June 22nd 2021: Dollar on the Backfoot; DXY Trades South of 92.00

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Down 2.5 percent MTD, June remains on the ropes. Reclaiming May’s gains and also chipping into April’s upside, EUR/USD recently touched gloves with familiar support at $1.1857-1.1352.

Upstream is concentrated on 2021 peaks at $1.2349, with additional enthusiasm welcoming 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 major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Snapping a decisive three-day bearish phase, Monday—ahead of Quasimodo support at $1.1836— kicked off the final full week of June chalking up a recovery. With a focus now likely on the 200-day simple moving average at $1.1992, extending recovery gains could be in store.

A $1.1836 breach, on the other hand, helps validate June’s bearish tone, highlighting Quasimodo support from $1.1688.

Reinforcing Monday’s gains, the RSI pencilled in hidden bullish divergence (commonly forms a trend continuation signal that suggests upside strength remains), with the value exiting oversold terrain (bullish cue).

H4 timeframe:

A closer examination of price action on the H4 scale informs traders a floor of support emerged just north of demand from $1.1794-1.1822, arranged under Quasimodo support at $1.1836 on the daily timeframe.

Overhead, resistance at $1.1937 calls for attention, followed by supply at $1.2006-1.1983 and resistance seen partnering with the zone at $1.1990 (38.2% Fib retracement value also visible at $1.2007).

H1 timeframe:

The dollar echoed weakness on Monday—DXY elbowed back under 92.00—as markets digest the recent Fed-induced bid. Technically, this lifted EUR/USD above $1.19 to within a stone’s throw of local resistance at $1.1924. Territory above the latter unmasks a relatively clear path to the $1.20ish neighbourhood, joined by supply from $1.2006-1.1983 and the 100-period simple moving average, currently circling $1.1973.

The picture drawn from the RSI indicator reveals the value levelling off ahead of overbought territory. Should a dip occur, trendline support is seen, taken from the low 8.62.

Observed levels:

The monthly timeframe rebounding from support at $1.1857-1.1352, in addition to the daily timeframe discovering a floor ahead of Quasimodo support from $1.1836, emphasises a bullish setting.

The above places H1 bulls in a favourable location, north of $1.19, with subsequent buying to perhaps pursue space north of H1 resistance at $1,924, targeting the $1.20 figure. Though do take into account this involves brushing aside H4 resistance at $1,1937.

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 low) and supply from $0.8303-0.8082. That was, of course, until last week’s one-sided decline, movement throwing light on support at $0.7394. Additional downside pressure also brings light to demand at $0.7029-0.6664 (prior supply).

June is currently down by 2.5 percent.

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:

Leaving supply-turned demand at $0.7453-0.7384 unchallenged, AUD/USD booked gains on Monday as the DXY slumped back under 92.00. It is worth noting the aforementioned demand aligns with a collection of Fib studies and monthly support at $0.7394.

The currency pair is now within touching distance of the 200-day simple moving average at $0.7550, collaborating closely with resistance at $0.7563.

Out of the RSI, the indicator exited oversold territory yesterday, action some traders view as a bullish cue.

H4 timeframe:

$0.7485 support made an entrance Monday, stirring a bullish vibe that landed price action within reach of daily resistance at $0.7563, closely shadowed by H4 resistance at $0.7588.

H1 timeframe:

From the H1 chart, the technical picture has price toying with levels just beneath supply at $0.7558-0.7547, with a break here uncovering Quasimodo resistance at $0.7580, followed by the 100-period simple moving average at $0.7585 and then the $0.76 region.

Downstream, support at $0.7511 is on the radar.

Action from the RSI shows the value on the doorstep of overbought, eyeing resistance at 72.21.

Observed levels:

Knowing the daily timeframe is on the brink of shaking hands with the 200-day simple moving average at $0.7550 and resistance from $0.7563, a bearish theme could develop if the aforesaid barriers enter the fray.

This shines light on the area between daily resistance and H4 resistance at $0.7588 (yellow) as a possible ceiling, as well as H1 resistance zone between $0.7605 and $0.7580 (orange).

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.

Weekly Technical Market Insight: 21st – 25th June 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

According to the US dollar index (ticker: DXY), dollar bulls entered an offensive phase last week, awakened on the back of a hawkish Fed tailwind.

Climbing 2 percent, the advance not only delivered technical demand at 90.32-90.70, it overpowered resistance at 91.36 (now potential support), as well as the 200-day simple moving average, currently circling 91.51. Regular readers will note recent moves also completed a descending wedge pattern (a shape exhibiting decreased downside momentum within converging walls [91.43/90.42]), colliding with the formation’s take-profit target around 91.32 (red zones) on Wednesday.

In terms of trend, while the DXY has been underwater since topping in early 2020—by way of well-defined lower lows and lower highs (black arrows)—the question is whether recent USD optimism is the beginning of a trend change? On the basis of technical trend studies presented here, a bullish revival could be on the cards if the 94.74 25th September high is overrun (blue arrow). Of course, some technicians will view last week’s price close above the 200-day simple moving average as a bullish cue.

Prior to crossing swords with 94.74, price must confront the 93.43 31st March high, closely shadowed by Quasimodo resistance drawn from 93.90.

Unsurprisingly, the RSI indicator (a popular gauge of momentum) entered overbought on Friday, stroking levels not seen since early March 2020 (73.00). Despite overbought conditions, this oscillator can remain overbought for prolonged periods. Exiting overbought, nevertheless, is a bearish sign some traders watch for; others seek what’s known as bearish divergence and failure swings.

  • While the RSI is at a point profit-taking may emerge, price studies indicate the technical pendulum favours further buying this week, taking aim as far north as 93.43 tops and Quasimodo resistance from 93.90.

EUR/USD:

Monthly timeframe:

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

Down 3 percent MTD, June is clearly on the ropes.

Reclaiming May’s gains and chipping into April’s upside, Europe’s single currency is now touching gloves with familiar support at $1.1857-1.1352.

Upstream, the technical spotlight remains concentrated on 2021 peaks at $1.2349, with additional enthusiasm welcoming 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 major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Latest developments show the currency pair navigating territory south of the 200-day simple moving average at $1.1991. Although crossing below the SMA awakens bearish calls, downside risks could ease once/if the unit challenges Quasimodo support at $1.1836 this week.

A $1.1836 breach, on the other hand, helps validate the bearish tone, highlighting Quasimodo support from $1.1688.

On the side of a bullish theme off $1.1836, however, is the RSI oscillator, recently nosediving into oversold terrain and establishing what many traders will view as hidden bullish divergence—commonly forms a trend continuation signal that suggests trend strength remains, despite momentum producing negative signals. Essentially, this consists of the RSI pulling out a lower low and price action forming a higher low.

H4 timeframe:

H4, as you can see, discovered a degree of support off the Quasimodo formation at $1.1899 at the tail end of the week, though was brushed aside as the USD continued to flex its financial muscle.

Clearing $1.1899 opens the door to a possible test of demand from $1.1794-1.1822, arranged south of Quasimodo support at 1.1836 on the daily timeframe. Yet, before pursuing lower levels, a $1.1899 retest on the H4 could come about.

H1 timeframe:

The Fed-induced USD bid, coupled with local resistance at $1.1926, weighed on $1.19 bids on EUR/USD Friday, eventually delivering lows of $1.1847, just ahead of demand at $1.1835-1.1846.

Moves lower smothered not only the round number, but also Quasimodo support found at $1.1883. Combined, $1.19 and $1.1883, therefore, may shape resistance early week to raid $1.1835-1.1846 and test daily Quasimodo support within at $1.1836.

From the RSI, the value shows momentum crawling higher, balancing off trendline support, taken from the low 8.62. Though, traders are unlikely to take this seriously until the indicator climbs the 50.00 centreline.

Observed levels:

Long term:

Thanks to a strong-willed decline, monthly support at $1.1857-1.1352 is back in the frame. In similar fashion, daily price is on the doorstep of Quasimodo support from $1.1836, emphasising a bullish setting this week.

Short term:

Before reaching daily Quasimodo support at $1.1836, the combination of the $1.19 figure on the H1 and resistance from $1.1883 is a recipe short-term sellers may appreciate, targeting H1 demand at $1.1835-1.1846 (holds daily Quasimodo support within).

An alternative short-term bearish scenario to potentially decorate the H1 chart is a whipsaw through $1.19 offers—tripping stops—to fuel offers around resistance at $1.1926.

