100% projection at $0.6562) alongside a number of Fibonacci ratios between $0.6575 and $0.6554 (note that the 50.0% retracement is not a Fibonacci value). Adding to current chart studies, I also see an early bearish pennant pattern emerging between $0.6363 and $0.6531.

Out of the H1 timeframe, we can see price recently snapped above $0.65 and touched gloves with prime resistance at $0.6553-0.6537. Further downside throws light on $0.64, a psychological level that held firm as support late in September.

Technical Expectation:

Weekly and daily timeframes, although the currency pair is entrenched within a clear-cut downtrend, are still rebounding from support.

The H4 AB=CD bearish formation at $0.6562 was an initial upside target, yet the H1 prime resistance offered a ceiling at $0.6553-0.6537. This, given H1 price remains under $0.65, could lead to a test of $0.64 in the short term. However, should buyers regain consciousness, a test of $0.6562 could still be in the offing in light of the bigger picture’s direction (south).

USD/JPY:

Eking out a minus 0.2 per cent decline, it was another monotonous day of trading for the USD/JPY on Tuesday.

As a result, weekly, daily and H4 timeframes remain unchanged in regard to their technical position.

The weekly timeframe’s price action continues to cement position north of support at ¥137.23, inching towards forging a fresh 24-year high with scope to climb to weekly Quasimodo resistance at ¥146.79 (in line with the current primary bull trend). Note that directly above the aforementioned resistance resides a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). In terms of supportive structure, daily support falls in at ¥139.55, closely followed by weekly support at ¥137.23.

Interestingly, the daily timeframe’s relative strength index (RSI) ventured outside of its overbought territory (70.00) and is establishing what I see as early bearish divergence (negative divergence). This informs market participants that upside momentum is slowing and that a test of weekly Quasimodo resistance could trigger a bearish scenario.

As evident from the H4 timeframe, resistance is featured in the form of a 1.618% Fibonacci projection at ¥145.64, and support demands attention from ¥141.72.

Price action based on the H1 timeframe saw the currency pair dip to ¥144 and, for now at least, hold steady. Absence of support on the higher timeframes, attention is likely drawn to H1 prime support coming in from ¥143.20-143.39 which is stationed above ¥143.

Technical Expectation:

Weekly Quasimodo resistance at ¥146.79 is a level that traders are likely to have on their watchlists in light of the slowdown in momentum.

However, before reaching this far north, a drop under ¥144 on the H1 to test H1 prime support at ¥143.20-143.39 could be on the table to draw in fresh buyers. This is due to the lack of obvious support seen between current price and the aforementioned prime support and, of course, the liquidity below ¥144.

GBP/USD:

Sterling concluded Tuesday higher for a sixth successive session, adding 1.0 per cent versus its US counterpart. Following the one-sided recovery from the record low established on 26th September at $1.0357, GBP/USD has rallied 10.0 per cent amid the UK government’s tax U-turn and dollar softness.

Through the lens of a technical trader, price action on the weekly timeframe is shaking hands with resistance at $1.1410 and a neighbouring decision point at $1.1751-1.1413, which houses a daily trendline resistance, extended from the high $1.3639. The daily chart also shows the relative strength index (RSI) testing the mettle of resistance forged from 60.00 and 50.00 (a common sight in downtrends).

Longer-term trend direction also supports current price/indicator resistance, pencilling in a series of lower lows and lower highs since early 2021, and daily price has remained under its 200-day simple moving average ($1.2570) since August 2021.

The H4 timeframe, as you can see, is testing resistance marked at $1.1463, with a break likely calling for continuation buying towards resistance at $1.1760. The H1 timeframe, nevertheless, is at an interesting location: at the underside of $1.15 and prime resistance from $1.1532-1.1512, with downside space drawing attention to a decision point at $1.1350-1.1389 and an ascending support, taken from the low $1.0770.

Technical Expectation:

The weekly decision point at $1.1751-1.1413 (merging with daily trendline resistance), $1.1410 resistance on the weekly chart and daily RSI resistance between 60.00 and 50.00 places a favourable (technical) bearish light on a whipsaw materialising above $1.15 into H1 prime resistance at $1.1532-1.1512.

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.

Technical View for 4th October: Pound Higher Though Faces Obvious Weekly Resistance at $1.1751-1.1413

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Europe’s common currency welcomed a modest bid against a softer US dollar on Monday. Following the open of US equity cash markets, US ISM Manufacturing recorded a lower-than-expected print (50.9 vs. consensus: 52.5) and consequently weighed on dollar demand, sending the US Dollar Index (DXY) to a low of 111.47.

The technical landscape, in particular, the weekly timeframe, continues to reflect a bearish tone for EUR/USD. Shaped by way of a series of lower lows and lower highs, a primary bear trend has graced the chart since early 2021. You will also note that the monthly timeframe shows the currency pair has been bearish since mid-2008.

Although price is attempting to rebound from weekly support at $0.6906, the trend is likely to weigh on upside efforts. A similar view is visible on the daily chart after recovering from a Quasimodo resistance-turned support from $0.9573. Overhead, daily Quasimodo support-turned resistance calls for attention at $0.9906, a base complemented by trendline resistance, taken from the high $1.1495.

Across the page, buyers and sellers are squaring off at the underside of H4 Fibonacci resistance at around $0.9854: a 61.8% Fibonacci retracement (the 50.0% retracement is not a Fibonacci ratio and neither is the 100% projection [this is generally used to denote an AB=CD formation]).

Given the lack of selling, rupturing the noted resistances would shine light on a H4 decision point from $0.9999-0.9955, closely sheltered by a Quasimodo resistance at $1.0037. Out of the H1 timeframe, however, an early range is seen forming between Quasimodo resistance at $0.9844 and support from $0.9748. Upstream, $0.99 is in view, housed under the H4 timeframe’s decision point at $0.9999-0.9955.

Technical Expectation:

Medium term, buyers appear to have the upper hand: scope to navigate north on the weekly and daily charts until the daily Quasimodo support-turned resistance at $0.9906. This suggests a break of H1 Quasimodo resistance at $0.9844 and the 61.8% H4 Fibonacci retracement ($0.9854) to target at least $0.99, which merges with the current daily resistance level ($0.9906).

AUD/USD:

Working with a support area on the weekly timeframe—made up of a 1.272% Fibonacci projection from $0.6351 and a 61.8% Fibonacci retracement at $0.6468—the AUD/USD staged an impressive rebound on Monday and trimmed a portion of last month’s 6.5 per cent decline. Resistance warrants consideration at $0.6673.

Aligning with weekly support is a daily support barrier at $0.6401, aided by the (daily) relative strength index (RSI) exiting oversold territory (eyeing trendline resistance, drawn from the high 64.39). Daily resistance is seen at $0.6678 (nearby weekly resistance at $0.6673), whereas a bearish offensive throws light on daily Quasimodo support from $0.6263.

From the H4 timeframe, Quasimodo support-turned resistance at $0.6528 is a clear base of interest, sharing chart area closely with an AB=CD bearish pattern (100% projection at $0.6562) alongside a number of Fibonacci ratios between $0.6575 and $0.6554 (note that the 50.0% retracement is not a Fibonacci value). To the downside, support falls in at $0.6352: Quasimodo formation. In terms of the H1 chart, price recently reclaimed position north of $0.65 and is close to connecting with $0.6519. Above, $0.66 is an upside target, while a rejection under $0.65 directs price back to $0.64.

Technical Expectation:

Weekly and daily timeframes, although the currency pair is entrenched within a clear-cut downtrend, are rebounding from support. This may be enough to draw bullish curiosity beyond $0.65 and H4 Quasimodo support-turned resistance at $0.6528 to test the H4 AB=CD bearish formation at $0.6562. In light of the bigger picture’s direction (south), the H4 AB=CD level (and neighbouring H4 Fibonacci ratios) could see sellers respond from this area.

USD/JPY:

It was a somewhat quiet session for the USD/JPY on Monday, settling mostly unmoved off session pinnacles at ¥145.33.

The weekly timeframe’s price action continues to cement position north of support at ¥137.23, inching towards forging a fresh 24-year high with scope to climb to weekly Quasimodo resistance at ¥146.79 (in line with the current primary bull trend). Note that directly above the aforementioned resistance resides a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). In terms of supportive structure, daily support falls in at ¥139.55, closely followed by weekly support at ¥137.23.

Interestingly, the daily timeframe’s relative strength index (RSI) ventured outside of its overbought territory (70.00) and is establishing what I see as early bearish divergence (negative divergence). This informs market participants that upside momentum is slowing and that a test of weekly Quasimodo resistance could trigger a bearish scenario.

As evident from the H4 timeframe, resistance is featured in the form of a 1.618% Fibonacci projection at ¥145.64, and support demands attention from ¥141.72. A closer reading of price action on the H1 timeframe reveals the unit failed to command a presence above ¥145, consequently dropping to a low ahead of ¥144 and leaving Quasimodo resistance at ¥145.39 unchallenged. South of ¥144 sheds light on prime support coming in from ¥143.20-143.39 which is stationed above ¥143.

Technical Expectation:

Weekly Quasimodo resistance at ¥146.79 is a level that traders are likely to have on their watchlists in light of the slowdown in momentum. However, before reaching this far north, a drop under ¥144 on the H1 to test H1 prime support at ¥143.20-143.39 could be on the table to draw in fresh buyers. This is due to the lack of obvious support seen between current price and the aforementioned prime support.

GBP/USD:

Dollar softness amid weaker-than-expected ISM Manufacturing data, as well as the UK chancellor Kwasi Kwarteng confirming that the UK government are scrapping plans to cut the highest rate of income tax, underpinned sterling against its US counterpart on Monday.

GBP/USD, adding 1.5 per cent and recording a fifth consecutive daily gain, elevated the currency pair to within a stone’s throw of weekly resistance at $1.1410 and a neighbouring weekly decision point at $1.1751-1.1413. Combined, these technical levels are an important juncture, which happens to join hands with a daily trendline resistance, extended from the high $1.3639. The daily timeframe also shows the relative strength index (RSI) on the doorstep of 50.00 and a resistance area forged from 60.00 and 50.00 (common in downtrends).

Longer-term trend direction has also faced southbound since February 2021, and daily price has remained under its 200-day simple moving average ($1.2580) since August 2021.

The H4 timeframe offers little at the moment, aside from resistance marked at $1.1463. Lower on the curve, shorter-term flow on the H1 timeframe has price kissing the lower side of $1.13 after spiking to a high of $1.1334 (and shaping a shooting star candlestick pattern [bearish signal]). Below, I see support at $1.12 while above $1.13 is $1.14.

Technical Expectation:

The pandemic low of $1.1410 remains in the line of fire for sellers on the bigger picture, aided by the weekly decision point at $1.1751-1.1413 and daily RSI resistance between 60.00 and 50.00. In view of this, a break of $1.13 could form, taking price to $1.14 at which point sellers may begin to show interest having noted the connection it has with weekly resistances (see above).

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.

Technical View for 1st September: GBP/USD Eyes Space South of $1.16; EUR/USD Maintains Support off Parity

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

With the month of August in the rear-view mirror, down 1.6 per cent, the EUR/USD currency pair trades lower 11.60 per cent, year to date. Wednesday, however, witnessed price rally 0.5 per cent, strengthening its position north of parity ($1.00).

The H1 timeframe has price movement closing in on the underside of $1.01, a psychological base complemented by Quasimodo support-turned resistance at $1.0108 and a 100% Fibonacci projection at $1.0114—a bearish AB=CD pattern that also brings the 1.618% Fibonacci extension to the table at $1.0108.

Any downside attempts on the H1 chart, of course, has $1.00 arranged as a reasonable support target. Also joining the aforementioned H1 resistances is prime resistance on the H4 chart at $1.0125-1.0105, which happens to accommodate a 100% Fibonacci projection from $1.0105.

Although H4 and H1 resistances echo strong confluence, the bigger picture demonstrates scope to navigate higher levels. Following a rebound from weekly support in the form of a 1.272% Fibonacci projection at $0.9925 (alternate AB=CD bullish formation) and daily support coming in at $0.9919 (aided by a bounce seen from the relative strength index [RSI] trendline resistance-turned support ahead of oversold space), weekly resistance serves as the next upside target at $1.0298.

However, while room to advance is indeed present on the higher timeframes, price action on the weekly timeframe has been entrenched within an unmistakable primary bear trend since pencilling in a top in early 2021 with heavy-handed pullbacks in short supply.

