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Weekly Technical Market Insight: 12th – 16th April 2021

Charts provided by Trading View

US Dollar Index (Daily Timeframe):

The US dollar, as measured by the US dollar index (ticker: DXY), shed nearly 1 percent last week and snapped a three-week bullish phase.

Technically speaking, the highlight of the week was the index journeying back under the 200-day simple moving average at 92.33, movement generally interpreted as a bearish signal. This highlights immediate support at 91.60 this week, with subsequent selling bringing light to additional layers of support at 91.00 and 90.00.

With reference to trend, a downside bias (primary trend) has been present since the unit topped in March 2020, formed by way of clear lower lows and lower highs (black arrows). Interestingly, the 93.43 31st March peak echoes the early stages of a bearish wave within the current downtrend (dashed black arrow), especially after crossing below the 200-day simple moving average.

Momentum, as indicated by the relative strength index (RSI), muscled its way through support at 55.67 in recent moves (now recognised as possible resistance), emphasising potential for further downside momentum towards support at 41.24.

  • With the above points taken on board, technical studies hint at additional USD softness this week, with support at 91.64 organised as an initial target.

EUR/USD:

Monthly timeframe:

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

March carved out a third consecutive loss, extending the 2021 retracement slide by 2.8 percent. Recent underperformance, as you can see, pulled EUR/USD into the upper range of demand at 1.1857/1.1352.

April’s 1.4 percent rebound thus far shifts attention to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641). Extending lower, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

The US dollar index shaping a decisive loss last week underpinned a healthy EUR/USD bid, generating sufficient bullish force to overthrow the 200-day simple moving average, currently circling 1.1885. Nearby resistance at 1.1966 is next in line, with a break unmasking additional resistance at 1.2058.

Despite the 2021 retracement slide, trend studies reveal the pair has been higher since early 2020.

RSI analysis shows upside momentum gathered traction last week, sweeping through trendline resistance (taken from the peak 75.97) and forming a bullish failure swing (a sign of a potential reversal).

H4 timeframe:

1.1870 support has served buyers well, withstanding two downside attempts last week.

Quasimodo resistance calls for attention at 1.1937 this week, with continuation buying to bring light to notable resistance at 1.1990. In the event 1.1870 fails to hold price, nevertheless, support at 1.1818 is likely to elbow its way into the spotlight.

H1 timeframe:

Technical framework present on the H1 chart this week shows supply residing at 1.1956/1.1935, a zone housing H4 Quasimodo resistance at 1.1937.

With reference to supportive structure, the chart highlights demand at 1.1851/1.1861 (aligning closely with the 100-period simple moving average and sited beneath H4 support at 1.1870) as well as at 1.1836/1.1846.

The relative strength index (RSI) welcomed trendline support on Friday (drawn from the low 20.57), elevating the value back above the 50.00 centreline.

Observed levels:

Long term:

Monthly demand at 1.1857/1.1352 making an entrance emphasises the prospect of a bullish theme emerging. This—coupled with daily price climbing above the 200-day simple moving average last week—places daily resistance at 1.1966 in a vulnerable position.

Short term:

In conjunction with the bigger picture, H4 support at 1.1870 holding firm last week reinforces a bullish scenario. As such, H4 Quasimodo resistance at 1.1937 may fail to deliver much bearish flow.

From the H1, Friday bottomed north of demand at 1.1851/1.1861, an area accompanied by a 100-period simple moving average. This movement, strengthened by H4 support mentioned above at 1.1870, was likely viewed as a buy-the-dip scenario, therefore suggesting continuation buying may unfold to test H1 supply at 1.1956/1.1935.

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

March subsequently erased 1.5% over the Month and probed February’s lows. Should follow-through selling develop, demand is in view at 0.7029/0.6664 (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:

Largely unchanged analysis from previous report.

Since 25th March, buyers and sellers have been squaring off around the 0.7563 February low, aided by a 1.272 Fib extension at 0.7545.

Resistance on the daily timeframe remains at 0.7817; a dip beneath 0.7563 brings light to demand from 0.7453/0.7384 (dovetailing closely with a 100% Fib expansion at 0.7465 and a 1.618% Fib extension at 0.7460). Technicians will also note the 200-day simple moving average circling nearby at 0.7401.

Trend studies reveal the unit has been higher since early 2020.

As for the RSI oscillator, the value remains reinforced off channel support, taken from the low 43.70, and is nearing the underside of 50.00.

H4 timeframe:

AUD/USD flow remains languishing south of resistance at 0.7688, with price discovering a modestly supportive tone around the 0.7592 April 2nd low. Traders will note that 0.7688 unites with trendline resistance, taken from the high 0.8007, with space above pointing to supply at 0.7696/0.7715, accompanied by a 50.0% retracement at 0.7689.

Should 0.7592 step aside this week, Quasimodo support at 0.7529 could enter the frame, a level joined closely by a trendline resistance-turned support, taken from the high 0.7805.

H1 timeframe:

As you can see from the H1 chart, price action established a head and shoulders top pattern around 0.7662 last week, a formation that’s considered a reversal indicator. In this case, it has formed amidst a pullback within a short-term downtrend (see H4 for clearer view). Consequently, should price overrun the pattern’s neckline this week, drawn from the low 0.7605, a bearish theme might unfold. This, of course, would entail dethroning 0.76 psychological support and likely attacking demand at 0.7558/0.7575.

In addition to the pattern structure, traders will note the unit bounced from 0.76 Friday and retested the underside of the 100-period simple moving average around 0.7637 (SMAs often deliver dynamic support and resistance).

