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March 24th 2021: Bullish Dollar Amidst Decline in Equities

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 remains toying with the upper side of 1.1857/1.1352 demand, lower by 1.8 percent.

Price action traders will have noted the demand’s entrance, possibly viewing it 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). An extension to the downside, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

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

Daily timeframe:

Down by 0.7 percent, Tuesday nosedived into an interesting base of support, made up of a 127.2% Fib projection at 1.1843, a 100% Fib extension at 1.1855 (harmonic traders will note this represents an AB=CD formation), and a 200-day simple moving average at 1.1849.

South of this support, Quasimodo support at 1.1688 deserves notice.

In the context of trend on this timeframe, the unit has faced north since 2020 despite the 2021 retracement so far.

As for the RSI oscillator, trendline resistance is within touching distance.

H4 timeframe:

H4 pattern traders will note Tuesday dipped south of a double-top pattern’s neckline at 1.1882, forming a one-sided decline into support between 1.1818 and 1.1860 (Quasimodo support at 1.1818, a 161.8% Fib projection at 1.1835, and a 100% Fib extension at 1.1860).

Below 1.1818/1.1860, the double-top pattern’s take-profit target (yellow) forms at 1.1774 (measured by taking the distance from the highest peak in the pattern to the neckline and extending this measurement to the downside at the breakout point).

H1 timeframe:

Following an earlier retest at the lower side of demand-turned supply at 1.1894/1.1906, demand at 1.1881/1.1865 stepped aside and price shook hands with 1.1850 support. Note this technical level also coincides with a 127.2% Fib projection at 1.1840 and a Quasimodo support from 1.1844.

In terms of the RSI, the value entered oversold territory and is currently seen closing in on support at 20.64.

Observed levels:

Despite USD strength weighing on EUR/USD, technical elements show the currency pair testing support.

Monthly is seen crossing swords with demand at 1.1857/1.1352, daily price is testing support around 1.1855, H4 is testing support at 1.1818/1.1860, and H1 is reacting from Quasimodo support at 1.1844.

The question, of course, is whether the noted support is contains sufficient fuel to spark a bullish recovery.

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 interesting was February came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

March, as you can probably see, trades lower by 1.1 percent, bound for the lower limit of February’s range.

Should sellers make a push, demand at 0.7029/0.6664 is in view (prior supply).

With respect to 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:

AUD/USD erased more than 1.5 percent Tuesday amidst a safe-haven dollar surge.

Sustained weakness has February’s low at 0.7563 to target, with subsequent downside perhaps taking aim at demand from 0.7453/0.7384 (previous supply).

RSI movement inched back under the 50.00 centreline in recent trade, indicating a test of oversold space could be on the cards.

H4 timeframe:

Demand drawn from 0.7601/0.7627 elbowed its way into the spotlight yesterday, following a spirited push beneath demand at 0.7696/0.7715.

Also in view, of course, is Quasimodo support at 0.7592.

H1 timeframe:

Between 0.7600 and 0.7622 (yellow), a support zone formed, made up of Fibonacci studies and traditional horizontal levels. Joined by RSI support at 19.40, reclaiming price-based resistance at 0.7636—a previous Quasimodo support level—could emerge today, with 0.77 then possibly to call for attention.

Observed levels:

Longer term, both the monthly and daily timeframes note a bearish vibe, targeting at least February’s low from 0.7563. Across the page, short-term action demonstrates a supportive tone. 0.7600/0.7622 support is evident on the H1 scale, dovetailing with H4 Demand at 0.7601/0.7627.

The above suggests a pullback from the H1/H4 supports today, targeting 0.77. However, buyers will likely be mindful of the bigger picture and, as a result, may look to reduce risk to breakeven as soon as logically possible.

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 February’s outperformance, March, up by 1.9 percent, is closing in on descending resistance, etched from the high 118.66. A spirited break of the latter swings the technical pendulum in favour of further upside.

To the downside, support inhabits 101.70.

Daily timeframe:

Largely unchanged from previous analysis –

Buyers and sellers continue to square off south of Quasimodo resistance from 109.38. Of particular interest is the Quasimodo formation fusing closely with the monthly timeframe’s descending resistance.

While the aforesaid Quasimodo cannot be disregarded, recognising supply resides at 110.94/110.29 is important, as a run for stops above the Quasimodo head (blue arrow—109.85) could materialise.

Areas visible 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 pointed to the upside.

Based on the RSI oscillator, the value exited overbought space, leaving resistance at 83.02 unchallenged.

H4 timeframe:

After a week of back and forth around Quasimodo resistance at 109.16 (sited just under supply at 109.59/109.37—houses daily Quasimodo resistance at 109.38), sellers eventually strengthened their grip on Tuesday and crossed paths with demand at 108.31/108.50.

Residing beneath demand, we also have support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

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

Demand at 108.67/108.78 (considered an important zone given it was here a decision was made to initially break through 109 offers) continued to echo signs of weakness Monday. Having its lower side clipped twice last week and again yesterday, as well as H1 defending the underside of 109 and 100-period simple moving average, this suggests downside risks are building.

As evident from the chart, price took on demand at 108.67/108.78 and bottomed just north of support at 108.36 before retesting demand as supply (yellow). Technically, the reason behind failing to reach the aforementioned support is likely due to H4 demand at 108.31/108.50.

RSI action failed to find acceptance north of the 50.00 centreline yesterday, rotating lower just ahead of trendline resistance.

Observed levels:

Having noted the bearish scene evolving under daily Quasimodo resistance at 109.38, and H1 displaying room to test support at 108.36, H4 demand may fail to deliver. Therefore, a bearish theme from 108.67/108.78 could be seen to take on H1 support, followed by H4 support at 108.09 and the 108 figure (H1).

GBP/USD:

Monthly timeframe:

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

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring 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 currently trades lower by 1.3 percent, contained within February’s range.

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:

Tuesday’s 0.9 percent depreciation, movement closing at session lows, overwhelmed bids around trendline support, taken from the low 1.1409, and took the currency pair to support at 1.3755. While a reaction could form off this support, traders are urged to pencil in Quasimodo support at 1.3609 should sellers remain at the wheel.

Interestingly, RSI flow dipped beneath support between 46.21 and 49.16, with the value currently trading around 40.00.

H4 timeframe:

Failing to find grip north of 1.3852, early movement Tuesday triggered a wave of selling, a decline spearing through bids at 1.3761/1.3789 demand and tested neighbouring demand at 1.3730/1.3749.

Any upside attempts out of 1.3730/1.3749 may encounter resistance from 1.3761/1.3789, serving as supply.

Downstream, the 127.2% Fib projection is seen at 1.3649, closely shadowed by Quasimodo support at 1.3611.

H1 timeframe:

After establishing a defence around the lower side of 1.38 psychological resistance heading into US hours on Tuesday, the session ended testing the mettle of 1.3750 support (representing the upper edge of H4 demand at 1.3730/1.3749).

Forming early bullish divergence out of the RSI, buyers could attempt to form a floor off 1.3750 today. Failure to hold throws light on Quasimodo support at 1.3711.

Observed levels:

Daily price testing support around 1.3755, along with H4 bumping heads with demand from 1.3730/1.3749 and H1 testing 1.3750 support, may prompt a short-term bid. Buyers off 1.3750 will likely be watching 1.38 as an initial upside hurdle.

A H1 close under 1.3750, on the other hand, could trigger a bearish wave to H1 Quasimodo support at 1.3711.

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