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May 28th 2021: DXY Ends Thursday Flirting with 90.00

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. Month-to-date action for May currently trades higher by 1.5 percent.

April upside—alongside May’s gains—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

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

Daily timeframe:

Quasimodo resistance at 1.2169 established a roadblock early May, though traders bought on dips around 1.2051 lows and overthrew 1.2169. The latter, as you can see, now represents support, with another layer of Quasimodo resistance stationed at 1.2278.

The vibe from the RSI indicator reveals the value drifting lower, forming what’s known as bearish divergence. Technicians will also note support resting around 51.36.

H4 timeframe:

Thursday left behind a somewhat muted tone, with lower timeframe traders likely playing the intraday range between 1.2215 and 1.2175. In terms of the day’s economic releases, the market witnessed a larger-than-anticipated decline in US unemployment claims (406,000 vs. 427,000). First-quarter GDP growth also came in unchanged at 6.4 percent (annualised).

Technically on the H4 scale, trendline support, extended from the low 1.1712, is visible, with demand plotted a handful of pips south of the ascending line at 1.2143-1.2162 (an important zone given it was within this area a decision was made to break 1.2177 tops). For resistance, analysts see a possible ceiling pinned around the 1.2244ish range.

H1 timeframe:

The 1.22 figure, aided by the 100-period simple moving average around 1.2214, served as resistance Thursday, launching what’s known as a pennant pattern (1.2214/1.2175), generally viewed as bearish continuation configurations. Breakout moves to the downside shines the technical spotlight on Quasimodo support at 1.2170, together with a support at 1.2162 (and a 50.00% retracement at 1.2159 as well as a 1.272% Fib expansion at 1.2153).

Interestingly, though, the RSI value wrapped up Thursday above trendline resistance (taken from the high 75.04) and tested the lower side of the 50.00 centreline. Above the latter signals momentum could increase to the upside.

Observed levels:

With the overall trend facing higher, and monthly price exiting demand at 1.1857-1.1352 in April, daily flow retesting support at 1.2169 is perhaps in the offing. What’s technically interesting here is the daily support aligns with Quasimodo support at 1.2170 on the H1, plotted just north of H4 demand at 1.2143-1.2162.

As a result, while a breakout beneath the H1 chart’s pennant pattern may materialise, chart studies imply a bullish showing could emerge from H1 Quasimodo support at 1.2170/top side of H4 demand at 1.2162.

AUD/USD:

Monthly timeframe:

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

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

Daily timeframe:

Despite rupturing resistance at 0.7816 early May, the level maintains its position on the daily chart. Interestingly, since April 20th, AUD/USD has offered a somewhat non-committal tone, consolidating between the aforementioned resistance and support from 0.7699 (yellow).

With respect to trend, though, we have been higher since the early months of 2020.

As you can see from the RSI, the indicator remains flirting with the 50.00 centreline, following a dip from 60.30 peaks in early May.

H4 timeframe:

The Australian dollar concluded directionless against the US dollar on Thursday, largely disregarding US economic data.

The technical outlook on the H4 chart, nonetheless, shows a symmetrical triangle (a neutral chart pattern) forming between 0.7688 and 0.7813. Some could view this pattern as a pennant formation, though more of a decisive downtrend would be required in that case. A breakout beyond the symmetrical triangle, therefore, may draw attention to this market.

External areas of interest fall in at daily resistance highlighted above at 0.7816 and 0.7696-0.7715 H4 support.

H1 timeframe:

The 100-period simple moving average at 0.7748 was in the spotlight on Thursday, delivering dynamic resistance. Territory north of the value draws light to supply coming in at 0.7783/0.7771, followed by the 0.78 figure. Space to the downside, however, has Quasimodo support to target at 0.7714, closely shadowed by the 0.7700 figure.

With respect to the RSI, yesterday’s lacklustre performance watched the indicator fluctuate within a tight range (yellow) between 53.50 and 41.92.

Observed levels:

Daily resistance at 0.7816 is key on the bigger picture. This level dovetails closely with the 0.78 figure on the H1.

Before reaching 0.78, bears may attempt to make an appearance from H1 supply at 0.7783-0.7771, given the base effectively represents a decision point to move below 0.7733 (Tuesday’s low).

H1 Quasimodo support at 0.7714 could also capture interest if tested, having seen the level join the upper edge of H4 support from 0.7696-0.7715.

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