Technical Expectation:

H4 prime resistance from $1.0125-1.0105, together with H1 resistance between $1.0114 and $1.01, offers a robust technical ceiling that’s bolstered by the currency pair’s downtrend. Sellers from the noted resistances, nonetheless, are likely to adopt a watchful stance and pursue additional confirmation prior to pulling the trigger, due to weekly and daily price rebounding from respective supports.

AUD/USD:

It was largely another risk-off session on Wednesday, despite major US equity indexes staging a modest comeback. The Australian dollar finished the day off best levels against the US dollar, which, technically speaking (as I noted in previous reports) should not raise many eyebrows.

Due to the somewhat lacklustre movement in recent trading, technical structure remains unchanged on the weekly and daily timeframes, therefore the following should serve as a reminder of where I currently stand (italics):

The currency pair has reflected a primary bear trend since forging a top from $0.8007 (22nd Feb high [2021]), action currently suggesting a drop back into weekly support between $0.6632 and $0.6763, constructed from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. You will also note that the daily price is respecting the lower side of resistance at $0.6901 and on the verge of venturing south of a head and shoulders top pattern neckline, drawn from the low $0.6869.

Further adding to this bearish vibe is the daily chart’s relative strength index (RSI) rejecting the underside of the 50.00 centreline. Consequently, daily trendline resistance-turned support, drawn from the high $0.7661, could soon welcome price action, followed closely by support at $0.6678.

Prime support on the H4 scale at $0.6774-0.6815 (houses a 100% Fibonacci projection at $0.6789 and a deep 78.6% Fibonacci retracement at 0.6780, as well as being arranged just north of H4 Quasimodo support at $0.6761) is seen a touch south of current price, holding the $0.68 psychological figure from the H1 timeframe. Yet, in order to reach the said supports, H1 Quasimodo resistance-turned support at $0.6843—tested heading into US hours on Wednesday following a decisive rejection of $0.69 in Asia—must be dethroned.

Technical Expectation:

Weekly, daily, and H4 timeframes, hint that bears are likely to continue to control sentiment for the time being. This, as communicated in previous research, opens the door for a break of H1 Quasimodo resistance-turned support at $0.6843, with short-term selling perhaps unfolding towards $0.68 and H4 prime support at $0.6774-0.6815.

USD/JPY:

It was another muted session on Wednesday for USD/JPY. This leaves price action in much the same spot as it was heading into Wednesday’s session. As a result, much of the following analysis will echo similar thoughts as recent writing (italics).

While the weekly timeframe’s price action is busy cementing position north of support at ¥137.23—inching towards forging a fresh multi-year pinnacle with scope to climb as far north as weekly resistance from ¥146.79—daily resistance at ¥139.55 could ‘throw a spanner in the works’ for buyers. Should we overthrow the aforementioned resistance, this sends a robust signal that buyers are still in the driving seat (in line with the current primary bull trend), and will likely want to explore higher territory.

Interestingly, the daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August. Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

As evident from the H4 timeframe, nearby resistance is featured in the form of a 1.618% Fibonacci projection at ¥140.15, and support demands attention from ¥137.45, closely followed by support at ¥135.58. Realised from the H1 timeframe, recent flow established a bullish flag between ¥139 and ¥138.26, a pattern that experienced a breach to the upside on Tuesday. This indicates a break of ¥139 and at least a potential run at ¥140, with the bullish flag’s profit objective set at ¥141.63 (blue arrows).

Technical Expectation:

All four timeframes suggest a break of ¥139, though traders are urged to pencil in the possibility of turbulence from daily resistance at ¥139.55. Should we clear the noted level, ¥140 represents a reasonable upside objective in the near term.

GBP/USD:

Downside risks for sterling remain elevated and the technical framework also subscribes to a bearish position.

Longer-term technical price action shines the spotlight on the pandemic low of $1.1410, following a retest of weekly resistance at $1.2263. Pair this with the primary bear trend since early 2021, I see little technical evidence suggesting a bullish revival just yet.

A similar vibe is seen from the daily timeframe; limited support is visible until $1.1410 and the unit is seen reacting to the underside of trendline resistance, extended from the high $1.3639. According to the daily chart’s relative strength index (RSI), the indicator stepped into oversold territory, a move shifting attention to support at 15.91.

The H4 timeframe offers straightforward price structure; after a pip-perfect rejection of resistance at $1.1760, the pair appears poised to continue tunnelling southbound until support at $1.1531. On the H1 timeframe, the unit is kissing the upper edge of $1.16, threatening to probe space beneath the psychological value and make its way to H4 support pencilled in above at $1.1531.

Technical Expectation:

This is a market for sellers, according to the current technical (and fundamental) picture.

The pandemic low of $1.1410 remains in the line of fire for sellers on the bigger picture, giving bears some space to work with which implies any rallies are likely to be viewed as selling opportunities.

Shorter term, a break under $1.16 would likely be recognised as a bearish breakout opportunity, in line with the prevailing downtrend, targeting at least H4 support from $1.1531.

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.

Technical View for 31st August

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

It was another relatively optimistic day for EUR/USD on Tuesday, extending Monday’s mild recovery gains by 0.4 per cent. Surprisingly, markets witnessed an advance in US consumer confidence to 103.2, effortlessly surpassing July’s downwardly revised 95.3 reading. Job openings in the US also recorded a slight uptick, topping 11.2 million in July. This appears to be an improvement in the US economy, yet major US equity indexes sold off. Meanwhile, the US Dollar Index is ‘holding its own’, consequently weighing on euro demand.

Technically, as noted in previous writing, price action on the weekly timeframe has been entrenched within an unmistakable primary bear trend since pencilling in a top in early 2021 with heavy-handed pullbacks in short supply. Resistance falls in at $1.0298 on the weekly scale, with resistance on the daily chart formed by way of a trendline resistance, taken from the high $1.1495.

The currency pair, however, has managed to regain some poise after shaking hands with weekly support in the form of a 1.272% Fibonacci projection at $0.9925 last week (alternate AB=CD bullish formation) and daily support coming in at $0.9919 (aided by a bounce seen from the relative strength index [RSI] trendline resistance-turned support ahead of oversold space).

Yet, whether the aforementioned supports are sufficient to withstand bearish forces in the weeks to come is difficult to estimate in light of the current trend.

We remain pretty much unchanged on the H4 scale, centred around prime resistance at $1.0125-1.0105 and a bearish pennant (forged between $1.0122 and $1.0195) pattern’s profit objective at $0.9928.

Closer analysis of price action shows the currency pair forging support from parity ($1.00), though resistance at $1.0046 is putting up a fight. North of the aforesaid level, $1.01 (and Quasimodo support-turned resistance at $1.0108) calls for attention, while tumbling under $1.00 propels $0.99 back into the frame.

Technical Expectation:

The lack of demand from weekly and daily supports at $0.9925 and $0.9919, along with the pair’s downtrend, portends a break of the noted supports and could shift attention to daily Quasimodo support at $0.9668. This implies a break of $1.00 on the H1 to the downside, therefore a bearish scenario could emerge from the following resistances: $1.0046 on the H1, $1.01 also on the H1, and H4 prime resistance coming in from $1.0125-1.0105.

AUD/USD:

Upbeat US economic data, a reasonably robust USD, and downbeat risk sentiment pressured the Australian dollar lower against its US counterpart Tuesday. Technically, AUD/USD selling should not surprise.

The currency pair has reflected a primary bear trend since forging a top from $0.8007 (22nd Feb high [2021]), action currently suggesting a drop back into weekly support between $0.6632 and $0.6763, constructed from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. You will also note that the daily timeframe is respecting the lower side of resistance at $0.6901 and on the verge of venturing south of a head and shoulders top pattern neckline, drawn from the low $0.6869.

Further adding to this bearish vibe is the daily chart’s relative strength index (RSI) rejecting the underside of the 50.00 centreline. Therefore, trendline resistance-turned support, drawn from the high $0.7661, could soon welcome price action, followed closely by support at $0.6678.

Near term, H1 is on the doorstep of Quasimodo resistance-turned support at $0.6843 and a break shines light on $0.68 which happens to be set within H4 prime support at $0.6774-0.6815 (houses a 100% Fibonacci projection at $0.6789 and a deep 78.6% Fibonacci retracement at 0.6780, as well as being arranged just north of H4 Quasimodo support at $0.6761).

Technical Expectation:

Daily flow holding resistance at $0.6901, price threatening to breach the daily head and shoulders top pattern neckline, along with an active primary bear trend, emphasises a bearish stance. This opens the door for a break of H1 Quasimodo resistance-turned support at $0.6843, with short-term selling perhaps unfolding towards $0.68 and H4 prime support at $0.6774-0.6815.

USD/JPY:

Amidst a clear phase of risk aversion, USD/JPY wrapped up Tuesday directionless, albeit refreshing a six-week pinnacle at ¥139.08.

While the weekly timeframe’s price action is busy cementing position north of support at ¥137.23—inching towards forging a fresh multi-year pinnacle with scope to climb as far north as weekly resistance from ¥146.79—daily resistance at ¥139.55 could ‘throw a spanner in the works’ for buyers.

Should we overthrow the aforementioned resistance, this sends a robust signal that buyers are still in the driving seat, in line with the current primary bull trend, and will likely want to explore higher territory.

I had the following to say regarding the daily timeframe’s relative strength index (RSI) in previous writing (italics):

Interestingly, the daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August.

Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

As evident from the H4 timeframe, nearby resistance is featured in the form of a 1.618% Fibonacci projection at ¥140.15, and support demands attention from ¥137.45, closely followed by support at ¥135.58.

Realised from the H1 timeframe, recent flow established a bullish flag between ¥139 and ¥138.26, a pattern that experienced a breach to the upside in US trading yesterday. This indicates a break of ¥139 and at least a potential run at ¥140, with the bullish flag’s profit objective set at ¥141.63 (blue arrows).

Technical Expectation:

All four timeframes suggest a break of ¥139, though traders are urged to pencil in the possibility of some turbulence from daily resistance at ¥139.55. Should we clear the noted level, ¥140 represents a reasonable upside objective in the near term.

GBP/USD:

The British pound ended another day in negative territory versus the US dollar amid fears of a long-scale recession in the UK as soaring energy costs grip the nation. Adding to this, according to a Bloomberg report, Goldman Sachs warned inflation could top 22 per cent next year.

$1.1958 offers resistance on the weekly timeframe—a recently punctured level of support—pointing to a potential test of the pandemic low of $1.1410. This, together with the primary bear trend since early 2021, places sellers in control for the time being.

Out of the daily timeframe, support at $1.1655 and $1.1683 are being tested: two 100% Fibonacci projection levels. Clearance of these barriers, technically speaking, provides an early cue that we are on our way to visit the pandemic low. The daily chart also shows that the unit has been trading beneath its 200-day simple moving average since August 2021 (currently trading around $1.2815). Additionally, the relative strength index (RSI) is on the verge of dropping in on oversold territory.

Against the backdrop of higher timeframe flow, H4 and H1 charts both greeted resistance at $1.1760 (14th July Low) and $1,1746 (a Quasimodo support-turned resistance), respectively. H4 space shows we have ample room to drill into deeper ground until hitting support around $1.1531, while the H1 chart casts light on possible support emerging from $1.16.

Technical Expectation:

From a longer-term perspective, if daily price crosses beneath the 100% Fibonacci projection levels at $1.1683 and $1.1655, this places the pandemic low of $1.1410 in the line of fire for sellers. Shorter term, room is seen to approach $1.16 on the H1 scale, therefore a retest of $1.17 to form resistance could be enough to draw bearish attention.

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: Week Ending 2nd September 2022

Charts: Trading View

(Italics: Previous Analysis)

US Dollar Index:

Month to date, the US dollar, measured by the US Dollar Index, is higher by 2.8 per cent. Quite remarkably, aside from May, the US dollar has chalked up successive monthly gains in every other month this year, adding 13.0 percent, year to date. The final full week of trading in August is now in the rear-view mirror and the Dollar Index finished 0.7 per cent in the green.

Visible from the daily timeframe, familiar resistance between 109.14 and 108.58 (made up of a 1.272% Fibonacci projection, a 1.618% Fibonacci expansion, and a Quasimodo resistance level) entered the frame last week. Given the lacklustre bearish presence from the noted zone, manoeuvring higher this week could call on additional resistance by way of a Quasimodo support-turned resistance formation at 110.69.

