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Weekly Technical Market Insight: 6th – 10th September 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

The US dollar—measured by the US dollar index—extended losses last week, down 0.6 percent.

Back-to-back weekly declines, south of a Fibonacci cluster (resistance) between 94.07 and 93.90, pulled the benchmark to within reach of July 30th low at 91.78. A subsequent drop this week (taking out 91.78 stops) exposes the 200-day simple moving average at 91.33 (mean price), grouped together with substantial support at 90.64-91.40 and neighbouring demand at 90.32-90.70.

From a trend perspective, the buck has exhibited a modest bullish phase since the beginning of the year, following sizeable declines in 2020. After realising support at 89.34 (a level displaying historical significance since early 2009), the index eventually clocked fresh highs at 93.73 in late August this year. Of note, year-to-date movement is higher by 2.4 percent.

The relative strength index (RSI), a popular momentum gauge, muscled through key support between 40.76 and 47.49 last week. This informs technicians average losses exceed average gains; momentum is, therefore, to the downside, unlocking the likelihood of oversold space making an entrance, in particular support at 21.36.

  • Technically speaking, a test of support at 90.64-91.40 emerging this week should not surprise. Tripping sell-stops south of July 30th low at 91.78 is likely to exacerbate any selling. Efforts to hold 90.64-91.40 may also fuse with an RSI oversold signal.

EUR/USD:

Monthly timeframe:

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

South of ascending support-turned resistance, taken from the low $1.1641, June’s 3.0 percent loss persuaded EUR/USD to retest support from $1.1857-1.1352. A bullish revival shines light on 2021 peaks at $1.2349.

Month to date, September trades 0.6 percent higher.

Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Further adding to this, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Technically underpinned by Quasimodo support priced in from $1.1688, the currency pair—with the exception of one session—has shaped a series of daily gains since August 20th.

Friday, as you can see, touched gloves with late July tops at $1.1909ish, though closed considerably off the high. Cementing a close north of the latter this week seats resistance between $1.2033 and $1.1994, arranged by way of a 61.8% Fib, the 200-day simple moving average and a Quasimodo support-turned resistance. What’s interesting here is a break of $1.1909 highs likely trips buy-stops, fuelling $1.2033-1.1994 offers.

With regards to long-term trend, 2021 has been directionless, despite healthy gains in 2020.

As for momentum, the relative strength index (RSI) is on the verge of crossing swords with trendline resistance just ahead of overbought territory. Also of note is resistance plotted at 80.39. This shows momentum is perhaps gearing up to level off.

H4 timeframe:

$1.1907 resistance, a level holding back buyers since late June, called for attention Friday. The interesting feature, however, is the stops above this level, and clear zone of resistance at $1.1955-1.1933.

Buy-stops arranged above $1.1907 may be enough to fuel offers at $1.1955-1.1933, creating a short-term bearish phase back to at least $1.1907.

H1 timeframe:

Following Friday’s mammoth job’s miss, EUR/USD initially popped higher and challenged $1.19, which predictably served as resistance.

$1.19 is joined by a number of key technical levels, including a 100% Fib projection at $1.1904, a longer-term 38.2% Fib retracement at $1.1896 (taken from the $1.2266 May 25th high), a 1.618% Fib expansion at $1.1913, as well as channel resistance, extended from the high $1.1845.

Should sellers govern control early week, channel support, taken from the low $1.1735, is a key watch, an ascending base sharing chart space with a 100% Fib projection at $1.1860 and a 61.8% Fib retracement at $1.1863. South of here, demand—albeit not fresh—falls in at $1.1812-1.1824.

In terms of where we stand on the relative strength index (RSI), the indicator is establishing an oversold threshold between 40.00 and 50.00, which is common in rising markets. In effect, we’re now working with a range between the aforesaid values and overbought.

Observed levels:

Long term:

Recognising monthly flow testing support at $1.1857-1.1352, downside movement on the daily timeframe could be limited from late July tops at $1.1909.

Any upside attempts on the daily scale shines the technical spotlight on resistance between $1.2033 and 1.1994.

Short term:

Against the backdrop of longer-term action, the H1 chart, after defending $1.19 resistance, suggests a test of channel support at the $1.1860ish zone, which may align with a H1 RSI oversold signal around 40.00-50.00.

The above could send the unit higher from $1.1860, in line with the H4 technical projection: breaching $1.1907 resistance to tackle $1.1955-1.1933 offers.

AUD/USD:

Monthly timeframe:

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

Month to date, September is higher by 1.9 percent, consequently trimming a portion of the recent three-month decline.

Long-term areas to be mindful of are support at $0.6305-0.6872 and supply coming in at $0.8303-0.8082, along with trendline support-turned resistance, taken from the low $1.4776.

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

Daily timeframe:

AUD/USD bulls remained on the offensive last week, rising through Quasimodo resistance at $0.7414. Note should a $0.7414 retest emerge this week, and the barrier develops support, addressing resistance between $0.7665 and $0.7590 is possible (made up of a 61.8% Fib retracement at $0.7665, a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7604 and another 61.8% Fib retracement at $0.7590).

Interestingly, the relative strength index (RSI) climbed above trend line resistance, taken from the high 80.12. This places overbought space in range.

H4 timeframe:

Under the influence of channel resistance, drawn from the high $0.7271, Friday concluded a touch off best levels. Earlier, however, commanded a bullish presence and formed a clear-cut decision point at $0.7393-0.7410 to drive through daily Quasimodo resistance at $0.7414 (now a serving support).

Dip-buyers are likely to show interest in $0.7393-0.7410 should a test form, aided by channel support, taken from the low $0.7107, and neighbouring daily support at $0.7414. A realistic upside objective resides at $0.7494: a Quasimodo resistance joined by a 1.618% Fib projection at $0.7497.