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 low) and supply from $0.8303-0.8082. That was, of course, until last week’s one-sided decline, movement throwing light on support at $0.7394. Additional downside pressure also brings light to demand at $0.7029-0.6664 (prior supply).

June is currently down by 3.2 percent.

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:

Last week’s four-day slump chopped at support from $0.7563 and the 200-day simple moving average at $0.7549, introducing the possibility of bringing in supply-turned demand at $0.7453-0.7384 this week (note this area holds monthly support at $0.7394). Also flirting with the area is a collection of Fib studies, including a 61.8% Fib retracement value at $0.7379, a 1.272% Fib expansion at $0.7411 and a 100% Fib projection at $0.7418.

Harmonic traders will acknowledge the 100% value represents an AB=CD bullish formation. And with this, we can therefore accommodate the B-C 1.27% Fib extension at $0.7425.

The above—alongside the RSI indicator dropping in on oversold territory—underlines a bullish theme if the demand base is tested this week.

H4 timeframe:

Several support levels stepped aside last week, including Quasimodo support at $0.7507 which welcomed a resistance test on Friday. This unlocked the trapdoor to possible follow-through selling this week until support at $0.7440.

Additional resistances to be mindful of are $0.7529, $0.7563 and $0.7588.

H1 timeframe:

Friday, as you can see, attempted to reclaim 0.75+ status but found $0.7511 resistance too much of a ceiling and subsequently had price action refresh session lows into the close.

Downstream, technical support is not expected to develop until around $0.7450ish, which happens to dovetail closely with the upper side of daily demand at $0.7453.

Interestingly, although price forged fresh lows, the RSI indicator, a measure of momentum, shows momentum gradually climbing, aided by support within oversold at 19.30.

Observed levels:

Long term:

Longer term, technical eyes (in particular price action traders) will be on the daily timeframe’s demand zone at $0.7453-0.7384. Aside from housing a number of Fib studies and an AB=CD bullish configuration, monthly support resides within the lower boundary at $0.7394. As such, this is a location the chart may witness bulls attempt to make a stand this week.

Short term:

Against the backdrop of higher-timeframe structure, the lower timeframes—H4 and H1—reveal fresh air to the downside until H1 support at $0.7450, followed by H4 support at $0.7440.

With the above, technical studies suggest a short-term bearish theme until $0.7450ish, at which point traders might abandon shorts and shift to longs in response to daily demand mentioned above at $0.7453-0.7384.

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 cut through descending resistance, etched from the high ¥118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.6 percent.

Daily timeframe:

Technical framework unchanged from previous research.

Long-term resistance at ¥110.94-110.29—posted under supply at ¥111.73-111.19—made a show in recent movement, with Thursday enticing bearish flow and erasing a large portion of Wednesday’s upside. You will note, however, Friday lacked direction and consequently fashioned what’s known as a doji indecision candle.

Downside structure to be cognisant of this week are lows around ¥109.19 (upper green oval), closely shadowed by ¥108.60ish lows (lower green oval), with subsequent selling to perhaps bump heads with supply-turned demand at ¥107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April. Recent research also showed the RSI continues to oscillate around resistance at 57.00. Additional RSI structure is found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

Last week’s technical studies identified supply at ¥110.85-110.46, a range accommodating a number of Fib studies and the completion of a three-drive bearish formation (the 1.272% Fib extension at ¥110.63). Sellers occupied the zone on Thursday, eking out a 0.5% decline, and Friday scored a low of ¥109.94.

The 38.2% and 61.8% Fib retracement values at ¥109.50 and ¥108.70, respectively, remain logical downside targets this week (collected from the origin of the three-drive pattern [¥107.48] to recent tops at ¥110.82). Note the chart displays trendline support, taken from the low ¥107.48, plotted close by demand at ¥109.02-109.20.

H1 timeframe:

Early London hours on Friday acknowledged the ¥110 figure. Powered on the back of St. Louis Fed President James Bullard noting the central bank’s latest shift was a natural response to economic growth, USD/JPY reached ¥110.48. Nevertheless, heading into the early hours of US trading handed the baton to sellers, presumably weighed by waning US Treasury yields (benchmark 10-year yield down more than 4 percent).

Though ¥110 remains support, it’s worth pencilling in Quasimodo support situated at ¥109.91. Psychological levels (¥110) often provide a home for a crowd of orders, and the majority, in this case, would site stops (from both buyers attempting to fade and breakout sellers) just south of the level. This opens up a stop-run scenario, with price perhaps fading stops off ¥109.91.

In terms of momentum, the RSI oscillator finished the week circling the 50.00 centreline, following an earlier bottom ahead of oversold space.

Observed levels:

Long term:

Higher timeframe charts have contradictory positions.

The long-term monthly chart is in the process of attempting to take hold of a breached descending resistance-turned possible support, while daily price engages with resistance at ¥110.94-110.29.

Ultimately, higher timeframe structure tends to take precedence.

Short term:

Lower timeframe charts also deliver conflicting views.

The H4 timeframe’s supply at ¥110.85-110.46—housed within daily resistance at ¥110.94-110.29—is a technical sign lower levels are in the air this week, zeroing in on the 38.2% Fib retracement value from ¥109.50.

Then again, knowing the monthly scale is in the process of attempting to take hold of a breached descending resistance, the H1 chart may witness a whipsaw through ¥110 bids to fuel (stops) bids at Quasimodo support from ¥109.91 for a possible bullish play. Though, be aware that should ¥110 give in, ¥109.50 on the H4, as stated above, is likely the next downside objective, conveniently aligning with H1 demand at ¥109.44-109.55.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance, taken from the high $2.1161. May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent.

June, however, reclaimed May’s gains, down 2.9 percent MTD, albeit recording fresh YTD peaks at $1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4376 gives way (April high 2018).

Daily timeframe:

Arranged by way of three hefty bearish candles, driven amidst a Fed-induced USD bid, cable eked out its worst week since September 2020, down more than 2 percent.

Last week muscled through support at $1.4003 (now labelled resistance) and demand at $1.3857-1.3940, with Friday closing at session lows. This unearths Quasimodo support at $1.3609 and neighbouring 200-day simple moving average circling $1.3586.

According to the RSI indicator, the value is on the verge of entering oversold space, an area that could spark recovery interest.

H4 timeframe:

Friday found itself under significant pressure—pressure that annihilated back-to-back Quasimodo support levels at $1.3876 and $1.3823 and uncovered another Quasimodo support base at $1.3761. What’s interesting is its position: nestled beneath 3rd May low at $1.3800. Below $1.3800 is a location breakout stops will be located, and once filled are perhaps sufficient to fuel bids off $1.3761. The question, of course, is whether the bids contain enough oomph to override bearish pressure?

H1 timeframe:

After an earlier $1.39 retest, it was one-way traffic south until $1.38. Efforts to hold the latter in early US flatlined just north of $1.3830ish and left resistance at 1.3851 unopposed, resulting in a retest—and marginal breach—of $1.38.

H4 Quasimodo support at $1.3761 also commands attention on the H1 scale this week, possibly welcoming price action in early trade.

With reference to the RSI indicator, the value discovered resistance around 40.00 while oversold space has provided support—common view during periods of selling. Between the 50.00 centreline and 40.00, therefore, may serve as an overbought trigger for the time being.

Observed levels:

Long term:

Brushing aside daily demand at $1.3857-1.3940 on Friday unzips a downside bias this week. According to the chart, scope to approach Quasimodo support at $1.3609 is seen.

Short term:

Shorter-term charts focus on H4 Quasimodo support at $1.3761. The fact H1 bulls failed to build on the initial reaction from $1.38 Friday indicates the round number is hanging by a thread. A H1 close south of the number, therefore, might stir a short-term bearish scenario, targeting $1.3761, with further selling possibly on the cards given the daily timeframe’s technical position.

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.

June 18th 2021: DXY Out of Hibernation; Gains Test 92.00

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Down by 2.6 percent MTD, June has reclaimed May’s gains and is now within a stone’s throw from revisiting support at 1.1857-1.1352.

Upstream, the technical spotlight is concentrated on 2021 peaks at 1.2349, with additional upside possibly welcoming 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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Versus a basket of foreign currencies, the US dollar index (ticker: DXY) extended recovery gains on Thursday, 24 hours after the US Federal Reserve surprised markets.