Nevertheless, a drop from current price levels—aided by early negative divergence from the relative strength index (RSI) on both monthly and daily charts—unearths a daily acceleration trendline support (drawn from the low 95.17) and a 50-day simple moving average, trading around 106.45.

Trend studies on the monthly and daily timeframes continue to favour buyers which portends a break of the current daily resistance, as well as prime resistance on the monthly scale from 109.77-104.96. As aired in recent weekly technical writing, aside from a 7-year range (forming a pennant chart pattern [considered a continuation signal], taken from 103.82 and 88.25), monthly movement has been higher since early 2008.

This is reinforced by the uptrend visible on the daily timeframe, exhibiting well-defined upward action since price made contact with support from 89.69 in May 2021. The upside bias is also shown through the 50-day simple moving average crossing above the 200-day simple moving average (current: 100.68) in August 2021 (‘Golden Cross’).

Technical Expectation:

According to chart studies, technical evidence supporting buyers continues to surpass the chart’s bearish features.

As a result, a break of daily resistance might be seen between 109.14 and 108.58 this week. This may trigger breakout buying, dethroning the monthly timeframe’s prime resistance at 109.77-104.96 for daily price to eventually greet Quasimodo support-turned resistance around 110.69.

EUR/USD:

Month to date, Europe’s common currency is 2.6 per cent lower against its US counterpart, fashioned by way of two consecutive weekly bearish candles. Last week concluded 0.7 per cent lower for the EUR/USD, following the prior week’s one-sided fall of more than 2.0 per cent.

The currency pair, however, did manage to regain some poise after shaking hands with weekly support in the form of a 1.272% Fibonacci projection at $0.9925 last week (alternate AB=CD bullish formation), yet whether this will be sufficient to withstand bearish forces in the weeks to come is difficult to estimate in light of the current trend.

I noted the following in my previous weekly report in respect to the trend (italics):

Price action on the weekly timeframe has been entrenched within an unmistakable primary bear trend since pencilling in a top in early 2021 with heavy-handed pullbacks in short supply.

The above, thrown together with the recent pullback touching gloves with resistance at $1.0298 on the weekly chart, sets the currency pair up for another leg lower, perhaps eventually pulling weekly flow south of $0.9925. Weekly support from $0.9606 warrants attention should $0.9925 cede ground.

Unfortunately, the outlook from the daily timeframe is not much brighter. Friday ended in the shape of what’s known as a shooting star candlestick formation after a mid-week rebound from nearby support at $0.9919 (note that in order for this bearish candle pattern to be valid, an up move must be present which is not the case here).

Although scope to establish a pullback is evident on both the weekly and daily timeframes (to at least weekly resistance at $1.0298), weekly and daily supports echo a vulnerable position, with daily Quasimodo support set to greet price movement at $0.9668 in the event of a break lower this week.

The story on the H4 timeframe remains centred around prime resistance at $1.0125-1.0105 and a bearish pennant (forged between $1.0122 and $1.0195) pattern’s profit objective at $0.9928. Shorter-term flow on the H1 chart spiked to a high just under $1.01 (and Quasimodo support-turned resistance at $1.0108) before muscularly rotating south and recapturing parity ($1.00) to the downside.

Trendline resistance-turned support, extended from the high $1.0364, was subsequently tested heading into the close. Dropping under here is likely to revive selling towards the $0.99 region in early trading this week.

Technical Expectation:

Overall, the picture for EUR/USD remains bearish, according to technical studies.

The lack of demand from weekly and daily supports at $0.9925 and $0.9919 (viewed through candle action), along with the pair’s clear downtrend, portends a break of the noted supports this week. As underlined above, a break of the aforesaid support levels shifts attention to daily Quasimodo support at $0.9668.

Short term, rupturing current H1 trendline support provides an early cue of a potential bearish scenario, tipping price in the direction of $0.99 on the H1 and $0.9928 on the H4.

AUD/USD:

Despite July’s hammer candlestick formation—frequently accepted as a bullish signal—AUD/USD is on track to conclude August on the ropes. Efforts to recover from the prior week’s 3.5 per cent one-sided decline rapidly drew to a close on Friday last week, leaving the currency pair considerably off best levels.

Consequently, as I noted in the previous weekly technical briefing, support between $0.6632 and $0.6763 is back on the radar for the weekly timeframe, constructed from a 100% Fibonacci projection, horizontal price support, and a 50% retracement.

I also noted the following with respect to the trend direction in recent writing (italics):

Siding with the recent bout of selling is the currency pair’s trend: reflecting a primary bear trend since $0.8007 (22nd Feb high [2021]). The monthly timeframe has also portrayed a longer-term downtrend since August 2011, indicating the rally from the pandemic low of $0.5506 (March 2020) to a high of $0.8007 (February 2021) on the weekly timeframe is likely viewed as a deep pullback among chartists. Downside from the 2021 February top, therefore, might be seen as a move to explore lower over the coming weeks/months.

The outlook on the daily timeframe offers an interesting technical picture, yet not one that really improves the currency pair’s position. Friday’s candle engulfed Thursday’s upside, offering traders a bearish outside reversal candle. Note that I would have preferred to see a decisive up move form before recognising such a candle pattern. Nevertheless, recent movement places a bold question mark on current support at $0.6901.

Adding to the bearish vibe, the pair remains under its 200-day simple moving average at $0.7130, alongside a brewing head and shoulders top pattern (price has yet to puncture the neckline, drawn from the low $0.6869). Assuming buyers lack fuel above $0.6901, this swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678.

Interestingly, the daily chart’s relative strength index (RSI) is testing the 50.00 centreline (resistance). Until we decisively breach this value, this timeframe (according to the indicator) reflects negative momentum.

Prime resistance on the H4 timeframe at $0.7004-0.6972, although having its upper boundary clipped on Friday, welcomed sellers and pulled price action back into the walls of H4 supply-turned demand at $0.6901-0.6862. This signals that sellers are perhaps gearing up for a push towards prime support at $0.6774-0.6815 (arranged just north of Quasimodo support at $0.6761).

Addressing the H1 timeframe, you’ll note the unit slipped under $0.69 on Friday after crossing swords with the widely watched $0.70 figure (missing a 1.272% Fibonacci projection at $0.7017 by an inch). Should bearish players continue to occupy space under $0.69 this week, Quasimodo support from $0.6862 is visible, closely followed by a Quasimodo resistance-turned support level from $0.6843. Reclaiming space above $0.69, on the other hand, could watch price zero in on the $0.6973-0.6963 prime resistance.

Technical Expectation:

Technically, price action reflects a bearish stance, both long term and also in the short term.

The modest close beneath daily support at $0.6901, the room to manoeuvre lower on the daily and weekly timeframes (to at least daily trendline support), the primary bear trend, and the H1 timeframe crossing under $0.69, technically, places H4 supply-turned demand at $0.6901-0.6862 under pressure this week.

With the above, a short-term bearish scene could emerge beneath $0.69, action that might have traders pursue at least H1 Quasimodo support at $0.6862 and H1 Quasimodo resistance-turned support at $0.6843. If a daily close forms under the head and shoulders top pattern’s neckline, of course, further selling is in the offing.

USD/JPY:

Following the prior week’s spirited advance, rallying 2.5 per cent, recent trading observed additional gains which consequently placed resistance on the weekly timeframe at ¥137.23 under attack. This followed the beginning of August adopting a dip-buying phase from the weekly timeframe’s decision point at ¥126.40-131.30, in a market that’s been trending higher since early 2021: a primary bull trend. This is further reinforced by the monthly timeframe’s trend, higher since bottoming in late 2011.

Meanwhile on the daily timeframe, following the rebound from supply-turned demand at ¥131.93-131.10 in early August (an area glued to the upper boundary of the weekly decision point), Quasimodo support-turned resistance at ¥139.55 is in the firing line this week.

I noted the following in the previous weekly technical briefing (italics):

Supporting trend direction, price has been trading north of the 200-day simple moving average since February 2021. Additionally, the SMA has pointed higher since April 2021: another widely used trend-following technique. Interestingly, the daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August.

Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

The H4 ascending support-turned resistance, taken from the low ¥134.27, remains a clear talking point at the moment, a base rejecting upside attempts last week. Below, support is seen at ¥135.58, joined closely with a 38.2% Fibonacci retracement at ¥134.94 and a 50.0% retracement value from ¥134.72. Above, a 1.272% Fibonacci projection and a deep 88.6% Fibonacci retracement at ¥138.35ish will demand attention should further buying play out this week, as suggested on the higher timeframes.

Realised from the H1 timeframe, Friday came within reach of ¥136 and trendline support, taken from the low ¥131.73, and subsequently reclaimed ¥137+ status. ¥138, therefore, delivers a reasonable upside objective, though before buyers change gears, a retest of ¥137 could be seen with a whipsaw possibly unfolding into H1 prime support coming in at ¥136.38-136.77.

Technical Expectation:

Weekly resistance from ¥137.23 appears to be hanging by a thread. Couple this with scope to advance on the daily timeframe to ¥139.55 and the primary bull trend, buyers appear to have the upper hand as the market looks to step into September.

Should price form a pullback in early trading this week, chart studies indicate a whipsaw beneath ¥137 on the H1 could be seen, and a whipsaw into H1 prime support from ¥136.38-136.77 enough to perhaps entice buying interest to target ¥138.

GBP/USD:

It was another disappointing week for sterling. Versus the US dollar, GBP/USD is 3.6 per cent lower, month to date, following last week’s 0.75 per cent slump that refreshed 2022 lows. The downside bias is unlikely to surprise technicians, particularly those who focus on trend direction and basic support and resistance.

$1.1958 exiting the fight as support in mid-August on the weekly timeframe uncovers the pandemic low of $1.1410. This, together with the primary bear trend since early 2021, places sellers in the driving seat for the time being. Adding to current trend direction on the weekly scale, the monthly timeframe shows the overall long-term downtrend has been soft since late 2007 tops at $2.1161.

From the daily timeframe, Friday’s bearish outside reversal candle (one which engulfed four previous daily candles) shines the technical spotlight on support at $1.1655 and $1.1683: two 100% Fibonacci projection levels. The daily chart also shows that the unit has been trading beneath its 200-day simple moving average since August 2021 (currently trading around $1.2832). Additionally, the relative strength index (RSI) is on the verge of dropping in on oversold territory.

Addressing both the H4 and H1 timeframes, H4 manoeuvred beneath 14th July low at $1.1760 on Friday and H1 price secured ground beneath $1.18 along with the decision point at $1.1744-1.1784, following a test of $1.19. This week has $1.17 calling to be tested on the H1 and H4 Quasimodo support at $1.1698.

Technical Expectation:

Longer term, GBP/USD remains bearish until at least the daily timeframe’s 100% Fibonacci projection levels at $1.1683 and $1.1655.

Short term, in line with the bigger picture, shows sellers likely have control until reaching at least $1.17 and H4 Quasimodo support at $1.1698. Thus, should a retest of $1.18 play out (or 14th July low at $1.1760) as resistance, sellers could be drawn to this level.

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.

Technical View for 26th August

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Currency markets, once again, echoed a subdued vibe on Thursday, with all eyes on the Jackson Hole Symposium. Global equities were largely bid, alongside procyclical currencies, such as the Australian dollar and the New Zealand dollar. Europe’s common currency concluded the session off best levels against its US counterpart, forming a clear-cut upper candle shadow on the daily timeframe.

Forming in line with the primary bear trend (seen on the weekly timeframe since 2021), medium-term technical studies show nearby weekly support in the shape of a 1.272% Fibonacci projection at $0.9925 (alternate AB=CD bullish formation), a daily support coming in from $0.9919 is in a vulnerable position.

I have also seen the daily chart’s relative strength index (RSI) level off after rebounding from indicator trendline resistance-turned-support (drawn from the high 58.91), situated just ahead of oversold territory.

Noted in previous analysis, if the weekly timeframe steps under $0.9925, limited (obvious) support is not visible until $0.9606, while the daily timeframe’s downside support target rests at $0.9668 (Quasimodo support).

Out of the H4 timeframe, price movement attempted to secure ground north of Quasimodo support-turned resistance at $0.9998, yet failed at $1.0033. The bearish pennant pattern’s profit objective drawn at $0.9928 remains key support on the H4 scale for the time being.