H1 timeframe:

Friday, on the back of a much lower-than-expected NFP print, welcomed upside, a move establishing a decision point at $0.7429-0.7438 that penetrated supply coming in from $0.7450-0.7436.

Quasimodo resistance at $0.7472 also made an entrance, which persuaded a $0.7429-0.7438 test.

With buyers and sellers likely to square off between $0.7472 and $0.7429-0.7438 early week, additional levels to be mindful of are $0.74 and $0.75.

The relative strength index (RSI), similar to EUR/USD, recently launched a consolidation between overbought and the 50.00ish range. This is common during lengthy moves higher. Consequently, it’s worth keeping a close eye on these barriers.

Observed levels:

Long term:

Observing daily price manoeuvre north of Quasimodo resistance at $0.7414 last week communicates a bullish vibe towards resistance between $0.7665 and $0.7590.

Short term:

With the bigger picture in mind, the H4 decision point at $0.7393-0.7410 offers a primary area of support this week. Not only joined closely by daily support at $0.7414, the H4 zone also works closely with H4 channel support.

Chart studies, therefore, suggest the H1 decision point at $0.7429-0.7438 echoes a precarious tone. This places $0.74 in the line of fire as a possible support this week, joined by the noted H4 supports underlined above.

Ultimately, though, any bullish scenario may take aim at $0.75ish, based on the H4 technical picture.

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, September trades 0.3 percent in the red.

Daily timeframe:

Weighed by NFP-induced USD softness, USD/JPY ended Friday marginally off session lows.

Technical support is evident around the 61.8% Fib retracement at ¥109.07. More engaging, nonetheless, is the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41, reinforced by supply-turned demand at ¥107.58-106.85.

When it comes to trend, USD/JPY has been higher in 2021.

From the relative strength index (RSI), a range has been in process between 40.94 and 54.43 since early July. This tells traders that upside momentum is weak: average losses exceed average gains.

H4 timeframe:

Mid-week trading witnessed the unit cross swords with supply at ¥110.56-110.29 and subsequently explore lower levels.

Upside momentum, as demonstrated through the three blue arrows, has been diminishing since mid-August, which alerted traders to a possible bearish theme from the aforementioned supply. Continued interest to the downside this week faces Quasimodo support at ¥109.48, with a break uncovering two Quasimodo support levels at ¥108.88 and ¥108.83.

H1 timeframe:

Friday’s thinly bid market allowed short-term action to challenge an interesting Fibonacci cluster between ¥109.58 and ¥109.63.

On top of this, the relative strength index (RSI) registered an oversold signal, and price developed a reasonable decision point at ¥109.97-109.97, situated just south of $110 and the 100-period simple moving average at $109.97.

Voyaging beneath the noted Fib structure underlines the ¥109 figure as a possible downside objective.

Observed levels:

Long term:

Monthly price occupying area above descending resistance-turned support delivers a bullish tone, long term.

The 61.8% Fib retracement at ¥109.07 on the daily timeframe, therefore, could accommodate buyers this week, as may the harmonic Gartley pattern’s potential reversal zone between ¥107.50 and ¥108.41.

Short term:

From a shorter-term perspective, H4 Quasimodo support at ¥109.48 is unlikely to provide much of a floor if tested. A more realistic downside target is two Quasimodo support levels at ¥108.88 and ¥108.83, as they align closely with the daily timeframe’s 61.8% Fib retracement at ¥109.07.

As a result of the above, the week may welcome a bearish theme, with H1 sellers possibly looking to take action south of the Fibonacci cluster between ¥109.58 and ¥109.63, targeting ¥109ish.

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment below $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, September trades 0.7 percent higher.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

The key technical move on the daily chart last week was price engulfing the 200-day simple moving average at $1.3808. This follows August 23rd recovery from Quasimodo support at $1.3609.

Overhead, resistance resides at $1.4003.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum is gaining traction, according to the relative strength index (RSI) crossing above the 50.00 centreline, a move that underlines average gains exceed average losses.

H4 timeframe:

We’re faced with a reasonably simple setting on the H4 scale early week.

$1.3939-1.3887 resistance made an appearance heading into the close Friday, following an earlier advance that was sponsored on the back of a huge NFP miss.

The $1.3766-1.3799 decision point is now in range as a possible downside objective, a base underpinning the 200-day simple moving average on the daily at $1.3808.

H1 timeframe:

Situated a handful of pips beneath $1.39, Quasimodo resistance put in an appearance at $1.3890 a few hours ahead of the close on Friday. With that, a bout of profit taking emerged, and highlights a possible retest of $1.38 early week.

$1.38 has ‘whipsaw’ written all over it. Potentially heavy bids, therefore, might be attracted to the area marked in yellow between $1.3774 and $1.3787 in order to welcome sell-stops beneath $1.38.

Additional observations out of the relative strength index (RSI) show the indicator chalked up bearish divergence and is now within striking distance of the 50.00 centreline. A break beneath the latter helps confirm bearish intent.

Observed levels:

Long term:

The daily timeframe making its way above the 200-day simple moving average at $1.3808 is considered a bullish signal among many technical traders, and could encourage a bullish scene this week.

Short term:

The H4 decision point at $1.3766-1.3799 is well placed to receive sellers. In addition to this, the H1 timeframe’s $1.38 base is positioned nearby, which is calling for a whipsaw to the H1 area marked in yellow between $1.3774 and $1.3787.

The combination of a bullish cue on the daily timeframe, along with H4 and H1 timeframes working in somewhat harmony at the moment, signals buyers may be drawn to the $1.38ish range this week.

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