Dollar support bruised recent EUR/USD action. Notably, the currency pair tunnelled through the 200-day simple moving average, currently circling 1.1991—movement typically viewed as a bearish cue. Should sellers override any technical bids surfacing around the 61.8% Fib retracement at 1.1918, this emphasises a downward bias and has Quasimodo support at 1.1688 calling for attention.

Trend on the daily timeframe has been somewhat muted since 2021. 2020, nevertheless, was a relatively strong period for the unit.

The timeframe’s RSI indicator, following last week’s move through support at 51.36, is now on the doorstep of oversold space (an area possibly drawing bullish awareness).

H4 timeframe:

Thursday’s follow-through descent, as you can see, not only established clear-cut supply at 1.2006-1.1983, the move also absorbed two support levels at 1.1990 and 1.1937.

Recent hours, nonetheless, witnessed the one-sided decline confront Quasimodo support from 1.1899, which, for now at least, is serving as a floor. Upside attempts are likely to be limited by 1.1937, while sellers regaining control south of 1.1899 suggests demand at 1.1794-1.1822 could make an entrance.

H1 timeframe:

A closer examination of price action on the H1 chart witnessed the 1.19 figure welcome the pair during US hours on Thursday, a level organised north of Quasimodo support from 1.1883. A EUR/USD bid throws light on the key figure 1.20 (supply marked yellow between 1.1958 and 1.1926 is potentially fragile).

Reinforcing 1.19 support is RSI bullish divergence within oversold territory—this indicates increased momentum to the upside. However, traders are likely watching for the indicator to exit oversold before taking action.

Observed levels:

61.8% Fib retracement at 1.1918 on the daily timeframe, coupled with H4 Quasimodo support from 1.1899 and the combination of the 1.19 figure on the H1 and neighbouring Quasimodo support at 1.1883, offers an area of support to work with. Upside targets rest at H4 resistance from 1.1937, the underside of the 200-day simple moving average around 1.1991 and H4 supply at 1.2006-1.1983 (houses the 1.20 figure on the H1).

Alternatively, keep eyes on the upper side of monthly support at 1.1857. which may be tested should a 1.19 breach come about.

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 low) and supply from 0.8303-0.8082.

Support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

June is currently down by 2.3 percent.

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:

AUD/USD failed to exploit Thursday’s early bid on the back of optimistic Australian job’s data, as USD upside added to recent Fed-induced gains. This ultimately weighed on the currency pair, pencilling in a third successive daily loss and crossing swords with the 200-day simple moving average at 0.7548 and support from 0.7563.

Space south of the SMA casts light on supply-turned demand at 0.7453-0.7384.

With respect to trend, despite a directionless tone since 2021, the currency pair has been higher for most of 2020 (from pandemic lows at 0.5506).

The RSI, however, is bound for oversold space, currently trading at 32.39.

H4 timeframe:

Following 0.7632-0.7653 welcoming a retest, a strong bearish wind emerged and pulled the currency pair under two Quasimodo supports at 0.7588 and 0.7563, both of which now represent potential resistance.

Elsewhere on the chart, support is seen in the shape of a Quasimodo formation at 0.7507.

H1 timeframe:

Drawn from 22nd December 2020, Quasimodo support rests at 0.7529, joining hands with a 100% Fib projection at 0.7528. Harmonic traders will note this base also represents an AB=CD bullish formation, accompanied by a 2.618% Fib extension at 0.7518 of the C-retracement.

Out of the RSI indicator, bullish divergence is unfolding off support at 19.30. The value exiting oversold may strive for the 50.00 centreline which aligns with trendline support-turned resistance, taken from the low 22.47.

Observed levels:

Noting daily flow touching gloves with the 200-day simple moving average at 0.7548, as well as support from 0.7563, H4 sellers reaching for support at 0.7507 may struggle as H1 buyers could set up a defence off support drawn between 0.7518 and 0.7528 (blue).

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.6 percent.

Daily timeframe:

Long-term resistance at 110.94-110.29—posted under supply at 111.73-111.19—made a show in recent movement, with Thursday enticing bearish flow and erasing a large portion of Wednesday’s upside.

Downside structure to be cognisant of are lows around the 109.19 (upper green oval), closely shadowed by 108.60ish lows (lower green oval), with subsequent selling to perhaps bump heads with supply-turned demand at 107.58-106.85.

As stated in previous writing, trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April. Recent research also showed the RSI continuing to oscillate around resistance at 57.00. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

Wednesday, as you can see, charged into supply at 110.85-110.46, an area which housed a number of Fib studies and the completion of a three-drive bearish formation (the 1.272% Fib extension at 110.63), and has so far welcomed a bearish vibe.

The 38.2% and 61.8% Fib retracement values at 109.50 and 108.70, respectively, offer reasonably logical downside targets (drawn from the origin of the three-drive pattern [107.48] to recent tops at 110.84). Note the chart also displays trendline support, taken from the low 107.48, plotted close by demand at 109.02-109.20.

H1 timeframe:

Leaving the 111 figure unchallenged on Thursday, sellers stepped forward a touch north of 110.80 and hauled price action back to a supply-turned demand base at 110.18-110.09. Technical elements show the area brings with it 38.2% and 61.8% Fib retracement values around 110.20ish, in addition to the 20-period simple moving average at 110.12.

It is worth pencilling in the Quasimodo support situated just under 110 at 109.91.

Short-term momentum, according to the RSI oscillator, is depressed, exploring space south of the 50.00 centreline and consequently threatening moves into oversold water (possibly eyeballing indicator support at 18.76).

Observed levels:

The technical framework points to two possible scenarios:

  1. Given H4 supply at 110.85-110.46 is housed within longer-term daily resistance at 110.94-110.29, and the H4 area is joined by a recently completed three-drive bearish pattern, sellers may take aim at the 38.2% Fib retracement value from 109.50.
  2. Knowing the monthly scale is in the process of attempting to take hold of a breached descending resistance, the H1 chart may respond from either demand at 110.18-110.09 (joined by Fib studies and the 100-period SMA), or the chart may witness a whipsaw through 110 bids to collect fuel (stops) to fill bids around Quasimodo support at 109.91 for a possible bullish play.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is depressed (down 2 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

In the shape of five consecutive losing sessions, sterling nosedived through support at 1.4003 (now labelled resistance) and locked horns with demand at 1.3857-1.3940—an important technical area where a decision was made to INITIALLY break above 1.4003 resistance.

Though efforts to defend demand may be limited by 1.4003, terrain south of the area unearths Quasimodo support at 1.3609 and neighbouring 200-day simple moving average circling 1.3587.

As for the RSI indicator’s location, the value nudged below 40.00 and is on the doorstep of oversold territory.

H4 timeframe:

Latest from the H4 chart has the currency pair toying with support around the 1.3919ish region, following an earlier test of resistance from 1.4007. Also of technical note is Quasimodo support registered at 1.3876.

Both 1.3919 and 1.3876 reside within daily demand highlighted above at 1.3857-1.3940.

H1 timeframe:

From the H1 chart, the technical landscape shows bulls holding 1.39 as support and, as we write, taking a stab at overthrowing resistance from 1.3929. This is accompanied by RSI bullish divergence out of oversold territory.

Should bulls take 1.3929, limited resistance is visible overhead until 1.4026-1.40.

Observed levels:

Daily demand at 1.3857-1.3940 making an appearance, and H4 support emerging from 1.3919, places H1 bids off 1.39 in a favourable spot, technically speaking. Running above H1 resistance at 1.3929, therefore, may unlock a bullish scenario, targeting H1 resistance from 1.4026-1.40.

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.

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is down 0.8 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure unchanged from previous analysis.

In recent analysis, the chart breakdown highlighted softness south of Quasimodo resistance at 1.2278 since May 25th. This swings the technical pendulum in favour of shaking hands with a 50.00% retracement ratio at 1.1986, a horizontal level sharing chart space with the 200-day simple moving average around 1.1990.

The timeframe’s bearish setting is braced by the RSI value travelling through both support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Technical structure unchanged from previous analysis.

Against a basket of six foreign currencies, the US dollar index (ticker: DXY) eked out modest gains and clocked fresh monthly tops on Tuesday. In terms of news events, we had US retail sales register a lower-than-anticipated print of 1.3 percent in May, with the core metric lower by -0.7 percent. In a separate report, the Producer Price Index (PPI) increased by 0.8 percent in May vs. 0.6 percent in April. Next on tap, we have the US Fed taking centre stage.