Alongside Friday’s 0.76 rebound, RSI action dipped a toe in oversold waters and recovered to within touching distance of the 50.00 centreline.

Observed levels:

Long term:

From the bigger picture, the lack of buying interest from the 0.7563 February low on the daily scale may be due to monthly price pencilling in a bearish candlestick formation in February ahead of notable structure.

The above indicates sellers could eventually topple 0.7563 and challenge daily demand at 0.7453/0.7384.

Short term:

In tandem with the monthly chart, H1 pencilled in a head and shoulders top pattern, with price retesting the lower side of the 100-period simple moving average on Friday. This implies a bearish scene could develop this week, taking on the 0.76 round number and testing H1 demand at 0.7558/0.7575. Of course, further selling may also be on the cards, given the head and shoulders top pattern’s take-profit target resides beyond the H1 timeframe’s 1.618% Fib expansion at 0.7534.

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 concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, as you can see, is retesting the breached descending resistance, movement that may entice bullish flow. With respect to long-term upside targets, supply at 126.10/122.66 calls for attention.

Daily timeframe:

Despite supply at 110.94/110.29 limiting upside since the beginning of April, the monthly timeframe testing descending resistance-turned support places a question mark on further selling.

Aside from a collection of lows around 108.36ish (green oval), limited support is offered on the daily scale until connecting with demand coming in at 107.58/106.85 and trendline support, etched from the low 102.59.

In terms of trend on the daily scale, we have been decisively higher since early 2021.

RSI action journeyed to support at 57.00 last week, with Friday showing signs of holding. 57.00 delivers notable history, serving as support and resistance since July 2020.

H4 timeframe:

The combination of a support level at 109.24, along with a 78.6% Fib level at 108.95, produced a floor in the latter half of last week (green box). Movement out of the zone jumped to a session peak at 109.96 Friday, with increased interest to the upside to perhaps shake hands with supply at 110.85/110.46 (an area lodged within daily supply at 110.94/110.29).

In the event 108.95/109.24 fails, demand at 108.31/108.50 (holding lows highlighted on the daily scale around 108.36) may enter the frame.

H1 timeframe:

The 100-period simple moving average at 109.79, aided by demand-turned supply at 109.99/109.92 (sited under 110) and an RSI overbought signal, handed over resistance heading into US hours on Friday.

This throws light on nearby support at 109.53, while a breach of the latter underlines a possible decline back to demand at 108.86/108.98 (glued to the underside of the H4 support area at 108.95/109.24). North of 110, however, reveals a reasonably clear path back to 110.50 resistance.

Further downside momentum, according to the RSI oscillator, could have the value cross swords with trendline resistance-turned support, etched from the high 84.28.

Observed levels:

Long term:

As aired in Friday’s technical briefing, having noted the monthly timeframe testing descending resistance-turned possible support, any selling this week may be short-lived. As such, overtaking lows around 108.36 on the daily scale, according to chart studies, is unlikely.

Short term:

In light of where we’re coming from on the monthly timeframe, H1 support priced at 109.53 represents a possible floor. Though before buyers attempt to make a show off monthly structure, traders are urged to pencil in the possibility of a dip back into H4 support at 108.95/109.24.

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. Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower in subsequent months would generally be viewed as a bearish signal.

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:

Sterling was largely traded as a function of modest dollar buying on Friday, with GBP/USD chalking up a fourth successive bearish close.

The technical arrangement present on the daily chart displays a Quasimodo support at 1.3609, a level connected with a 1.272% expansion at 1.3617, and 1.618% as well as 1.272% Fib extension levels at 1.3614 and 1.3607, respectively.

Traders might also note the recent retracement slide (from the end of February) forms a near-perfect three-drive bullish pattern at the noted Quasimodo support (the missing link is the 61.8% Fib level at the initial pullback [red arrow]).

With reference to trend, GBP/USD has been trending higher since early 2020.

The RSI failed to find acceptance north of the 50.00 centreline last week, informing traders that momentum remains to the downside for the time being.

H4 timeframe:

Thursday’s rejection off trendline support-turned resistance, taken from the low 1.3670, reinvigorated sellers, with price movement touching gloves with support at 1.3680 Friday. Note, however, limited bullish activity was seen from this level.

Beyond support, the technical radar focuses on the daily Quasimodo support highlighted above at 1.3609. North of trendline resistance, on the other hand, resistance is seen at 1.3852.

H1 timeframe:

1.37 welcomed whipsaw movement heading into early European hours on Friday, with subsequent buying failing to reach 1.3750 resistance before rotating south into the close. As you can see, GBP/USD settled back within striking distance of 1.37.

Having noted the recent whipsaw through 1.37, and immediate flow displaying a bearish bias since topping around 1.39, bids are likely fragile at this big figure. Support at 1.3653, therefore, could make a show this week, dovetailing closely with a 1.272% Fib extension at 1.3650.

In tandem with the short-term bearish bias highlighted above, upside momentum, according to the relative strength index (RSI), has been capped by a trendline support-turned resistance, drawn from the low 23.20.

Observed levels:

Long term:

The daily timeframe’s Quasimodo support at 1.3609 is likely to be on the watchlist for many this week. Not only is this considered stable structure, neighbouring Fib confluence and the near-perfect three drive bullish pattern reinforces its technical presence.

Short term:

In addition to H4 support at 1.3680 echoing a fragile tone, the 1.37 figure appears on the verge of giving way on the H1. Therefore, a short-term bearish scenario may emerge south of 1.37 early week. Downside targets rest at H1 support from 1.3653, with further selling potentially pulling price as far south as daily Quasimodo support mentioned above at 1.3609.

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