Depositphotos_165381696_s-2019 (1)

March 17th 2021: DXY Indecisive Ahead of FOMC

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

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

March, as you can see, remains toying with the upper side of 1.1857/1.1352 demand, with the month lower by 1.4 percent. Price action traders will have noted the demand test, likely viewing this as a bullish signal.

A decisive rebound from the aforesaid demand shifts attention back to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641).

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

Daily timeframe:

Europe’s single currency, as you can see, continued to navigate deeper water against the US dollar on Tuesday. This generated a third successive bearish close and saw price shake hands with support at 1.1887, a level fixed nearby a 127.2% Fib projection at 1.1843, a 100% Fib extension at 1.1855, and a 200-day simple moving average at 1.1834.

In recent trading, we have also witnessed the RSI rotated south of the 50.00 centreline and threatens a possible test of oversold levels.

It is also worth acknowledging the trend on this timeframe has faced north since 2020.

H4 timeframe:

Following a near-test of resistance plotted at 1.1992 last week, bearish flow has since governed control and redirected the technical spotlight back to support between 1.1818 and 1.1860 (Quasimodo support at 1.1818, 161.8% Fib projection at 1.1835, and a 100% extension at 1.1860).

In terms of trend on this scale, a bearish bias exists since topping just ahead of supply from 1.2282/1.2245 (see black arrows). Does this mean we’re headed below 1.1818/1.1860 support?

H1 timeframe:

Early London hours Tuesday witnessed a EUR/USD bid develop—aided by a stronger-than-expected German ZEW survey in the current March survey—consequently elevating the currency pair to tops around 1.1950 resistance.

Healthy selling, however, surfaced from 1.1950 mid-way through London, nosediving beneath 1.19 bids to test not only a Fib cluster at 1.1893 but also space ahead of demand at 1.1881/1.1865.

With respect to RSI movement, resistance at 54.40 is a talking point, capping the value since last Friday.

Observed levels:

The monthly price testing demand at 1.1857/1.1352, along with daily price crossing swords with support at 1.1887 and the H1 greeting 1.19 psychological support and a Fib cluster around 1.1893, offers technical confluence to work with today.

Upside gaining speed north of 1.19 may have buyers zero in on at least 1.1950 resistance (H1).

AUD/USD:

Monthly timeframe:

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

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s also interesting was February’s movement came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082. Should sellers regain consciousness, demand at 0.7029/0.6664 is in view (prior supply).

March, as you can probably see, trades higher by 0.5 percent, and remains within February’s range.

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

Daily timeframe:

Buyers and sellers continue to square off beneath trendline support-turned resistance, taken from the low 0.5506.

Should sellers regain consciousness, February’s low at 0.7563 deserves attention as a logical support target, with subsequent downside taking aim at demand from 0.7453/0.7384 (previous supply).

RSI followers will note the value testing the mettle of the 50.00 centreline, following 42.00 lows formed earlier last week.

H4 timeframe:

The technical framework out of the H4 chart reveals price action is somewhat sandwiched between supply from 0.7811/0.7770 (and ascending resistance drawn from the low 0.7563) and demand coming in at 0.7696/0.7715.

Beyond supply, we have demand-turned supply coming in at 0.7848/0.7867—housing a 61.8% Fib level at 0.7859—while south of current demand, another demand resides at 0.7601/0.7627.

H1 timeframe:

As evident from the H1 scale, the 100-period simple moving average around 0.7753 proved relatively effective (dynamic) resistance on Tuesday.

Upstream, supply at 0.7786/0.7770 calls for attention, with a break unmasking 0.78 and another layer of supply drawn from 0.7818/0.7807. Lower on the curve, however, shines light on 0.77 psychological support, closely shadowed by a 61.8% Fib level at 0.7689.

Those following the RSI indicator will likely have noted the recent test of trendline resistance-turned support and subsequent push to the 50.00 centreline.

Observed levels:

Partly modified from previous analysis – Longer term, the monthly and daily charts suggest sellers are likely to remain behind the wheel until February 2nd low at 0.7563 enters view on the daily scale. However, before sellers make a show, a retest of daily trendline resistance could be on the cards.

Shorter term, H4 traders will be watching the area between supply from 0.7811/0.7770 and demand coming in at 0.7696/0.7715. This may attract range trading strategies.