Technically speaking, the H4 chart is unmoved. EUR/USD defended the 61.8% Fib retracement at 1.2094 on Monday—a value (green) stationed north of demand from 1.2044-1.2071—with Tuesday on track to maintain the short-term bullish narrative.

1.2044-1.2071 demand boasts a solid floor to be mindful of, infested with Fibonacci studies, including extension levels, expansions and projections. Space south of demand throws light on support coming in at 1.1990.

H1 timeframe:

The combination of a 1.618% Fib expansion at 1.2095, a 1.272% Fib projection at 1.2098, and the 1.21 figure, deserves notice as a support zone on the H1. To the upside, resistance at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value, also recently made an entrance and developed a ceiling.

It is important to identify that should price move lower and challenge 1.21 again, demand at 1.2075-1.2085 is strategically positioned a touch under the psychological level. A whipsaw through the big figure—tripping sell-stops—could provide enough fuel for 1.2075-1.2085 bids.

North of current resistance shines light on the 100-period simple moving average, currently circling 1.2142.

As for the RSI indicator, we are seeing the value establish a mild recovery off 38.27 to reclaim 50.00+ status. Securing position north of here signals upside momentum may gather traction in the direction of overbought territory. Structure to be mindful of are resistance at 78.97 and support from 14.74.

Observed levels:

Placing longer-term monthly action on the back burner for now, we can see the daily timeframe on the verge of sinking further, taking aim at a 50.00% retracement ratio at 1.1986. This, therefore, places a question mark on H1 breakout buying north of resistance at 1.2132. In fact, moves above this barrier, along with the 100-period simple moving average around 1.2142, could help facilitate a bearish theme off H4 resistance from 1.2158 (buy-stops driving price into H4 resistance offers, essentially providing fuel to move lower, assuming offers are heavy).

Ultimately, despite the lacklustre presence, the daily, H4 and H1 exhibit a downside bias for the time being.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

June is currently down by 0.6 percent.

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:

As anticipated (see Tuesday’s technical briefing), bearish forces took the wheel Tuesday. Helped lower by downbeat risk sentiment and a moderately buoyant greenback, the pair ruptured the lower side of a two-month range between resistance at 0.7816 and support from 0.7699 (yellow).

Support at 0.7563 is in view as a potential objective, deriving additional (dynamic) support from the 200-day simple moving average, circling 0.7545.

With respect to trend, despite a directionless tone since 2021, the currency pair has been higher for most of 2020 (from pandemic lows at 0.5506).

The RSI has worked with space south of the 50.00 centreline since May 20th—signs the value is headed for support at 37.92.

H4 timeframe:

A prominent technical ceiling exists at 0.7782: Quasimodo resistance, while downriver singles out familiar demand at 0.7632-0.7653—helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

Latest developments out of the H1 chart reveals early London pulled the currency pair through 0.77 and retested the lower side of the horizontal base heading into US hours. Subsequent movement called price action lower, reaching a low of 0.7674.

Downstream, demand from 0.7634-0.7649 is on the radar, an area working with a 100% Fib projection at 0.7639, which many harmonic traders will note represents an AB=CD formation.

In terms of the RSI indicator’s position (38.16), bullish divergence is currently underway (note some traders require a simultaneous oversold signal to validate divergence).

Observed levels:

With H1 navigating below 0.77—and scope to approach demand at 0.7634-0.7649—in addition to the daily timeframe slicing through range support at 0.7699 and H4 bound for demand at 0.7632-0.7653, a (technical) bearish scenario is in the offing. Note H1 demand at 0.7634-0.7649 is enclosed within H4 demand at 0.7632-0.7653.

Traders are also urged to pencil in the possibility of H1 retesting 0.77, a level that may draw bearish curiosity.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.5 percent.

Daily timeframe:

Technical structure unchanged from previous analysis.

USD/JPY demanded a bullish setting on Monday, but motivated limited follow-through buying Tuesday.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains within reaching distance, sheltered a handful of pips under supply from 111.73-111.19.

108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85, are positioned downriver, should sellers regain consciousness.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April.

The RSI continues to oscillate around resistance at 57.00. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

USD/JPY left behind a muted vibe on Tuesday, as markets await today’s Fed meeting.

For those who read Tuesday’s technical briefing, the piece underlined the following (italics):

Monday’s supportive tone was likely a welcomed sight for USD/JPY buyers out of demand at 109.02-109.20—an area joining the fight at the beginning of last week and noted in previous analysis as a base to keep an eye on. Technical eyes will also note the nearby trendline support present, taken from the low 107.48.

A key feature to remain aware of is the chart demonstrates scope to rally as far north as supply at 110.85-110.46 (houses Fib studies).

H1 timeframe:

Given Tuesday’s lacklustre performance, it’s worth reminding ourselves of where we stand on the H1 chart. Tuesday’s technical briefing highlighted the following (italics):

This supply [110.18-110.09] is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41. What adds credibility to the aforementioned supply zone—recently welcomed price action—is the overriding bearish position out of its base (red arrow), disturbing 109.63 and 109.52 lows. With this, and stops triggered above 110 fuelling 110.18-110.09 offers, a bearish theme is possible back under 110.

Note that demand from 109.44-109.55 offers a reasonable technical target south of the 110 base.

Adding to the above, the RSI indicator recently dropped through trendline support, drawn from the low 20.25.

Observed levels:

Recent technical research noted the following (italics):

Although H1 supply at 110.18-110.09 stresses sturdy position, the concern is higher timeframes. The monthly chart has buyers attempting to take hold of a breached descending resistance, and the daily chart demonstrates scope to test long-term resistance at 110.94-110.29 (located above H1 supply), as well as the H4 chart also displaying room to reach for supply at 110.85-110.46 (boasts a connection with the daily timeframe’s resistance area).

With this in mind, bearish attempts from 110.85-110.46 are unlikely to deliver anything earthshattering. In fact, 110 serving as support should not surprise, with a reaction perhaps targeting 110.29 as an initial base.

As we can see, 110 did indeed prove supportive, though H1 supply remains in the frame at 110.18-110.09. Ultimately, a breakout beyond either area will be interesting and likely witness follow-through momentum. With 110.29 arranged as a possible upside target, below 110 could have bears target H1 demand from 109.44-109.55.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.9 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), 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 dropped to one-month lows versus the US dollar on Tuesday; the catalyst is unclear.

From a technical perspective, the decline moved GBP/USD to within a stone’s throw of support from 1.4003, forged north of demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Overhead, Quasimodo resistance remains stationed at 1.4250.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position. This, coupled with the value tunnelling through the 50.00 centreline, suggests downside momentum may be on the cards.

H4 timeframe:

The passage below is taken from previous analysis (italics):

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range resistance at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, traders would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

As evident from Tuesday’s drop, price action sliced below both H4 consolidation supports and took on the aforementioned trendline support, perhaps squeezing out longs around the latter.

Does the above mean we’re making our way to 1.4007 support?

H1 timeframe:

Tuesday’s spirited whipsaw to lows ahead of Quasimodo support at 1.4026 caught a number of traders off guard.

Interestingly, price reclaimed 1.4078 as support heading into US hours and, as we write, remains moderately loyal, despite 1.41 clouding the base.

Recent movement had the RSI dip a toe in oversold water, with the value circling space under the 50.00 centreline.

Observed levels:

Having recognised scope to drop in on support at 1.4003 via the daily chart, in conjunction with H4 moving through the lower side of two consolidation areas (1.4096/1.4219 and 1.4188/1.4083), the 1.41 figure based on the H1 chart is in position to perhaps forge resistance.

As noted in Tuesday’s technical briefing, should 1.4078 break, H1 Quasimodo support at 1.4026 and the key figure 1.40 are in view—joins closely with daily support from 1.4003.

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.

June 15th 2021: Dollar Motionless Ahead of Looming Fed Meeting

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.8 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure unchanged from previous analysis.

In recent analysis, the chart breakdown highlighted softness south of Quasimodo resistance at 1.2278 since May 25th. This swings the technical pendulum in favour of shaking hands with a 50.00% retracement ratio at 1.1986, a horizontal level sharing chart space with the 200-day simple moving average around 1.1988.

The timeframe’s bearish setting is braced by the RSI value travelling through both support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Technical structure unchanged from previous analysis.

Ahead of Wednesday’s impending Fed meeting, Monday’s session echoed an uninspiring tone.