As evident on the H1 timeframe, sellers stepped into the fight from trendline resistance, drawn from the high at $1.0364, accompanied by a 100% Fibonacci projection at $1.0028 and a 38.2% Fibonacci retracement at $1.0016. Note that the 100% Fibonacci projection represents an AB=CD bearish pattern, strategically positioned above parity ($1.00) to facilitate a stop-run.

Technical Expectation:

Long term, things are not looking too great for the EUR/USD as weekly and daily timeframes threaten to breach support at $0.9925 and $0.9919, respectively. This—coupled with the H4 showing room to approach $0.9928 support—could have H1 flow drop back in on the $0.99 psychological figure.

AUD/USD:

Up 1.5 per cent on the week, it was a positive session for AUD/USD on Thursday as bids defend support on the daily timeframe from $0.6901.

I wrote the following in regards to the situation on the daily and weekly timeframes in previous reports (italics):

Buyers gaining ground here shines the technical spotlight on the 200-day simple moving average, currently circling $0.7132 (accompanied by a 50.0% retracement value at $0.7167 and a 78.6% Fibonacci retracement at $0.7156). Assuming buyers lack fuel above $0.6901, this swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678. Interestingly, the daily chart’s relative strength index (RSI) is testing the 50.00 centreline (resistance). Until we decisively breach this value, this timeframe (according to the indicator) reflects negative momentum.

The weekly timeframe’s support likely remains on the radar for longer-term players between $0.6632 and $0.6763, built from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. This follow’s last week’s 3.5 per cent tumble, in a market that’s been entrenched within a primary bear trend since $0.8007 (22nd Feb high [2021]).

In terms of where I stand on the H4 timeframe, prime resistance at $0.7004-0.6972 welcomed price action on Thursday which, as you can see, held into the closing bell. Rotating south from here is questionable, having noted the daily timeframe demonstrating scope to approach the 200-day simple moving average. This implies a break of $0.7004-0.6972 and possible test of the resistance area from $0.7062-0.7031.

Lower, the H1 timeframe shows price rebounding from support at $0.6961 after rejecting a 100% Fibonacci projection at $0.6987 (an AB=CD bearish pattern). The widely watched $0.70 base calls to the upside, with a break subsequently opening the door to resistance coming in at $0.7032.

Technical Expectation:

Daily flow recovering from support at $0.6901 and room to advance, as well as the H1 rebounding from support at $0.6961, places the currency pair in a favourable setting to continue climbing to potentially take aim at $0.70. This means the unit is likely to topple H4 prime resistance at $0.7004-0.6972.

USD/JPY:

USD/JPY movement adopted a modest bearish phase on Thursday after H1 price failed to dethrone ¥137. Interestingly, from a harmonic perspective, a 100% Fibonacci projection resides beneath at ¥136.04, complemented by a 1.618% Fibonacci extension at ¥135.92, the ¥136 psychological figure and a trendline support, pencilled in from the low ¥131.73.

What’s also interesting is the H4 timeframe; the unit is in the progress of reaching for support at ¥135.58, followed by a 100% Fibonacci projection from ¥135.30. Note that just below here we have a 38.2% Fibonacci retracement at ¥134.94 and a 50.0% retracement value from ¥134.72. This follows an earlier rejection from a H4 ascending support-turned resistance, taken from the low ¥134.27 (sheltered under a 1.272% Fibonacci projection and a deep 88.6% Fibonacci retracement at ¥138.34).

Analysis drawn from the weekly and daily timeframes echo a similar tone put forward in previous reports (italics):

From the weekly timeframe, resistance remains a key talking point at ¥137.23, in a market that’s emphasised a dominant primary bull trend since 2021. The weekly decision point from ¥126.40-131.30 is also a worthwhile note in the event sellers make a show on this timeframe.

Technical studies on the daily chart has price chalking up a range after an earlier defence formed from supply-turned demand at ¥131.93-131.10. Quasimodo support-turned resistance at ¥139.55 serves as the next upside target. The daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August.

Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

Technical Expectation:

Short term, ¥136 is likely to be monitored on the H1 scale, should sellers continue pushing. Given the round number’s confluence (see above), a bounce from here may take shape. However, traders are urged to pencil in the possibility of dipping lower to test H4 support from ¥135.58 and neighbouring 100% Fibonacci projection at ¥135.30, as let’s remember we’re coming from weekly resistance at ¥137.32.

Ultimately, though, ¥136 and ¥135.58 are key supports, positioned in line with the primary bull trend.

GBP/USD:

GBP/USD eked out modest gains on Thursday, albeit enough to yank H1 price from its decision point at $1.1744-1.1784 to close above $1.18. This decision point was strategically positioned beneath $1.18 to welcome a bid into sell-stop flow just beneath the psychological number (stop-run). Continued interest to the upside on the H1 scale casts light on the $1.19 figure, closely sheltered by a 100% Fibonacci projection at $1.1916 (an AB=CD bearish pattern).

H4, daily and weekly timeframes, thanks to a lack of recent movement, display limited change. Therefore, the following text is taken from previous reports as the technical structure remains valid as we head into Friday’s session (italics).

The H4 timeframe is retesting the spirit of support in the form of 14th July low at $1.1760. Above calls on Quasimodo support-turned resistance at $1.1925, together with prime resistance at $1.1978-1.1954. On the daily timeframe, GBP/USD put in a bottom just ahead of daily support between $1.1655 and $1.1683 (two 100% Fibonacci projection ratios). In terms of the daily chart’s relative strength index (RSI), we can see that the indicator has marginally bottomed ahead of oversold.

$1.1958 remains a key resistance level to be mindful of on the weekly timeframe, following last week’s dominant push lower. This is not a surprise as GBP/USD has chalked up an unmistakable primary bear trend since early 2021. And, as I wrote in recent analysis, the breach of $1.1958 reopens the risk of a return to the pandemic low of $1.1410.

Technical Expectation:

Longer term, GBP/USD remains bearish until at least the daily timeframe’s 100% Fibonacci projection levels at $1.1683 and $1.1655.

Short term, assuming H1 price maintains position north of $1.18, a pullback to the area made up of H4 resistance at $1.1925 and $1.19 on the H1 (and the H1 100% Fibonacci projection at $1.1916) could be on the table, an area with enough technical confluence to perhaps garner bearish attention, in line with the downside bias seen on the bigger picture.

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.

Technical View for 25th August: Focus Turns to Jackson Hole

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

It was a subdued session for EUR/USD—as well as other major currency pairs—on Wednesday as investors brace for the beginning of the Jackson Hole Symposium, held for three days. We also look forward to the US Q2 GDP print today, although it is expected to remain unchanged at -0.9 per cent.

The technical environment on the bigger picture remains toying with support: weekly support in the shape of a 1.272% Fibonacci projection at $0.9925 (alternate AB=CD bullish formation), a daily support coming in from $0.9919, and the daily chart’s relative strength index (RSI) shaking hands with indicator trendline resistance-turned-support (drawn from the high 58.91), situated just ahead of oversold territory.

While the noted supports offer technical confluence, direction in this market continues to favour sellers. The currency pair has chalked up a dominant primary bear trend since pencilling in a top around $1.2350 in early 2021. Secondary trends, as you can see, have been short-lived, though provided willing sellers ample opportunity to get involved. If the weekly timeframe steps under $0.9925, limited (obvious) support is not visible until $0.9606, while the daily timeframe’s downside support target rests at $0.9668 (Quasimodo support).

Meanwhile on the H4 timeframe, buyers and sellers are seen battling for position between H4 Quasimodo support-turned resistance at $0.9998 and the bearish pennant pattern’s profit objective drawn at $0.9928. Drilling lower to the H1 timeframe, however, price has discovered willing sellers at the lower side of parity ($1.00), with $0.99 still calling for attention as support, and H1 resistance seen above at $1.0046. This is the lowest the euro has been against the US dollar since 2002, and now the euro is WORTH LESS than the US dollar.

Technical Expectation:

I noted the following in Wednesday’s technical briefing, and given the lacklustre performance on Wednesday, the analysis remains valid heading into Thursday’ sessions (italics):

It’s an interesting situation for the EUR/USD currently. On the one hand, the currency pair has been entrenched within a dominantly bearish downtrend since the beginning of 2021, yet on the other hand, support emerged from weekly, daily and H4 timeframes and, for now, has offered a floor to work with.

I feel attention, therefore, will be directed to $1.00 on the H1 scale. As highlighted above, price on the H1 chart is retesting the underside of the noted psychological figure. Sellers defending this number places a question mark on the higher timeframe supports and essentially trades in line with the overall downtrend (and could be viewed as a bearish cue back to $0.99). A break above $1.00, nonetheless, signals bullish strength and reinforces current support structure, opening the door to short-term breakout buying opportunities towards H1 resistance at $1.0046.

AUD/USD:

The Australian dollar eked out modest losses against the buck on Wednesday, yet doing little in the way of damage to higher timeframe technical structure.

The daily timeframe’s support at $0.6901 continues to welcome price movement as buyers and sellers square off for position.

I noted the following in Wednesday’s report regarding the daily and weekly structure (italics):

Buyers gaining ground here shines the technical spotlight on the 200-day simple moving average, currently circling $0.7133 (accompanied by a 50.0% retracement value at $0.7167 and a 78.6% Fibonacci retracement at $0.7156). Assuming buyers lack fuel above $0.6901, this swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678.

Interestingly, the daily chart’s relative strength index (RSI) is testing space just under the 50.00 centreline (resistance). Until we breach this value, this timeframe (according to the indicator) reflects negative momentum.

The weekly timeframe’s support likely remains on the radar for longer-term players between $0.6632 and $0.6763, built from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. This follow’s last week’s 3.5 per cent tumble, in a market that’s been entrenched within a primary bear trend since $0.8007 (22nd Feb high [2021]).

Leaving prime resistance at $0.7004-0.6972 unchallenged on the H4 chart, supply-turned demand at $0.6901-0.6862 is under pressure once again. Overthrowing the aforementioned demand zone unearths prime support from $0.6774-0.6815. From the H1 timeframe, price reclaimed $0.69+ territory during the early hours of US trading on Wednesday; resistance is seen between Quasimodo resistance at $0.6961 and resistance from $0.6947. Assuming a lack of grip above $0.69, dropping to Quasimodo resistance-turned support at $0.6843 could unfold.

Technical Expectation:

With the overall trend facing southbound (in spite of daily price climbing above resistance at $0.6901) and the H4 supply-turned demand at $0.6901-0.6862 echoing weakness (the recent rebound from here failed to reach H4 prime resistance at $0.7004-0.6972), this places a bold question mark on buyers holding ground north of $0.69 on the H1 timeframe.

As a result, a close back under $0.69 could be viewed as a cue to begin seeking bearish scenarios.

USD/JPY:

A mild bout of dip-buying materialised on Wednesday amid rising US Treasury yields—benchmark 10-year yield cemented position above 3.0 per cent following a low of 2.516 per cent in early August.

Volatility has clearly hit the decline button as traders await the beginning of Jackson Hole. Consequently, analysis drawn from the weekly and daily timeframes echo a similar tone as Wednesday’s report (italics):

From the weekly timeframe, resistance remains a key talking point at ¥137.23, in a market that’s emphasised a dominant primary bull trend since 2021. The weekly decision point from ¥126.40-131.30 is also a worthwhile note in the event sellers make a show on this timeframe.

Technical studies on the daily chart has price chalking up a range after an earlier defence formed from supply-turned demand at ¥131.93-131.10. Quasimodo support-turned resistance at ¥139.55 serves as the next upside target. I also noted the following in Monday’s weekly technical briefing in terms of the relative strength index (RSI) (italics):

The daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August. Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

H4 ascending support-turned resistance, taken from the low ¥134.27, is likely still on the radar for many traders after price failed to connect with neighbouring support at ¥135.58, closely shadowed by a 38.2% Fibonacci retracement at ¥134.94 and a 50.0% retracement value from ¥134.72.

The H1 timeframe deserves notice; price is seen attempting to find some acceptance above ¥137 after forging a low just ahead of ¥136 (in the shape of a hammer candle pattern). Is ¥138 on the table now?

Technical Expectation:

Weekly resistance at ¥137.23 and the H4 ascending support-turned resistance should be noted. However, whether the aforesaid levels are sufficient to hold back buyers is difficult to estimate. We are not only dealing with a dominant uptrend (the rebound from the weekly decision point was clearly a location buyers entered into a dip-buying phase), the daily timeframe also demonstrates scope to push for ¥139.55 and the H1 is threatening to hold ¥137 as support.