The H1 supply at 0.7786/0.7770 is glued to the lower side of the aforementioned H4 supply, therefore this may also be a watched area. In addition, the 0.77 figure on the H1, given its connection with H4 demand at 0.7696/0.7715, may also arouse interest.

USD/JPY:

Monthly timeframe:

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

Following January’s bullish engulfing candle and further outperformance in February, March is closing in (up by 2.3 percent) on descending resistance, etched from the high 118.66.

To the downside, support inhabits 101.70.

Daily timeframe:

Unchanged from previous analysis –

Latest movement out of the daily chart watched price action come within two pips of testing Quasimodo resistance from 109.38. Of particular note is the Quasimodo formation joins hands with the monthly timeframe’s descending resistance.

Price action traders are likely to be watching the aforementioned Quasimodo. However, recognising supply resides at 110.94/110.29, stops above the Quasimodo head (blue arrow—109.85) could be taken.

Areas of note to the downside are support at 107.64—a previous Quasimodo resistance—and supply-turned demand at 107.58/106.85.

With respect to trend, 2021 has firmly pointed to the upside.

Based on the RSI oscillator, the value continues to explore overbought space, hovering a touch beneath resistance at 83.02.

H4 timeframe:

Unchanged from previous analysis –

Quasimodo resistance at 109.16 continues to serve as a technical ceiling on the H4, a horizontal level placed below supply drawn from 109.59/109.37 (holds daily Quasimodo resistance at 109.38).

Any downside attempt could have sellers address demand coming in at 108.31/108.50, followed by support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

Early US hours welcomed demand at 108.67/108.78—an area joined closely by trendline support, extended from the low 104.92, and neighbouring 100-period SMA. The demand was also considered an important zone given it was here a decision was made to break through 109 offers.

As you can see, the rebound from the aforesaid demand area (confirmed by an RSI oversold signal) has had price action reconnect with the lower side of 109.

Observed levels:

Partly modified from previous analysis – Longer term, with daily Quasimodo resistance at 109.38 and the monthly timeframe’s descending resistance joining hands, this area may welcome selling if tested. However, before sellers put in an appearance, a whipsaw to daily supply at 110.94/110.29 could take shape.

The immediate trend facing north since the beginning of the year may help tempt breakout buyers above the 109 figure today. However, as aired in recent analysis, buyers still have their work cut out for them with H4 Quasimodo resistance at 109.16 and H4 supply from 109.59/109.37 seen close by, together with merging daily Quasimodo resistance at 109.38 and the monthly descending resistance, in close proximity.

GBP/USD:

Monthly timeframe:

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

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

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. March, on the other hand, has so far been lacklustre, down by 0.2 percent as of current price.

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

Daily timeframe:

Partly modified from previous analysis –

Trendline support, drawn from the low 1.1409, closely shadowed by support coming in at 1.3755, made an entrance on Tuesday and pencilled in a dragonfly doji candlestick pattern.

Quasimodo resistance drawn from 1.4250 is also worth a shout, should buyers enter the scene, while territory beneath 1.3755 elbows Quasimodo support at 1.3609 in the line of fire.

The trend, clearly visible on this scale, has faced higher since early 2020.

The RSI indicator remains buoyed by support between 46.21 and 49.16, with the value seen holding above 50.00.

H4 timeframe:

A swift whipsaw beneath support at 1.3852 touched a low just north of demand at 1.3761/1.3789 on Tuesday, an area shadowed by another layer of demand at 1.3730/1.3749.

Continued interest to the upside today/this week throws light back on Quasimodo resistance at 1.4007 (aligns with a 50.00% retracement).

H1 timeframe:

US trading crossed paths with the 1.39 figure, following an earlier recovery staged a few pips ahead of the 1.38 figure (accompanied by a nearby Quasimodo support from 1.3786).

Territory above 1.39 reveals the 100-period simple moving average lurking close by at 1.3920, in addition to peaks formed around the 1.3950ish area.

Yesterday’s session low, as you can probably see, was accompanied by an RSI oversold signal, with the value now pursuing terrain north of the 50.00 centreline.

Observed levels:

Technical flow reveals monthly price emphasising an optimistic tone above trendline resistance. This, together with daily price bouncing from trendline support yesterday and H4 whipsawing support (perhaps gathering liquidity [stops]), suggests H1 could be headed above 1.39 today to possibly take on the 100-period simple moving average and 1.3950 tops.

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.