Yet EUR/USD bulls did manage to defend the 61.8% Fib retracement at 1.2094, a value (green) stationed north of demand from 1.2044-1.2071.

Technically speaking, 1.2044-1.2071 boasts a solid floor to be mindful of, infested with Fibonacci studies, including extension levels, expansions and projections.

Space south of demand throws light on support coming in at 1.1990.

H1 timeframe:

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

Aided by a 1.618% Fib expansion at 1.2095 and a 1.272% Fib projection at 1.2098, the 1.21 figure embraced price action amidst US hours on Friday. Of course, we can also see 1.21 entered the frame at the same time the RSI indicator’s value dipped into oversold territory and shook hands with support at 14.74.

Another point worth highlighting is breakout stops plotted beneath the 1.2104 June 4th low (blue box). Tripping these orders as price greets bids around 1.21 has so far facilitated what’s known as a bear trap. This, therefore, could fuel additional buying as breakout sellers panic and liquidate (forming additional buy orders).

As evident from the chart, short-term sentiment navigated higher levels; breakout sellers clearly had a bad day on Monday, consequently delivering the currency pair to within striking distance of resistance at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value.

It is important to identify that should price move lower today and challenge 1.21 once again, demand at 1.2075-1.2085 is strategically positioned a touch under the psychological level. North of current resistance, however, shines light on the 100-period simple moving average, currently circling around 1.2156.

Observed levels:

Having seen the daily chart underline possible moves to a 50.00% retracement ratio at 1.1986, and the H1 chart showing signs of demand for lower prices ahead of resistance at 1.2132, retesting 1.21 is possible, from a short-term technical standpoint.

An alternative scenario, of course, is H4 bulls maintain position north of the 61.8% Fib retracement at 1.2094, targeting resistance at 1.2158.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure largely unchanged from previous analysis.

The daily chart’s technical scenery has been a dull affair since April 20th.

Despite a fleeting whipsaw to a low of 0.7645, resistance at 0.7816 and support from 0.7699 have outlined a range (yellow) since April 20th. However, technicians will note the recent pop south likely damaged the lower range edge, increasing the odds of sellers eventually taking the wheel.

Support at 0.7563 is in view as a potential objective below the current consolidation, deriving additional (dynamic) support from the 200-day simple moving average, circling 0.7542.

Above 0.7816, supply falls in at 0.8045-0.7985.

With respect to trend, we have been higher since early 2020, though we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging with space beneath the 50.00 centreline, unable to penetrate the latter since mid-May. This warns upside momentum hangs by a thread and a drop in on support from 37.92 could be on the cards.

H4 timeframe:

The technical story out of the H4 chart has the currency pair exploring no man’s land right now, at least according to basic chart studies.

A prominent technical ceiling exists at 0.7782: Quasimodo resistance, while downriver singles out familiar demand at 0.7632-0.7653—helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

A closer examination of price action on the H1 chart reveals the unit locked horns with resistance at 0.7722 on Monday, dovetailing closely with a 38.2% Fib retracement at 0.7720, and, heading into the early hours of US trading, pursued lower levels.

0.77—associated with a 61.8% Fib retracement marked in green at 0.7695—calls for attention as workable support, levels that claimed position late Friday and early Monday. Downstream, demand from 0.7634-0.7649 is on the radar.

Presented through the RSI indicator, momentum remains under its 50.00 centreline, a sign bears maintain control for the time being. Structure to be cognisant of are resistance from 72.21 and support at 19.30.

Observed levels:

Based on technical studies, sellers appear to have the upper hand.

This is largely due to the decisive short-term dip from resistance at 0.7222—a location Monday’s technical briefing highlighted as a base sellers may be drawn to—and the daily timeframe threatening to conquer the lower side of its range at 0.7699.

A H1 close south of the 0.77 figure could attract additional bearish curiosity, taking aim at H1 demand from 0.7634-0.7649 (secured within H4 demand at 0.7632-0.7653).

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.5 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

USD/JPY, as you can see, demanded a bullish setting on Monday, ahead of Wednesday’s Fed meeting.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention overhead, sheltered a handful of pips under supply from 111.73-111.19.

108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85, are positioned downriver.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April.

The RSI continues to oscillate around resistance at 57.00, with the value recently establishing mild bottoms ahead of the 50.00 centreline and attempting to find grip above the barrier. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

Monday’s supportive tone was likely a welcomed sight for USD/JPY buyers out of demand at 109.02-109.20—an area joining the fight at the beginning of last week and noted in previous analysis as a base to keep an eye on. Technical eyes will also note the nearby trendline support present, taken from the low 107.48.

A key feature to remain aware of is the chart demonstrates scope to rally as far north as supply at 110.85-110.46 (houses Fib studies).

H1 timeframe:

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

In fact, this supply [110.18-110.09] is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41.

What adds credibility to the aforementioned supply zone—recently welcomed price action—is the overriding bearish position out of its base (red arrow), disturbing 109.63 and 109.52 lows. With this, and stops triggered above 110 fuelling 110.18-110.09 offers, a bearish theme is possible back under 110.

From the RSI indicator, the value is engaging with overbought conditions, mildly rotating from session peaks of 78.76.

Observed levels:

Although H1 supply at 110.18-110.09 stresses sturdy position, the concern is higher timeframes. The monthly chart has buyers attempting to take hold of a breached descending resistance, and the daily chart demonstrates scope to test long-term resistance at 110.94-110.29 (located above H1 supply), as well as the H4 chart also displaying room to reach for supply at 110.85-110.46 (boasts a connection with the daily timeframe’s resistance area).

With this in mind, bearish attempts from 110.85-110.46 are unlikely to deliver anything earthshattering. In fact, 110 serving as support should not surprise, with a reaction perhaps targeting 110.29 as an initial base.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure unchanged from previous analysis.

Sterling against the dollar has emphasised an uneventful picture since May 18th, fluctuating between gains and losses south of Quasimodo resistance at 1.4250. Monday finished in the shape of a doji indecision candle.

Support at 1.4003 remains within reach. Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position, with Monday closing in on the 50.00 centreline.

H4 timeframe:

The passage below was taken from previous analysis (italics):

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range resistance at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, traders would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

Monday occupied the lower boundaries of the aforementioned consolidations, within a stone’s throw of trendline support.

H1 timeframe:

Support at 1.4078 and the 1.41 figure invited a bullish phase on Monday, aided by the RSI value scraping oversold territory.

Despite bulls displaying interest, upside momentum levelled off heading into US hours, consequently forming RSI resistance around the 50.00 centreline. We do have the unit currently retesting 1.41, which if accepted, unlocks a possible move to the 100-period simple moving average at 1.4133.

Territory below 1.4078 directs focus to Quasimodo support at 1.4026, as well as the widely watched 1.40 figure.

Observed levels:

The lack of buying interest off H4 range supports (two consolidations exist at 1.4096/1.4219 and 1.4188/1.4083), together with the daily timeframe absent of support until 1.4003, underscores a bearish theme.

Ultimately, to help validate a bearish presence, traders will want to see price below the said range supports and neighbouring H4 trendline support, from the low 1.3668.

Should 1.4078 break, H1 Quasimodo support at 1.4026 and the key figure 1.40 would be in view—joins closely with daily support from 1.4003.

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.

Weekly Technical Market Insight: 14th – 18th June 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Last week’s session observed the US dollar—according to the US dollar index—abandon its two-week indecisive phase and establish moderate gains (0.4 percent).

Earlier weekly reports shined the technical spotlight on a descending wedge pattern (a shape exhibiting decreased downside momentum within converging walls [91.43/90.42]). Traders will note both converging lines received at least two tests, yet some textbooks require three to form at the upper base. Nevertheless, the beginning of June had the unit retest the upper boundary of the wedge and develop support, following a breakout higher on May 28th.

Recent analysis also highlighted the following points (italics):

  • Since the DXY topped out at the 93.43 31st March peak, and cooked up reasonably decisive downside movement, the wedge, and subsequent upside breach, is perhaps a reversal signal.
  • The pattern’s upside target rests beneath resistance at 91.36 (red), stationed south of the 200-day simple moving average, circling 91.56. Should pattern bids hold the buck higher this week, price targeting 91.36 is a reasonably logical approach.
  • However, it’s important to note a bearish narrative has clouded the greenback since the early months of 2020, by way of well-defined lower lows and lower highs. Many analysts likely refer to this downward movement as a primary trend, as it’s visible structure from the weekly scale. Consequently, this unlocks the possibility of fresh lower lows beyond 89.34 support over the coming weeks (see black arrows), with sellers taking aim at Quasimodo support from 88.43.