Are we looking at a run higher from ¥137 to ¥138 is the question.

GBP/USD:

It was a sluggish session for sterling on Wednesday, gently grinding lower against its US counterpart and reclaiming a portion of Tuesday’s upside. Limited change is evident on the bigger picture, as you would imagine, though the H4 timeframe is retesting the spirit of support in the form of 14th July low at $1.1760.

The H1 timeframe is also currently working with a decision point at $1.1744-1.1784 after manoeuvring (whipsawing) beneath $1.18. As of writing, however, buyers are unwilling to commit and hold things above $1.18.

The higher timeframe picture, taken from recent writing (italics):

GBP/USD put in a bottom just ahead of daily support between $1.1655 and $1.1683 (two 100% Fibonacci projection ratios). In terms of the daily chart’s relative strength index (RSI), we can see that the indicator has marginally bottomed ahead of oversold.

$1.1958 remains a key resistance level to be mindful of on the weekly timeframe, following last week’s dominant push lower. This is not a surprise as GBP/USD has chalked up an unmistakable primary bear trend since early 2021. And, as I wrote in recent analysis, the breach of $1.1958 reopens the risk of a return to the pandemic low of $1.1410.

Technical Expectation:

Longer term, GBP/USD remains bearish until at least the daily timeframe’s 100% Fibonacci projection levels at $1.1683 and $1.1655.

Short term, assuming H1 price maintains position south of $1.18, could see the currency pair take aim at $1.17, in line with the bigger picture’s direction. However, this would involve engulfing $1.1760 on the H4.

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.

Technical View for 24th August

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Against the US dollar, Europe’s shared currency received some much-needed impetus in early US hours on Tuesday as the US private sector activity contracted again in August. The S&P Global Flash US Composite PMIs showed the services reading recorded a 44.1 print, following July’s 47.3. The survey’s manufacturing side, however, registered 51.3—modest expansion—though lower than July’s 52.2.

Technically speaking, the recovery should not be a surprise. I noted the following in Tuesday’s technical briefing (italics):

Support on the weekly, daily, and H4 timeframes ($0.9925, $0.9919, $0.9928) are likely to concern sellers and may be an area the charts witness a bout of profit taking.

The support on the weekly timeframe is in the shape of a 1.272% Fibonacci projection, while the daily timeframe’s support is considered ‘traditional’ support, and the H4 timeframe represents a bearish pennant pattern’s profit objective. You will also note that the daily chart’s relative strength index (RSI) shows the indicator rebounded from an indicator trendline resistance-turned-support level (drawn from the high 58.91), situated just ahead of oversold territory.

H4 Quasimodo support-turned resistance consequently entered the frame on Tuesday at $0.9998, aligned with the H1 timeframe’s price action chewing on the lower side of parity ($1.00). Should H1 price manage to find grip north of $1.00, H1 resistance at $1.0046 warrants consideration, alongside trendline resistance, drawn from the high $1.0364.

Technical Expectation:

It’s an interesting situation for the EUR/USD currently. On the one hand, the currency pair has been entrenched within a dominantly bearish downtrend (a primary bear trend) since the beginning of 2021, yet on the other hand, support emerged from weekly, daily and H4 timeframes and, for now, has offered a floor to work with.

I feel attention, therefore, will be directed to $1.00 on the H1 scale. As highlighted above, price on the H1 chart is retesting the underside of the noted psychological figure. Sellers defending this number places a question mark on the higher timeframe supports and essentially trades in line with the overall downtrend (and could be viewed as a bearish cue back to $0.99). A break above $1.00, nonetheless, signals bullish strength and reinforces current support structure, opening the door to short-term breakout buying opportunities towards H1 resistance at $1.0046.

AUD/USD:

US trading on Tuesday observed a healthy AUD/USD bid, bolstered by USD softness thanks to a contraction in US private sector activity.

Most notably is the daily timeframe’s movement clearing offers around resistance at $0.6901 and perhaps paving the way for further upside towards the 200-day simple moving average, currently circling $0.7135 (accompanied by a 50.0% retracement value at $0.7167 and a 78.6% Fibonacci retracement at $0.7156).

Assuming buyers lack fuel above $0.6901, this swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678. Interestingly, the daily chart’s relative strength index (RSI) is testing the mettle of the 50.00 centreline (resistance). Until we breach this value, this timeframe, according to the indicator, reflects negative momentum.

Limited change is seen on the weekly timeframe; therefore, the following text serves as a reminder of where I left things in Tuesday’s technical briefing (italics):

The weekly timeframe’s support likely remains on the radar for longer-term players between $0.6632 and $0.6763, built from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. This follow’s last week’s 3.5 per cent tumble, in a market that’s been entrenched within a primary bear trend since $0.8007 (22nd Feb high [2021]).

Out of the H4 timeframe, supply-turned demand at $0.6901-0.6862 stood firm (despite a number of downside attempts) and shows price is now on the verge of shaking hands with prime resistance at $0.7004-0.6972. Closer analysis on the H1 timeframe, on the other hand, has price responding to Quasimodo resistance at $0.6961 and resistance from $0.6947 in the shape of a shooting star candle pattern. Area above here throws light on $0.70; respecting the aforesaid resistances, nonetheless, projects a possible retest of $0.69.

Technical Expectation:

With the overall trend facing southbound (in spite of daily price climbing above resistance at $0.6901), the H4 prime resistance at $0.7004-0.6972 is likely to create interest among sellers if tested. Yet, if sellers continue to defend H1 resistance between $0.6961 and $0.6947, a dip back to $0.69 is not out of the question.

USD/JPY:

Following Tuesday’s bleak US data, the US dollar plunged versus the Japanese yen. This guided USD/JPY through ¥137 and a H1 acceleration trendline support, drawn from the low ¥132.56, to cross swords with ¥136. Reclaiming space south of the aforementioned psychological figure unearths H1 trendline support, pencilled in from the low ¥131.73.

Higher up, H4 ascending support-turned resistance, taken from the low ¥134.27, served well as a rising resistance barrier. H4 support is subsequently calling for attention at ¥135.58, closely shadowed by a 38.2% Fibonacci retracement at ¥134.94 and a 50.0% retracement value from ¥134.72. Should we eventually clear the noted ascending resistance, however, this highlights a 1.272% Fibonacci projection at ¥138.36 and a deep 88.6% Fibonacci retracement at ¥138.34.

From the weekly timeframe, resistance remains a key talking point at ¥137.23, in a market that’s emphasised a dominant primary bull trend since 2021. The weekly decision point from ¥126.40-131.30 is also a worthwhile note in the event sellers make a show on this timeframe.

Technical studies on the daily chart has price chalking up a bearish outside reversal; this follows five consecutive bullish sessions after an earlier defence formed from supply-turned demand at ¥131.93-131.10. While the daily bearish outside reversal has taken shape at weekly resistance (¥137.23), room to manoeuvre higher on the daily timeframe to Quasimodo support-turned resistance at ¥139.55 is evident.

I also noted the following in Monday’s weekly technical briefing in terms of the relative strength index (RSI) (italics):

The daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August. Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

Technical Expectation:

Weekly resistance at ¥137.23, the H4 ascending support-turned resistance recently welcoming sellers, and the daily timeframe’s bearish outside reversal informs traders that bears may look to control things further, particularly if H1 price dips under ¥136. This unlocks the door to at least the H1 trendline support, drawn from the low ¥131.73.

However, it is important to remember where we are in terms of trend studies. With the trend facing higher since 2021, any bearish showing could be short-lived as trend traders may view down moves as opportunities to buy the dip.

GBP/USD:

Snapping a four-day bearish phase, sterling made a comeback on Tuesday against the US dollar and established a daily bullish outside reversal candle. Influenced largely by dismal US economic data pressuring the buck lower, GBP/USD put in a bottom just ahead of daily support between $1.1655 and $1.1683 (two 100% Fibonacci projection ratios). In terms of where I stand on the daily chart’s relative strength index (RSI), we can see that the indicator has marginally bottomed ahead of oversold.

$1.1958 remains a key resistance level to be mindful of on the weekly timeframe, following last week’s dominant push lower. This is not a surprise as GBP/USD has chalked up an unmistakable primary bear trend since early 2021. And, as I wrote in recent analysis, the breach of $1.1958 reopens the risk of a return to the pandemic low of $1.1410.

The $1.1760 14th July low did a good job of holding back sellers on Tuesday on the H4 timeframe, with the test forming a hammer candlestick pattern. Quasimodo support-turned resistance at $1.1925 and prime resistance from $1.1978-1.1954 remains upside objectives on the H4 scale. The upside move on Tuesday also produced a H1 decision point at $1.1744-1.1784. Note that we can also see that price recaptured $1.18 and appears to have left $1.19 unchallenged, as we’re now on the verge of retesting $1.18 as possible support.

Technical Expectation:

Longer term, GBP/USD remains bearish until at least the daily timeframe’s 100% Fibonacci projection levels at $1.1683 and $1.1655. Short term, however, room to move higher on the H4 and H1 timeframes is visible to $1.19 and H4 Quasimodo support-turned resistance from $1.1925. Therefore, buyers could take control from $1.18 if retested on the H1 scale, supported by the H1 decision point at $1.1744-1.1784.

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.

23rd August: Technical View Ahead of Eurozone, UK and US PMIs

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

The European common currency extended losses on Monday, refreshing a two-decade low against a broadly stronger US dollar. Technically, I cannot say I am surprised by the drop; the higher timeframes emphasised clear weakness amid a lack of support and a decisive downtrend since early 2021.

I noted the following in Monday’s weekly technical briefing (italics):

The clear downtrend, the weekly resistance at $1.0298, the daily resistance at $1.0377, the daily trendline resistance (taken from the high $1.1495), the H4 bearish pennant pattern ($1.0122 and $1.0195), together with room to move lower on the aforementioned timeframes, signals sellers have the upper hand this week.

Consequent to Monday’s bearish forces, weekly and daily price are on the doorsteps of notable support at $0.9925 (a 1.272% Fibonacci projection) and $0.9919, respectively. Furthermore, the relative strength index (RSI) on the daily scale shows the indicator cementing position under the 50.00 centreline, placing the value within touching distance of oversold territory, together with an indicator trendline resistance-turned-support level (drawn from the high 58.91) and indicator support coming in from 21.87.

Against the backdrop of higher timeframe structure, H4 price is shaking hands with the bearish pennant pattern’s profit objective at $0.9928 after walloping its way under Quasimodo support at $0.9998 (now a marked resistance level). However, based on the H1 timeframe, scope to approach $0.99 is on the table following the break of parity—a move widely talked about in financial news.

Technical Expectation:

Support on the weekly, daily, and H4 timeframes ($0.9925, $0.9919, $0.9928) are likely to concern sellers and may be an area the charts witness a bout of profit taking. Nevertheless, the reality is that a H1 close south of $0.99 could trigger additional technical selling and place a question mark on the said higher timeframe supports.

AUD/USD:

Monday witnessed the Australian dollar finish the day off best levels versus the US dollar, amid sour risk sentiment that underpinned the safe-haven buck.

The weekly timeframe’s support likely remains on the radar for longer-term players between $0.6632 and $0.6763, built from a 100% Fibonacci projection, horizontal price support, and a 50% retracement. This follow’s last week’s 3.5 per cent tumble, in a market that’s been entrenched within a primary bear trend since $0.8007 (22nd Feb high [2021]).

From the daily timeframe, the technical framework remains pretty much unchanged (italics):

Adding to the bearish vibe, the daily timeframe has price action dipping a toe beneath $0.6901 (and retesting the level on Monday as resistance). Splitting the aforesaid support swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678. Further weakness is also communicated by the relative strength index (RSI) elbowing under the 50.00 centreline, action informing market participants that average losses exceed average gains: negative momentum.

Shorter term, H4 price action, albeit attempting to hold the area earlier in the session, is seen chewing on the lower boundary of supply-turned demand at $0.6901-0.6862. This, as I underlined in Monday’s technical briefing, signals sellers are gearing up for a push towards prime support at $0.6774-0.6815 (arranged just north of Quasimodo support at $0.6761). However, I still believe it is worth noting that before sellers change gears, a pullback to prime resistance from $0.7004-0.6972 might be on the table.

The London session on Monday, as you can see, staged the beginnings of a rather impressive whipsaw north of $0.69 on the H1, with US traders subsequently selling into any buy-stops tripped above the psychological figure. Quasimodo resistance-turned support warrants attention at $0.6843 to the downside, and a break casts light on $0.68 (aligns closely with the daily timeframe’s trendline support noted above).