Momentum studies, through the RSI indicator, shows the line elbowed north of the 50.00 centreline last week and finished on the doorstep of indicator resistance at 55.67.

Should an extension to the current pullback materialise, a bearish scenario—in line with the current downtrend—unfolding off 91.36 resistance remains a possible scenario this week. 91.36 is reinforced not only by a nearby 200-day simple moving average (dynamic resistance) at 91.56, but also the wedge pattern’s take-profit target around 91.32. At the same time, failure to maintain gains may result in a dip to support at 89.34, a level which echoes vulnerability and could unlock the door to Quasimodo support at 88.43.

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 1 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

A closer reading of price action on the daily chart shows the single currency cut away at recent attempts to explore higher.

Quasimodo resistance at 1.2278, as you can see, was left untested in recent weeks, with latest downside tipping the scales in favour of testing dynamic support around 1.1987: the 200-day simple moving average. Technicians will note the aforementioned SMA shares chart space with a 50.00% retracement ratio at 1.1986.

Adding weight to the downside is the RSI indicator. As sellers strengthened their grip Friday, the RSI value brushed aside support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Friday’s one-way slide watched the currency pair lock horns with a 61.8% Fib retracement at 1.2094, a horizontal value (green) stationed just north of interesting demand from 1.2044-1.2071. Technically speaking, this area boasts a solid floor to be mindful of this week, overrun with Fibonacci studies, including extension levels, expansion levels and projections.

Space south of demand, however, throws light on support coming in at 1.1990.

H1 timeframe:

Aided by a 1.618% Fib expansion at 1.2095 and a 1.272% Fib projection at 1.2098, the 1.21 figure embraced price action amidst US hours on Friday. Of course, we can also see 1.21 entered the frame at the same time the RSI indicator’s value dipped into oversold territory and shook hands with support at 14.74.

Another point worth highlighting is breakout stops plotted beneath the 1.2104 June 4th low (blue box). Tripping these orders as price greets bids around 1.21 has so far facilitated what’s known as a bear trap. This, therefore, could fuel additional buying as breakout sellers panic and liquidate (forming additional buy orders).

Demand at 1.2075-1.2085, nevertheless, is strategically positioned a touch under 1.21. Overhead, resistance is found at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value.

Observed levels:

Long term:

From the monthly chart, the outlook continues to emphasise a bullish bias, taking aim at 2021 tops around 1.2349 and ascending resistance. Before discovering northerly ground, the daily timeframe argues a test of the 200-day simple moving average (1.1987) and neighbouring 50.00% retracement at 1.1986 may be in store.

Short term:

The combination of the 1.21 figure on the H1 and associated Fib studies, together with the possibility of breakout sellers’ orders being liquidated to form buy orders and a 61.8% Fib retracement on the H4 at 1.2093, signals a possible test of H1 resistance at 1.2132 early week (joined with a 38.2% Fib retracement).

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure unchanged from previous analysis.

The daily chart’s technical scenery has been a dull affair since April 20th.

Despite a fleeting whipsaw to a low of 0.7645, resistance at 0.7816 and support from 0.7699 continue to outline a defined range (yellow).

Support at 0.7563 is in view as a potential objective in the event sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7540. Above 0.7816, supply falls in at 0.8045-0.7985.

With respect to trend, we have been higher since early 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging with space beneath the 50.00 centreline, unable to penetrate the latter since mid-May. This warns upside momentum could suffer this week and drop in on support from 37.92 and maybe oversold territory.

H4 timeframe:

Leaving Quasimodo resistance at 0.7782 unopposed on Friday, sellers took the reins and extended losses to highlight 0.7632-0.7653 demand this week. Note this was an area that helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

Following a test of supply from 0.7783-0.7771 during early Europe Friday (holds H4 Quasimodo resistance within at 0.7782), the early hours of US trading had price test the resolve of 0.77. Helped by a 61.8% Fib retracement (green) nestled just under the round number from 0.7695, a mild recovery occurred. Also reinforcing the 0.77 test is the RSI value dipped a toe in oversold waters and missed support at 19.30 by a whisker before exiting the area into the close.

Resistance at 0.7722 is on the radar, dovetailing closely with a 38.2% Fib retracement at 0.7720, while any sustained movement beneath 0.77 unlocks the door to demand at 0.7634-0.7649 (fixed within the walls of H4 demand at 0.7632-0.7653).

Observed levels:

Long term:

Looking over the monthly and daily charts echoes a bearish vibe. The monthly is contained under major supply and trendline support-turned resistance. The daily timeframe has been carving out a consolidation since mid-April between 0.7816 and 0.7699. Notably, though, June has watched price toy with the lower side of the said range, offering uninspiring bullish intent. With that, daily support at 0.7563 could be targeted.

Short term:

Scope to navigate deeper water on the H4 timeframe until crossing swords with demand at 0.7632-0.7653 signals the 0.77 figure on the H1—despite holding Friday and working with additional 61.8% Fib support from 0.7695—is on the verge of stepping aside and unmasking demand at 0.7634-0.7649 (which as we know is connected with H4 demand at 0.7632-0.7653). However, before any downside attempt takes shape, a 0.7722 resistance test could form—a location sellers may be drawn to early week.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.1 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Alternating between gains and losses, last week wrapped up largely unmoved.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April. Subsequent months witnessed a sizeable retracement, followed by attempts to recapture losses.

The RSI continues to oscillate around resistance at 57.00, with the value recently establishing mild bottoms ahead of the 50.00 centreline. Additional structure seen are support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

The emergence of a broad USD bid, along with a risk-on theme, elevated USD/JPY on Friday, consequently maintaining a bullish vibe above demand at 109.02-109.20—an area joining the fight at the beginning of last week.

A key feature to be aware of is not only does the chart demonstrate scope to rally as far north as supply at 110.85-110.46 (houses Fib studies), the noted demand is positioned nearby trendline support, drawn from the low 107.48.

Failure to hold current demand, attention shifts to another layer of proven demand printed at 108.20-108.43.

H1 timeframe:

Arranged by way of the 1.10 figure, resistance at 109.95, a three-drive bearish formation at 109.93 (albeit not perfect), a 100% Fib projection at 109.88, and a 61.8% Fib retracement at 109.89, the 110.00-109.88 area forms relatively dense resistance.

Upstream, 110.18-110.09 supply is in focus (this area is particularly standout due to the momentum derived out of its base which dug below a handful of support points). In fact, this supply is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41.

109.30 lows, on the other hand, is evident to the downside, closely tailed by familiar demand at 109.07-109.19 (fixed within H4 demand at 109.02-109.20).

On the basis of the RSI indicator, the value pulled away from overbought status Friday and now eyes trendline support, drawn from the low 20.25.

Observed levels:

Long term:

The descending resistance-turned possible support, etched from the high 118.66, belonging to the monthly chart has buyers attempting to take hold. Technically, this places the daily timeframe’s long-term resistance zone at 110.94-110.29 in question and, therefore, may have buyers set up a defence around 108.60 lows if tested.

Short term:

The H4 scale currently trades in unison with the monthly timeframe: scope to approach at least supply at 110.85-110.46.

Lower down, any H1 buying must face a number of notable resistances until Quasimodo resistance at 110.41, which essentially marks the lower boundary of H4 supply.

Therefore, in light of the picture out of both monthly and H4 timeframes, any bearish attempts from the said H1 resistances could be short-lived and promote a bullish scenario to approximately 110.40ish.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure unchanged from previous analysis.

Sterling against the dollar has emphasised an uneventful picture since May 18th, fluctuating between gains and losses south of Quasimodo resistance at 1.4250.

GBP/USD finished on the ropes for a second straight week amid raised concerns regarding a full reopening, placing support at 1.4003 within reach this week. Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position, with last week wrapping up within touching distance of the 50.00 centreline.

H4 timeframe:

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, we would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

H1 timeframe:

From June onwards, the theme on the H1 chart has been set around the 1.41 and 1.42 figures, along with the 100-period simple moving average, currently circling in between at 1.4146. Also, important areas to recognise are support at 1.4078 and resistance plotted at 1.4246. In fact, 1.4078 served as a substantial floor on Thursday, serving to help more informed traders capitalise on the stop run south of 1.41.

Price action failing to touch gloves with 1.42 since June 7th signals possible moves through 1.41 and support at 1.4078 this week, targeting Quasimodo support from 1.4026.

As you can see, the week ended forming a mild recovery from 1.41, confirmed by the RSI indicator bouncing from oversold space and chalking up what’s known as hidden bullish divergence (essentially signalling price strength despite momentum squeezing lower—these are usually seen as continuation patterns).

Observed levels:

Long term:

The monthly timeframe’s trendline resistance breach in December 2020 underlines a bullish stance. Before buyers change gears, however, touching gloves with support at 1.4003 or demand at 1.3857-1.3940 on the daily timeframe could be in the offing.

Short term:

Shorter term, nonetheless, the H4 timeframe’s ranging action (two clear consolidations exist at 1.4096/1.4219 and 1.4188/1.4083) calls attention to the recent jaded upside. Ultimately, to help validate weakened bulls, price must tunnel below the said range supports and neighbouring trendline support.

Given the H4 timeframe’s picture, 1.41 on the H and support from 1.4078 may deliver little early week and suffer a breach. Should this come to fruition, a 1.4078 break potentially drives moves to H1 Quasimodo support at 1.4026 and the key figure 1.40, which joins closely with daily support from 1.4003.

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.

June 11th 2021: DXY off Session Peaks After US Inflation Data; Eyes 90.00 Support

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Thursday, as you can see, wrapped up in the shape of a doji indecision candle. In light of the candle’s location on the chart (established within a mild range), this portrays a measure of caution in the market.

In terms of where we stand on the chart’s framework, Quasimodo resistance at 1.2278 remains in the light, while, as stated in recent writing, navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average.

Activity out of the RSI demonstrates the value attempting to hold on to support from 51.36, action following a deterioration from peaks fashioned just south of overbought status.

H4 timeframe:

In what was a somewhat choppy session—oscillating between gains and losses—EUR/USD ended the day mostly unchanged as the market digested upbeat US inflation data and ECB commentary.

From a technical standpoint, the currency pair remains languishing south of the 61.8% Fib retracement at 1.2206, which made an entrance on Wednesday.

For those who read previous analysis you may note that the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094).

Recent reports also highlighted additional areas to be watchful of on this timeframe: resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

The bulk of yesterday’s movement occurred around the 100-period simple moving average at 1.2176.

This leaves resistance between 1.2211 and 1.22 on the table today (note the area houses the H4 timeframe’s 61.8% [AB=CD] Fib level at 1.2206), with a break perhaps unmasking two Quasimodo resistances at 1.2257 and 1.2241. Moves lower, on the other hand, throw light on 1.2132 support, followed by the psychological figure 1.21.

With regards to the RSI indicator, we are seeing the value explore space under the 50.00 centreline after flirting with peaks around 60.00ish.

Observed levels:

On the basis of short-term charts—H4 and H1—this market continues to echo a downward bias, largely as a result of the recent rejection from H1 and H4 resistances between 1.2211, 1.2206 and 1.22. As aired in Thursday’s technical briefing, this could mean a H1 close south of the 100-period simple moving average around 1.2176, with downside to perhaps hone in H1 support at 1.2132 and, with some oomph, maybe the 100% Fib projection at 1.2123 on the H4 and then the 1.21 figure.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure unchanged from previous analysis.

The daily chart’s technical scenery is tedious.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7538. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s. North of here, we have trendline resistance, drawn from the peak 79.74.

H4 timeframe:

The US dollar index (ticker: DXY) finished off best levels as recent US inflation data and ECB action failed to spark movement.

Technically, however, AUD/USD derived modest support from 0.7726—Monday’s session low. In the event the market maintains a bid, Quasimodo resistance from 0.7782 is in the offing. Space under 0.7726, on the other hand, could guide price action as far south as 0.7632-0.7653 demand.

H1 timeframe:

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

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

As you can see, the unit held its bid-on-dip scenario from 0.7720-0.7728 support on Thursday, scaling to a high of 0.7763 and highlighting supply at 0.7783-0.7771 (holds H4 Quasimodo resistance within at 0.7782, and is situated under 0.78 [H1]). Territory south of noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

As for the RSI indicator, overbought space is plotted nearby, possessing obvious resistance from 72.21.

Observed levels:

Prime focus is on H1 supply at 0.7783-0.7771. Recognising the area shares space with H4 Quasimodo resistance at 0.7782, bearish activity could develop from this neighbourhood.

Bearish interest, however, may also want to consider the 0.78 figure. Not only is this a widely watched level, daily resistance is located nearby at 0.7816.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.2 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies, nevertheless, reveal the pair has been trending higher since the beginning of April. Subsequent months has witnessed a sizeable retracement, followed by an attempt to recapture higher levels.

The RSI is stationed under resistance at 57.00, yet currently challenging the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

Although demand at 109.02-109.20 motivated bullish activity at the beginning of the week, USD/JPY came under renewed pressure Thursday and has price loitering within a stone’s throw of the noted demand base. The key point to be mindful of is should we shake hands with this demand once more, trendline support, drawn from the low 107.48 intersects with the upper side of the demand and may trigger another bullish attempt.

Failure to hold the current demand, technical attention shifts to another layer of proven demand printed at 108.20-108.43.

H1 timeframe:

Following an earlier bull trap—movement in which price spiked to highs of 109.79 and deceived breakout bulls north of the previous higher high at 109.67—the technical pendulum swung in favour of sellers, with price toying with space a touch north of demand at 109.07-109.19 (set within H4 demand at 109.02-109.20), which is positioned within striking range of the 109 figure.

Information derived from the RSI informs traders that momentum is on the verge of entering oversold space, a zone between 0 and 30.00 which indicates extreme levels (gone too far in a particular direction according to the indicator) and a place where a reversal could emerge.

Observed levels:

The combination of the 109 figure, H1 demand at 109.07-109.19, H4 demand at 109.02-109.20, and H4 trendline support, extended from the low 107.48, could provide enough technical evidence to encourage a bullish reaction should the aforementioned area be tested today.

What’s also interesting is the H1 and H4 zones are supported by monthly action balancing off descending resistance-turned support.

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.2 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure unchanged from previous analysis.

Versus the US dollar, sterling ended Thursday on the front foot, following upbeat inflation data out of the US and recent ECB commentary.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week with recent action cruising within range of the 50.00 centreline.

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact. As evident from the chart, Thursday, although whipsawing the lower side of the aforesaid range, produced an almost one-sided recovery to a high of 1.4178.

Technical structure above the consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Support from 1.4078 welcomed price movement on Thursday, following a rapid push through 1.41 bids. Subsequent action witnessed GBP/USD reclaim 1.41+ status and dethrone the 100-period simple moving average around 1.4148.

Despite mild selling, as we write, resistance could potentially form at 1.42, with a break uncovering additional resistance coming in at 1.4246.

The picture from the RSI shows the value nearing the oversold range, in particular resistance at 71.00ish.

Observed levels:

The 1.42 figure based on the H1, dovetailing closely with the upper side of the H4 range at 1.4219, forms potential resistance. The caveat, of course, is a possible whipsaw forming to test daily Quasimodo resistance at 1.4250.

With scope to pilot higher levels, an alternative short-term scenario to be mindful of is H1 retesting the 100-period simple moving average around 1.4148 and driving moves to 1.42.

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.

June 10th 2021: EUR/USD Flat as Attention Shifts to ECB Meeting

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Ahead of today’s European Central Bank meeting and impending US inflation release, EUR/USD concluded Wednesday notably off session tops. This formed what many will recognise as a shooting start candlestick pattern—a bearish signal.

Technical structure on the daily chart remains fixed on Quasimodo resistance at 1.2278, while navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average.

Momentum studies, according to the RSI, reveals the value holding position north of support at 51.36. As long as the indicator maintains this position, momentum could head for overbought status.

H4 timeframe:

For those who have followed our recent technical briefings you may recall the following (italics):

Technically speaking, Tuesday’s retreat shaped just south of a 61.8% Fib retracement at 1.2206. Harmonic traders will note the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094).

As evident from the H4 chart, the 61.8% Fib retracement at 1.2206 made an entrance on Wednesday and effectively took out the second take-profit target from the AB=CD 1.2123 formation.