Technical Expectation:

I noted the following in Monday’s technical briefing, which remains valid heading into Tuesday’s sessions (italics):

Technically, price action reflects a bearish stance, both long term and also in the short term. The close beneath daily support at $0.6901, the room to manoeuvre lower on the daily and weekly timeframes (to at least daily trendline support), and the H4 timeframe stabbing the lower limit of demand at $0.6901-0.6862 says this is a market in favour of sellers.

The whipsaw above $0.69 was clearly sufficient to spur further selling, a move that may inspire a test of at least the H1 timeframe’s Quasimodo resistance-turned support at $0.6843, and perhaps $0.68.

USD/JPY:

USD/JPY continued to flex its financial muscle on Monday, extending gains for a fifth consecutive day amid a rise in US Treasury yields and a broad USD bid.

Seeing room to manoeuvre higher on the daily timeframe to Quasimodo support-turned resistance at ¥139.55, alongside a dominant primary bull trend since 2021, informs market participants that weekly resistance drawn from ¥137.23 is unlikely to offer a similar ceiling as it did in mid-July. Therefore, overthrowing the said weekly resistance is a scenario likely in many technical traders’ playbooks, perhaps taking aim at ¥139.55.

I also noted the following in Monday’s weekly technical briefing in terms of the relative strength index (RSI) (italics):

Interestingly, the daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August. Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

Addressing the H4 chart, ascending support-turned resistance, taken from the low ¥134.27, is being tested, as I write. Clearing the aforementioned line highlights a 1.272% Fibonacci projection at ¥138.36 and a deep 88.6% Fibonacci retracement at ¥138.34. Based on the H1 timeframe, although not to-the-pip, ¥137 delivered a technical floor of support on Monday, action unearthing a potential rally to ¥138.

Technical Expectation:

Buyers are in control for the time being, with little sign of slowing according to chart studies.

The room to climb higher on the daily timeframe to ¥139.55 and the H1 rebounding from ¥137, together with the clear uptrend, places a question mark on weekly resistance at ¥137.23 and the H4 ascending resistance. As a result, buyers could stage another push higher, targeting ¥138 (H1), the H4 Fibonacci ratios around ¥138.55ish (modest Fibonacci cluster), and daily resistance from ¥139.55.

GBP/USD:

Sterling fell to lows not seen since March 2020 against the US dollar on Monday, moves triggered by robust demand for the safe-haven US dollar as well as fears of an economic slowdown in the UK amid soaring energy costs and nationwide strikes.

In terms of the technical setting on the weekly and daily timeframes, I noted the following in Monday’s technical briefing (italics):

$1.1958 is likely out of the fight on the weekly timeframe as a support, hence its mark as resistance. This is not a surprise as GBP/USD has chalked up an unmistakable primary bear trend since early 2021. Breaking $1.1958 reopens the risk of a return to the pandemic low of $1.1410.

Addressing the daily timeframe, we can see that price movement has been trading beneath its 200-day simple moving average since August 2021. The currency pair, alongside the relative strength index (RSI) dropping below the 50.00 centreline, closed the week within striking distance of two 100% Fibonacci projection levels at $1.1683 and $1.1655. Note that the RSI may actually step into oversold space this week, potentially targeting indicator support as far south as 15.91.

Quasimodo support on the H4 timeframe greeted the currency pair at $1.1806 on Friday but stood little chance on Monday amid the bearish onslaught. Price is now seen crossing swords with the $1.1760 14th July low. Readers may recall I wrote the following regarding lower timeframe price structure (italics):

Short term, we are at support on both H4 and H1 timeframes. If H1 climbs above Quasimodo support-turned resistance at $1.1826, this signals a pullback is potentially on the cards to $1.19 (followed by H4 Quasimodo support-turned resistance at $1.1925) and consequently opens the door to a short-term bullish scenario. However, cracking beneath $1.18 indicates breakout selling towards $1.17.

As evident from the H1 timeframe, price failed to find any acceptance north of $1.1826 on Monday and subsequently tunnelled through $1.18, which, as communicated above, paves the way for a test of $1.17.

Technical Expectation:

Longer term, as noted in recent analysis, GBP/USD is technically exposed to further weakness this week until at least the daily timeframe’s 100% Fibonacci projection levels at $1.1683 and $1.1655.

Short term, I see limited support stopping the currency pair from attempting to voyage lower and attack bids around $1.17. Thus, a retest at $1.18 today could see sellers enter the fight.

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: Week Ending 26th August 2022

Charts: Trading View

(Italics: Previous Analysis)

US Dollar Index:

The US dollar—measured by way of the US Dollar Index—staged an impressive rally last week, adding more than 2.0 per cent and recording its largest one-week advance since March 2020.

Following a test of an ‘acceleration’ trendline support on the daily chart a week prior (drawn from the low 95.17), and last week’s advance, the daily candles are on the verge of shaking hands with familiar resistance between 109.14 and 108.58 (made up of a 1.272% Fibonacci projection, a 1.618% Fibonacci expansion, and a Quasimodo resistance level).

Note that the rebound from the said trendline support was backed by the daily timeframe’s relative strength index (RSI) recoiling from support between 40.00 and 50.00, an area delivering an oversold region since August 2021 (common in uptrends).

Trend studies on the monthly and daily timeframes also continue to favour buyers which portends a break of the current daily resistance. As aired in recent weekly technical writing, aside from a 7-year range (forming a pennant chart pattern [considered a continuation signal], taken from 103.82 and 88.25), monthly movement has been higher since early 2008. This is reinforced by the uptrend visible on the daily timeframe, exhibiting well-defined upward action since price made contact with support from 89.69 in May 2021.

The upside bias is also shown through the 50-day simple moving average (current: 106.07) crossing above the 200-day simple moving average (current: 100.36) in August 2021 (‘Golden Cross’).

Bearish elements to consider are the monthly timeframe showing prime resistance at 109.77-104.96, together with the monthly RSI demonstrating the possibility of negative divergence within overbought status. Furthermore, we must take on board the nearby daily resistance underlined above.

Technical Expectation:

According to chart studies, technical evidence supporting buyers surpasses the chart’s bearish features. As a result, a break of daily resistance might be seen between 109.14 and 108.58 this week. This may trigger breakout buying and, ultimately, dethrone the monthly timeframe’s prime resistance at 109.77-104.96.

EUR/USD:

Shedding 2.1 per cent, Europe’s single currency finished the week at session lows versus the US dollar. Technically, the downside move is unlikely to surprise chartists with an eye for trend direction and support and resistance.

Price action on the weekly timeframe has been entrenched within an unmistakable primary bear trend since pencilling in a top in early 2021 with heavy-handed pullbacks in short supply. This, thrown together with the recent pullback touching gloves with resistance at $1.0298 on the weekly scale, set the currency pair up for another leg lower, with scope to strike a 1.272% Fibonacci projection at $0.9925 this week.

The test of weekly resistance was accompanied by neighbouring resistance on the daily timeframe at $1.0377 and a trendline resistance, drawn from the high $1.1495. Daily support calls for attention at $0.9919—plotted a touch south of weekly support at $0.9925. Those who follow the relative strength index (RSI) will note the indicator is cementing position under the 50.00 centreline, and oversold territory is in reach, together with an indicator trendline resistance-turned-support level and indicator support coming in from 21.87.

Lacklustre trading seen on Tuesday and Wednesday established a bearish pennant pattern on the H4 scale, forged between $1.0122 and $1.0195. The tail end of the week subsequently saw price breakout south, taking on support at $1.0125 (now a marked resistance level), with technical eyes likely directed towards Quasimodo support at $0.9998, followed by the bearish pennant’s profit objective at $0.9928.

A closer reading of price movement on the H1 timeframe turns the technical spotlight in the direction of parity ($1.00), a level many traders will talk about this week, particularly if the currency pair finds sellers south of H1 resistance at $1.0046. Below $1.00 focusses on the 1.618% Fibonacci expansion at $0.9972. Terrain above $1.0046, though, could have the unit retest $1.01 and maybe cross swords with a H1 Quasimodo support-turned resistance at $1.0108.

Technical Expectation:

The clear downtrend, the weekly resistance at $1.0298, the daily resistance at $1.0377, the daily trendline resistance, the H4 bearish pennant pattern, together with room to move lower on the aforementioned timeframes, signals sellers have the upper hand this week. Consequently, any rally will likely be viewed as a bearish opportunity, targeting $1.00 on the H1 chart, the H4 Quasimodo support at $0.9998, the H1 1.618% Fibonacci expansion at $0.9972, and then, with a little oomph, weekly and daily supports at $0.9925 and $0.9919, respectively.

AUD/USD:

It was a bad week for procyclical currencies, such as the New Zealand dollar, the Canadian dollar, and the Australian dollar. AUD/USD plunged 3.5 per cent, reclaiming the prior week’s upside and registered its worst week of trading since September 2021. Consequently, support between $0.6632 and $0.6763 is back on the radar for the weekly timeframe, constructed from a 100% Fibonacci projection, horizontal price support, and a 50% retracement.

Siding with the recent bout of selling is the currency pair’s trend: reflecting a primary downtrend since $0.8007 (22nd Feb high [2021]). The monthly timeframe has portrayed a downtrend since August 2011, indicating the rally from the pandemic low of $0.5506 (March 2020) to a high of $0.8007 (February 2021) on the weekly timeframe is likely viewed as a deep pullback among chartists. Downside from the 2021 February top, therefore, might be seen as a move to explore lower over the coming weeks/months.

Adding to the bearish vibe, the daily timeframe has price action dipping a toe beneath $0.6901, perhaps shaping resistance this week. Splitting the aforesaid support swings the pendulum in favour of reaching trendline resistance-turned support, drawn from the high $0.7661, as well as support at $0.6678. Further weakness is also communicated by the relative strength index (RSI) elbowing under the 50.00 centreline, action informing market participants that average losses exceed average gains: negative momentum.

Addressing studies on the H4 timeframe, we can see price action clipped the lower boundary of supply-turned demand at $0.6901-0.6862 on Friday, signalling sellers are gearing up for a push towards prime support at $0.6774-0.6815 (arranged just north of Quasimodo support at $0.6761). However, before sellers change gears, a pullback to prime resistance from $0.7004-0.6972 might be on the table.

In terms of where I stand on the H1 scale, $0.69 stood little chance on Friday in spite of efforts to hold the psychological base in Asia. The level ceded ground mid-way through the London session, giving way to a retest heading into US trading hours, which, as you can see, managed to hold into the closing bell.

Located closely with trendline resistance, etched from the high $0.7123, $0.69 offers moderate confluence (resistance) to work with in early trading this week. Quasimodo resistance-turned support warrants attention at $0.6843, and a break casts light on $0.68 (aligns closely with the daily timeframe’s trendline support noted above).

Technical Expectation:

Technically, price action reflects a bearish stance, both long term and also in the short term. The close beneath daily support at $0.6901, the room to manoeuvre lower on the daily and weekly timeframes (to at least daily trendline support), and the H4 timeframe stabbing the lower limit of demand at $0.6901-0.6862 says this is a market in favour of sellers.

As with any downward facing market, however, pullbacks occur and can present opportunities to jump aboard. Short-term resistance is offered around $0.69, joined by H1 trendline resistance and, of course, daily resistance at $0.6901. Failing to hold here demonstrates willingness to stage a deeper pullback to H1 resistance at $0.6947, sheltered just under prime resistance on the H4 at $0.7004-0.6972.

USD/JPY:

Shaped by way of four back-to-back daily bullish candles, USD/JPY flexed its muscle last week and rallied 2.5 per cent. The beginning of August witnessed dip-buying emerge from the weekly timeframe’s decision point at ¥126.40-131.30, leading to a retest of resistance coming in at ¥137.23 in recent trading. Overthrowing the said resistance is certainly a scenario likely in many technical traders’ playbooks this week, in light of the prevailing uptrend.

The currency pair has exhibited a healthy upside bias since the beginning of 2021 and forms what many technicians will recognise as a primary bull trend. This is further reinforced by the monthly timeframe’s trend, higher since bottoming in late 2011.

The bullish climate is also reflected on the daily timeframe; price rebounded from supply-turned demand at ¥131.93-131.10, an area glued to the upper boundary of a weekly decision point. Quasimodo support-turned resistance at ¥139.55, therefore, is now in the firing line this week. Supporting trend direction, price has been trading north of the 200-day simple moving average since February 2021. Additionally, the SMA has pointed higher since April 2021: another widely used trend-following technique.

Interestingly, the daily timeframe’s relative strength index (RSI) ventured above its 50.00 centreline after coming within an inch of testing oversold space and forming hidden positive divergence at the beginning of August. Dethroning the 50.00 base adds weight to last week’s push, informing market participants that average gains are exceeding average losses (positive momentum). Upside targets are seen at the indicator trendline resistance, etched from the high 87.44, and indicator resistance at 87.52.

While the trend favours bulls, with room to navigate higher on the daily scale, the weekly resistance at ¥137.23 and the H4 timeframe’s AB=CD bearish pattern at ¥136.95 (a 100% Fibonacci projection) is visible confluence. Combine this with the H4 ascending support-turned resistance, taken from the low ¥134.27, and we have relatively impressive resistance in early trading this week.

Note that the H4 timeframe’s reaction from the AB=CD region moulded a shooting star candlestick pattern, considered a bearish signal. Assuming a response here this week, harmonic traders tend to take aim at 38.2% and 61.8% Fibonacci retracements, derived from legs A-D of the AB=CD formation.

Meanwhile on the H1 timeframe, ¥137 commanded attention ahead of the close on Friday, assisted by a Quasimodo resistance from ¥137.15. Above, eyes will be on ¥138; below features ¥136 and an acceleration trendline support, drawn from the low ¥132.56.

Technical Expectation:

Although we are looking at a market that remains entrenched within a dominant uptrend, a retracement is perhaps brewing. Evidence supporting bears in early trading this week consists of the following: weekly resistance at ¥137.23, the H4 AB=CD bearish pattern at ¥136.95 (and H4 ascending trendline resistance), and the ¥137 figure on the H1 (backed by H1 Quasimodo resistance).

While the above may deliver enough to tempt a bearish scenario, whether it will be sufficient to encourage prolonged selling is questionable. I say this because of not only the current uptrend, but also due to the daily timeframe demonstrating scope to climb to ¥139.55.

For that reason, bears could show early in the week and trade short term, though longer term is in favour of the bulls.

GBP/USD:

Following three weeks of tentative price action, a sharp slump in the pound erupted last week that saw the GBP/USD tumble 2.5 per cent and settle on the doorstep of a six-week low from $1.1760.

$1.1958 is likely out of the fight on the weekly timeframe as a support, hence it’s marked as resistance heading into the week. This is not a surprise as GBP/USD has chalked up an unmistakable primary bear trend since early 2021. Breaking $1.1958 reopens the risk of a return to the pandemic low of $1.1410.

I noted the following in regards to the trend in my previous weekly technical briefing (italics):

Trend direction has been bearish since February/May’s double-top formation on the weekly timeframe at around $1.4241 (2021). Furthermore, seen through the monthly timeframe, the long-term downtrend has been soft since late 2007 tops at $2.1161.

Addressing the daily timeframe, we can see that price movement has been trading beneath its 200-day simple moving average since August 2021. The currency pair, alongside the relative strength index (RSI) dropping below the 50.00 centreline, closed the week within striking distance of two 100% Fibonacci projection levels at $1.1683 and $1.1655. Note that the RSI may actually step into oversold space this week, potentially targeting indicator support as far south as 15.91.

Price action on the H4 timeframe ended the week at an interesting juncture. Quasimodo support greeted the currency pair at $1.1806, a level complemented by a Fibonacci cluster between $1.1803 and $1.1821. While this offers reasonably strong confluence, the higher timeframes project further selling and could, therefore, draw price towards the $1.1760 low. Overhead, nonetheless, sees Quasimodo support-turned resistance at $1.1925 and prime resistance at $1.1978-1.1954.

$1.18 made a show late in the day on Friday on the H1 scale. Quasimodo support-turned resistance also put in an appearance at $1.1826. If the unit managed to reclaim the aforementioned level, follow-through buying appears reasonable to $1.19. Though breaking $1.18, as the higher timeframes suggest, shows limited support until $1.17.

Technical Expectation:

Longer term, GBP/USD is technically exposed to further weakness this week until at least the daily timeframe’s two 100% Fibonacci projection levels at $1.1683 and $1.1655.

Short term, we are at support on both H4 and H1 timeframes. If H1 climbs above Quasimodo support-turned resistance at $1.1826, this signals a pullback is potentially on the cards to $1.19 (followed by H4 Quasimodo support-turned resistance at $1.1925) and consequently opens the door to a short-term bullish scenario. However, cracking beneath $1.18 indicates breakout selling towards $1.17.

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.

Technical View for 18th August 2022: Dollar Bid Weighing on Peers

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

From a technical perspective, chart studies indicate additional selling could materialise.

The weekly and daily timeframe’s longer-term structure remains unchanged. As a result, the following text serves as a reminder of where I left the bigger picture in recent writing (italics):

The weekly timeframe shows price action rejecting resistance at $1.0298, in a market decisively trending south since 2021. Many chartists will label this movement a primary bear trend, with pullbacks few and far between. Combine this with daily flow topping a whisker south of resistance at $1.0377 (and intersecting trendline resistance, drawn from the high $1.1495), and scope to explore as far south as the weekly timeframe’s 1.272% Fibonacci projection at $0.9925 and daily support from $0.9919, EUR/USD is a bearish market. In terms of where I stand on the daily chart’s relative strength index (RSI), we are south of the 50.00 centreline (negative momentum), further supporting softening demand for the euro.

Lackluster trading of late has seen buyers and sellers establish a potential bearish pennant pattern on the H4 scale, forged between $1.0122 and $1.0195. Note also that we have neighbouring support fixed just south of the formation at $1.0125. Should a breakout north emerge, resistance at $1.0279 is visible, coupled with an ascending support-turned-resistance level, pencilled in from the low $0.9952.

A closer examination of price action on the H1 timeframe has the unit circling beneath $1.02. The surrounding timeframes indicate we might continue to work under the aforementioned round number, targeting H1 Quasimodo support at $1.0108 (and $1.01), yet traders are encouraged to pencil in the possibility of a break above $1.02 and subsequent moves toward resistance at $1.0275.

Technical Expectation:

The clear downtrend, the weekly resistance at $1.0298, the daily resistance at $1.0377, the daily trendline resistance, and the possible H4 bearish pennant pattern signals sellers still have the upper hand.

As a result, a break of the lower side of the H4 pennant pattern could form to take on H4 support at $1.0125, pointing to at least the H1 Quasimodo support at $1.0108.

C:\Users\AHill\Desktop\EURUSD FPMARKETS.png

AUD/USD:

The risk-sensitive Australian dollar was on the ropes on Wednesday, weighed by a lower-than-expected labour price index reading, a clear risk-off tone and upbeat year-over-year US retail sales for July, which ultimately reinforced the buck.

Hopes of holding above support on the weekly timeframe at $0.6996 were dashed amid the one-sided decline yesterday, swaying emphasis in the direction of weekly support between $0.6632 and $0.6763. Lower, price movement on the daily timeframe is on the doorstep of support from $0.6901; splitting the aforesaid support swings the pendulum in favour of reaching support at $0.6678. The recent downside follows a near-test of the 200-day simple moving average at $0.7144.

Moving across to the lower timeframes, H4 is on the verge of shaking hands with the supply-turned-demand area at $0.6901-0.6862. Note that the upper edge of this area represents the daily timeframe’s support ($0.6901). Submerging the aforementioned H4 demand highlights space to approach Quasimodo supports at $0.6761 and $0.6710, respectively.

In terms of where I stand on the H1 scale, $0.69 calls for attention to the downside and resistance is at $0.6947. You will note that $0.69 boasts strong support from the upper edge of the H4 demand, together with daily support ($0.6901). Climbing above resistance shows limited resistance until $0.70 and trendline resistance, extended from the high $0.7123.

Technical Expectation:

Attention is centred on $0.69 at the moment. A H1 rejection demonstrates bullish curiosity from the H4 demand at $0.6901-0.6862, and daily support at $0.6901. A break lower, on the other hand, places a question mark on the noted areas and unlocks the gate to continuation selling opportunities.

C:\Users\AHill\Desktop\AUDUSD FPMARKETS.png

USD/JPY:

It was another positive session for USD/JPY on Wednesday, adding 0.5 per cent.

Higher timeframe technical structure remains unchanged (italics):

According to the weekly and daily timeframes, technical evidence suggests further buying. The daily timeframe responded well to supply-turned demand at ¥131.93-131.10, with a decisive push likely to throw light on Quasimodo support-turned resistance at ¥139.55. Note that ¥131.93-131.10 is an area that is glued to the upper boundary of a weekly decision point coming in at ¥126.40-131.30 with weekly resistance plotted at ¥137.23, set below the noted daily resistance.

As I said in previous writing, until the weekly decision point at ¥126.40-131.30 is overthrown, I do not expect to see much call for USD/JPY shorts. A break of the daily timeframe’s supply-turned demand at ¥131.93-131.10, however, would likely be a talking point for technical analysts as limited support is observed until reaching support at ¥125.54 (a weekly support level positioned just south of the current weekly decision point). Therefore, ¥131.93-131.10 is likely to be monitored closely.

But for now, buyers remain in the driving seat.

The H4 timeframe is watching the AB=CD bearish pattern at ¥136.95 (a 100% Fibonacci projection), accompanied by a 78.6% Fibonacci retracement at ¥137.48, an ascending support-turned resistance, taken from the low ¥134.27, and trendline resistance, drawn from the high ¥139.38. On the H1 timeframe, prime resistance at ¥136.21-135.87 is overhead, with any downside attempts likely to take aim at ¥134 and trendline support, etched from the low ¥131.73.

Technical Expectation:

Given the space to move higher on the weekly and daily timeframes, a test of the H4 AB=CD bearish pattern at ¥136.95 could be seen. Before buyers attempt to trade higher, however, a retest of ¥134 on the H1 timeframe may unfold to attract buyers to target the H4 pattern.

C:\Users\AHill\Desktop\USDJPY FPMARKETS.png

GBP/USD:

In the 12 months to July, UK inflation clocked an eye-watering 10.1 per cent, climbing from 9.4 per cent in June, according to the Office for National Statistics on Wednesday. Short-dated gilt yields rallied in response to the latest inflation figures, amid heightened expectations that the Bank of England (BoE) will continue to aggressively increase its Bank Rate to stem soaring consumer prices.

Sterling immediately spiked to a high of $1.2142 against the US dollar following the inflation data, rallying to within a whisker of H1 trendline resistance (drawn from the high $1.2277) before declining throughout European and US trading. This directed the currency pair through $1.21 to within a stone’s throw of the widely watched $1.20 psychological figure.

Price action on the weekly timeframe echoes a vulnerable setting around support at $1.1958, in a market trending lower since 2021. Interest to the upside casts light on weekly resistance at $1.2719 while clearing $1.1958 unearths the pandemic low of $1.1410. However, in order to navigate south, daily flow must confront (and engulf) trendline resistance-turned support, taken from the high $1.3639, as well as the H4 inverted head and shoulder’s pattern ($1.1876; $1.1760; $1.1890) neckline (from the high $1.2056).

Technical Expectation:

GBP/USD is technically exposed.

Short-term action indicates at least a test of $.20, while snapping under this level could trigger breakout selling and draw price towards H4 support at $1.1933 which shares a close connection with the daily timeframe’s trendline support.

C:\Users\AHill\Desktop\GBPUSD FPMARKETS.png

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.

Technical View Ahead of UK Inflation Data (17th August 2022)

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Europe’s single currency echoed a somewhat lacklustre vibe against its US counterpart on Tuesday, consolidating around Monday’s low of $1.0154.

The weekly timeframe shows price action rejecting resistance at $1.0298, in a market decisively trending south since 2021. Many chartists will label this movement a primary bear trend, with pullbacks few and far between. Combine this with daily flow topping a whisker south of resistance at $1.0377 (and intersecting trendline resistance, drawn from the high $1.1495), and scope to explore as far south as the weekly timeframe’s 1.272% Fibonacci projection at $0.9925 and daily support from $0.9919, EUR/USD remains a bearish market on the bigger picture.

In terms of where I stand on the daily chart’s relative strength index (RSI), we are comfortably south of the 50.00 centreline (negative momentum), further supporting softening demand for the euro.

The H4 timeframe, in support of the downside bias, shows price tunnelled through trendline support, drawn from the low $0.9952, and shook hands with support at $1.0125. While the latter has stood its ground, a breach shines the technical spotlight on Quasimodo support from $0.9998. A closer reading of price action on the H1 chart demonstrates the currency pair recently connected with trendline resistance (extended from the high $1.0364), missing $1.02 by a hair. Downside support falls in at $1.0108 (Quasimodo formation) and $1.01.

Technical Expectation:

The clear downtrend, the weekly resistance at $1.0298, the daily resistance at $1.0377, the daily trendline resistance, the break of H4 trendline support, and the H1 currently testing trendline resistance indicates sellers have the upper hand.

As a result, sellers rupturing H4 support at $1.0125 could be in offing, targeting at least the H1 Quasimodo support at $1.0108 and the $1.01 figure.

C:\Users\AHill\Desktop\EURUSD FPMARKETS.png

AUD/USD:

The Australian dollar lost ground versus the US dollar for a second consecutive session on Tuesday, comfortably cementing its position beneath the 200-day simple moving average at $0.7145 on the daily timeframe (blending with a 50% retracement at $0.7167 and a deep 78.6% Fibonacci retracement at $0.7156). While I do see room for the currency pair to extend losses to daily support at $0.6901, in a market trending lower since early 2021, the weekly timeframe’s price action is testing support from $0.6996 following last week’s break.

Across the page, H4 has buyers and sellers squaring off around the underside of a resistance area at $0.7062-0.7031. If we continue to defend the noted area, the technical pendulum swings in favour of reaching supply-turned demand at $0.6901-0.6862. Nevertheless, in order to achieve lower prices on the H4, this involves the H1 dropping under $0.70, a move possibly aided by neighbouring H1 resistance at $0.7032. 10th August low from $0.6947 calls for attention beneath $0.70, and a break re-opens the risk of a return to $0.69.

Technical Expectation:

Weekly support from $0.6996 will be a concern for sellers in this market, as will the $0.70 figure delivering possible support on the H1.

Consequently, sellers—backed by room to move lower on the daily and H4 timeframes—will likely want to see a H1 close under $0.70 before committing, with many perhaps taking aim at the $0.6947 10th August low.

C:\Users\AHill\Desktop\AUDUSD FPMARKETS.png

USD/JPY:

USD/JPY bulls came out swinging on Tuesday, underpinned amid healthy US Treasury yields.

According to the weekly and daily timeframes, technical evidence suggests further buying. The daily timeframe responded well to supply-turned demand at ¥131.93-131.10, with a decisive push likely to throw light on Quasimodo support-turned resistance at ¥139.55. Note that ¥131.93-131.10 is an area that is glued to the upper boundary of a weekly decision point coming in at ¥126.40-131.30 with weekly resistance plotted at ¥137.23, set below the noted daily resistance.

As I said in previous writing, until the weekly decision point at ¥126.40-131.30 is overthrown, I do not expect to see much call for USD/JPY shorts. A break of the daily timeframe’s supply-turned demand at ¥131.93-131.10, however, would likely be a talking point for technical analysts as limited support is observed until reaching support at ¥125.54 (a weekly support level positioned just south of the current weekly decision point). Therefore, ¥131.93-131.10 is likely to be monitored closely.

But for now, buyers remain in the driving seat.

As for the H4 timeframe, the 50% retracement ratio at ¥134.90 is overhead; a break places an AB=CD bearish pattern in view at ¥136.95 (a 100% Fibonacci projection), accompanied by a 78.6% Fibonacci retracement at ¥137.48 and an ascending support-turned resistance, taken from the low ¥134.27. Nonetheless, on the H1 timeframe, after running above ¥134, we see the unit testing prime resistance at ¥134.88-134.33—in particular a Quasimodo support-turned resistance at ¥134.61.

Technical Expectation:

H1 prime resistance from ¥134.88-134.33 is likely to interest sellers, particularly if the currency pair moves back under ¥134.

With that being said, the higher timeframes (weekly and daily charts) show room to move higher, therefore sellers in this market will likely adopt strict trade-management rules should they pull the trigger.

C:\Users\AHill\Desktop\USDJPY FPMARKETS.png

GBP/USD:

Ahead of today’s UK inflation data, sterling ended Tuesday modestly higher versus the US dollar.

Technically, I see limited change on the bigger picture (weekly and daily charts), therefore, here’s where I left things in recent writing (italics):

Price remains testing long-term weekly support at $1.1958. This is a level that has had a question mark on it as its positioned in a market trending lower since 2021. Interest to the upside casts light on weekly resistance at $1.2719.

The weekly support level is reinforced on the daily timeframe after daily price retested (and held) trendline resistance-turned support, taken from the high $1.3639, with the chart also demonstrating space to rally until reaching a decision point at $1.2605-1.2465.

Right now, therefore, higher timeframe structure is in favour of buyers.

The H4 timeframe’s price action has the currency pair rebounding from the H4 inverted head and shoulder’s pattern ($1.1876; $1.1760; $1.1890) neckline (from the high $1.2056). This locates the pattern’s take-profit level from $1.2335 back in the frame.

From the H1 timeframe, we can see the currency pair came within the range of $1.20 (and a trendline resistance-turned support, taken from the high $1.2293). Venturing above $1.21 is likely to see the pair attempt to target $1.22.

Technical Expectation:

According to the four charts analysed, buyers are likely to remain in command.

A decisive H1 close above $1.21 is likely enough to tempt breakout buying towards $1.22, in light of the space seen to move north on the weekly, daily, and H4 timeframes.

C:\Users\AHill\Desktop\GBPUSD FPMARKETS.png

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 2022: Technical View Ahead of UK GDP Data

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Against a basket of six international currencies, the US dollar continued to explore lower territory on Thursday. Risk events saw US weekly unemployment claims come in largely as expected at 262,000, while the Producer Price Index (PPI) fell 0.5 per cent in July versus 1.1 per cent in June.

EUR/USD moderately extended gains on Thursday and has resistance at $1.0377 in the headlights right now, which happens to intersect with trendline resistance, extended from the high $1.1495. This is a key level as defending the lower side of these barriers implies the break above weekly resistance coming in at $1.0298 could be short lived.

Ultimately, the trend—facing south since early 2021—favours sellers emerging from $1.0377. In terms of where I stand on the daily chart’s relative strength index (RSI), we are now comfortably north of the 50.00 centreline (positive momentum), opening the possibility of testing indicator resistance from 63.66.

Across the page on the H4 and H1 charts, price is seen connecting with H4 Quasimodo support-turned resistance at $1.0354. Support at $1.0279 made a show in recent trading and provided a platform for short-term buyers to work with. Nearby, we also have trendline support seen, pencilled in from the low $0.9952. Journeying above current resistance (and engulfing daily resistance at $1.0377), prime resistance is seen from $1.0535-1.0505.

The area of resistance between $1.0376 and $1.0356 on the H1 timeframe, made up of two Fibonacci projection levels (1.272% and 1.618%), also made an appearance on Thursday as it houses the current H4 resistance within. This follows an earlier rebound from support drawn from between a Quasimodo resistance-turned support at $1.0275 and $1.03.

Technical Expectation:

The clear downtrend, the daily resistance at $1.0377, the daily trendline resistance, the H4 Quasimodo support-turned resistance at $1.0354, and the H1 resistance between $1.0376 and $1.0356 is likely sufficient technical evidence to tempt a bearish scenario unfolding in this market.

To convince sellers, however, they will likely require at least a H1 close under $1.0275, action perhaps clearing the path to the H4 trendline support and the $1.02 figure on the H1 scale.

 

AUD/USD:

The Australian dollar gained versus a broadly softer US dollar on Thursday, comfortably aligning AUD/USD within a stone’s throw of the 200-day simple moving average at $0.7151. Blending with a 50% retracement at $0.7167 and a deep 78.6% Fibonacci retracement at $0.7156, this technical ceiling may contain sufficient fuel to hinder further buying (note that moving averages can [and often do] deliver dynamic support and resistance as price commonly reverts to its mean).

Up nearly 3.0 per cent week to date, however, the currency pair is on the verge of forging a close above resistance from $0.6996 on the weekly timeframe. As noted in previous writing, assuming a dominant finish to the week, weekly price invites an approach to as far north as prime resistance coming in at $0.7849-0.7599. This follows a rebound from weekly support between $0.6632 and $0.6764.

From a shorter-term perspective, H4 price came within touching distance of retesting supply-turned demand at $0.7062-0.7031 before rallying. H4 Quasimodo support-turned resistance is seen at $0.7148. On the H1 chart, price is shaking hands with Quasimodo resistance at $0.7129 (set just beneath the H4 Quasimodo base), with support standing close at $0.71. If we venture under the aforementioned round number, H1 Quasimodo resistance-turned support calls for attention at $0.7032.

Technical Expectation:

Daily resistance made up between a 200-day simple moving average and Fibonacci ratios (50% is not a Fib number) at around $0.7160ish is likely to act as a magnet to price and ultimately pull H1 price above Quasimodo resistance at $0.7129 to test the H4 Quasimodo support-turned resistance at $0.7148.

This means should we see a retest of $0.71 on the H1 scale as support, buyers could potentially step in.

USD/JPY:

Following Wednesday’s one-sided decline, Thursday attempted to navigate area to the downside, though ended the session considerably off worst levels after touching gloves with supply-turned demand at ¥131.93-131.10 on the daily scale. Note that this is an area that is glued to the upper boundary of a weekly decision point coming in at ¥126.40-131.30. Overhead on the bigger picture, weekly resistance is seen at ¥137.23, with a break here pointing to daily Quasimodo support-turned resistance at ¥139.55.

As I said in Thursday’s technical briefing, until the weekly decision point at ¥126.40-131.30 is overthrown, I do not expect to see much call for USD/JPY shorts, technically speaking. A break of the daily timeframe’s supply-turned demand at ¥131.93-131.10, however, would likely be a talking point for technical analysts as limited support is observed until reaching support at ¥125.54 (a weekly support level positioned just south of the current weekly decision point). Therefore, ¥131.93-131.10 is likely to be monitored closely.

I do not really have anything to add on the H4 timeframe right now as structure is relatively distant. Nevertheless, on the H1 scale, price is currently testing ¥133 and the H1 Quasimodo support-turned resistance at ¥133.11. This follows the push from ¥132. If we move north of ¥133, then traders are likely to zero in on ¥134 and neighbouring prime resistance at ¥134.88-134.33.

Technical Expectation:

Given the pair has tested the daily timeframe’s supply-turned demand area at ¥131.93-131.10, which shares a connection with the upper boundary of the weekly chart’s decision point at ¥126.40-131.30, a ¥133 break to the upside should not surprise. This may also trigger breakout buying towards ¥134. However, it is at this point I see a potential whipsaw of this number into H1 prime resistance at ¥134.88-134.33 which could have short-term sellers make a show.

GBP/USD:

Ahead of UK GDP data, sterling ended Thursday largely unmoved, remaining within the upper boundary of Wednesday’s range ($1.2277) and mildly fading session highs of $1.2249.

Therefore, here is where I left the charts on the weekly and daily timeframes in Thursday’s technical briefing (italics):

Kicking things off from the weekly timeframe, Wednesday’s performance may instil some confidence in bids from long-term weekly support at $1.1958. This is a level that has had a question mark on it as its positioned in a market trending lower since 2021. Continued interest to the upside casts light on weekly resistance at $1.2719.

The recent bid is further reinforced on the daily timeframe after daily price retested (and held) trendline resistance-turned support, taken from the high $1.3639, with the chart also demonstrating space to rally until reaching a decision point at $1.2605-1.2465.

Right now, therefore, higher timeframe structure is in favour of buyers.

The H4 timeframe’s price action also remains unchanged (italics):

Thanks to recent buying, we have seen the currency pair rebound from the H4 inverted head and shoulder’s pattern ($1.1876; $1.1760; $1.1890) neckline (from the high $1.2056). This locates the pattern’s take-profit level from $1.2335 back in the frame.

From the H1 timeframe, we can see the currency pair is attempting to hold off $1.22 in the form of support. I do not see much in the way of resistance on this timeframe until the $1.23 region, though a break of $1.22 could send price back to $1.21.

Technical Expectation:

According to the four charts analysed, buyers are likely to remain in command.

The retest of $1.22 on the H1 timeframe, therefore, could offer buyers a platform to work with, targeting $1.23, and then the H4 timeframe’s pattern (inverted H&S) profit objective at $1.2335.

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