Areas to be mindful of going forward are resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

In Wednesday’s technical briefing, the report highlighted the following (italics):

Against the backdrop of higher timeframe structure, the space between the 1.22 figure and resistance at 1.2211 on the H1 may still be of interest to lower timeframe traders, which houses the H4 timeframe’s 61.8% (AB=CD) Fib level at 1.2206.

As you can see, short-term action did indeed shake hands with the 1.2211/1.22 neighbourhood on Wednesday and withdrew to within reach of the 100-period simple moving average, currently circling around 1.2165. Support at 1.2132 could call for attention should sellers topple the aforementioned SMA today.

Helping to frame resistance yesterday, of course, was RSI resistance at 78.97, boasting historical significance since early 2021.

Observed levels:

Based on H4 and H1 charts, given both timeframes addressed resistance on Wednesday, short-term direction appears poised to explore lower levels. This could mean a H1 close south of the 100-period simple moving average around 1.2165, with subsequent downside to perhaps hone in H1 support at 1.2132.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure unchanged from previous analysis.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7536. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s.

H4 timeframe:

The Australian dollar tunnelled lower against a ‘recovering’ USD (US dollar index: ticker DXY) on Wednesday. This led the currency pair to challenge 0.7726—Monday’s session low—which, if a breach comes to pass could guide price action as far south as 0.7632-0.7653 demand.

A 0.7726 recovery, on the other hand, throws light on Quasimodo resistance from 0.7782.

H1 timeframe:

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

Although sellers made a show and we’re now back at the aforementioned support, upside objectives rest at the 38.2% and 61.8% Fib retracement levels at 0.7740 and 0.7750, respectively. Harmonic traders will note these targets are derived from the AB=CD (the 100% Fib projection).

Territory south of the noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

In terms of where we stand on the RSI, the value registered 40.00 on Wednesday. Knowing we’re plotting space south of the 50.00 centreline—breaking beneath this level suggests weakening upside—oversold territory could be on the cards, targeting support at 19.30.

Observed levels:

Up till now, upside strength echoes a fragile tone off H1 Fib support from 0.7720-0.7728. Moving through the latter today opens the door to a short-term bearish theme, with initial targets arranged around the 0.77 figure and nearby 61.8% Fib retracement at 0.7692. Below here, sellers may also take aim at H1 demand from 0.7634-0.7649, housed within the walls of H4 demand at 0.7632-0.7653.

However, to reach 0.7632-0.7653 involves pushing through the lower side of the daily timeframe’s consolidation at 0.7699.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.1 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI remains stationed under resistance at 57.00, though recently rebounded from the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

For those who’ve been following recent technical reports you may recall the following (italics):

Limited change was observed on Tuesday, though bulls did manage to maintain position north of demand at 109.02-109.20, which, as underlined in previous writing, represents a decision point to initially push above 109.71 tops. Also technically notable is trendline support, drawn from the low 107.48, intersecting with the noted demand base.

Assuming the market remains bid, supply is seen fixed just north of tops (110.33—last Thursday’s peak) at 110.85-110.46, which happens to house a 100% Fib projection at 110.59 and a 1.618% Fib expansion at 110.69.

With USD/JPY eking out modest upside on Wednesday, this reinforces a bullish wind today, targeting the above noted resistance structures.

H1 timeframe:

It was noted in Wednesday’s technical briefing that short-term direction was potentially bound for the 100-period simple moving average around 109.60ish. This followed Monday’s recovery from demand at 109.07-109.19—set within H4 demand at 109.02-109.20.

Going forward, H1 price taking on the said SMA today unlocks the trapdoor to possible follow-through buying towards resistance at 109.95 and the 110 figure.

With reference to the RSI, the value is within a stone’s throw from touching gloves with overbought, following yesterday driving through the 50.00 centreline.

Observed levels:

H1 and H4 demand areas standing ground (109.07-109.19 and 109.02-109.20), in conjunction with monthly action balancing off descending resistance-turned support, brings to light a potential bullish scene above the 100-period simple moving average on the H1 scale around 109.60, targeting 110 (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 subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and recently witnessed the value cruise towards the 50.00 centreline.

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact.

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Technical structure unchanged from previous analysis.

Aside from short-term fluctuations developing around the 100-period simple moving average at 1.4146 this week, focus, as noted in previous reports, remains on the 1.42 and 1.41 figures (the latter joins with a 61.8% Fib), echoing a similar picture to the H4 (see above).

Outside of these levels, emphasis is on support at 1.4078 and resistance formed from 1.4246.

The RSI, however, is trekking just ahead of oversold territory.

Observed levels:

Technical structure unchanged from previous analysis.

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure on these timeframes is limited for the time being. Despite this, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003.

The H4 timeframe’s range between 1.4096 and 1.4219 is likely still on the radar for medium-term traders, looking to fade range extremes. This will see H1 traders hone in on the 1.41/42 figures.

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.

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.

June 9th 2021: Markets Rangebound Ahead of Key Events — BoC Today and ECB Thursday

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Since mid-May, technicians will note the unit has been hovering (consolidating) within reach of Quasimodo resistance at 1.2278. Territory south of current price unearths dynamic support around 1.1983: the 200-day simple moving average.

From the perspective of the RSI, the indicator remains engaging with support at 51.36, with the value demonstrating signs of strength off the base.

H4 timeframe:

Ahead of the impending ECB meet on Thursday, Europe’s single currency eked out a modest bearish tone on Tuesday against a somewhat stronger greenback across the board.

Technically speaking, Tuesday’s retreat shaped just south of a 61.8% Fib retracement at 1.2206. Harmonic traders will note the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094).

Traders may also acknowledge additional resistance resides at 1.2244.

H1 timeframe:

Volatility thinned heading into the early hours of London on Tuesday, balancing off the 100-period simple moving average around 1.2169. Price action traders will be monitoring the 1.22 figure, a level in the company of another layer of resistance from 1.2211. As noted in Monday and Tuesday’s technical briefings, the ‘H4 AB=CD’ pattern’s 61.8% Fib retracement is located between the aforesaid H1 levels at 1.2206.

Downstream, south of the 100-period simple moving average, underperformance shines the technical spotlight on support at 1.2132, located nearby trendline resistance-turned support, extended from the high 1.2254.

In terms of where we’re positioned on the RSI, resistance at 67.65 is a prominent level right now, with additional resistance plotted nearby at 78.97. As for support, the 50.00 centreline appears to be serving as a relatively strong floor.

Observed levels:

Technical structure largely unchanged from previous analysis on the higher timeframes. Scope for further upside is visible on the monthly scale, with the daily timeframe chalking up a potential line in the sand at 1.2278: a Quasimodo resistance level.

Against the backdrop of higher timeframe structure, the space between the 1.22 figure and resistance at 1.2211 on the H1 may still be of interest to lower timeframe traders, which houses the H4 timeframe’s 61.8% (AB=CD) Fib level at 1.2206. Yet, seeing as price cleared a chunk of offers from 1.22 late Monday, the 1.2211/1.2200 region could be fragile. The question, therefore, is are we heading north of 1.22 to shake hands with H1 Quasimodo resistances at 1.2257 and 1.2241, and, by extension, H4 resistance at 1.2244?

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure largely unchanged from previous analysis.

Despite the second half of last week snapping to a low of 0.7645, since April 20th, resistance at 0.7816 and support from 0.7699 continues to work with a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, a level deriving additional (dynamic) support from the 200-day simple moving average circling 0.7535. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value attempting to secure position above the 50.00 centreline, a move not only signalling strength to the upside, but also highlighting trendline resistance, drawn from 80.12.

H4 timeframe:

AUD/USD left behind a modestly negative tone on Tuesday, weighed on the back of USD bids.

As underlined in Tuesday’s technical briefing, overhead resistance is arranged at peaks around 0.7769 and Quasimodo resistance from 0.7782, shadowed by daily resistance noted above at 0.7816.

In the event of a 0.7726 breach—Monday’s session low—the technical landscape indicates a 0.7632-0.7653 demand revisit may be on the menu.

H1 timeframe:

Supply at 0.7783-0.7771—capped upside pressure at the beginning of June—and the 100-period simple moving average at 0.7724 remain clear technical levels on the H1 chart.

Outside of the aforementioned areas unearths the 0.78 and 0.77 psychological figures. For any Fibonacci traders, the 38.2% value falls in at 0.7720, with a 61.8% value seen from 0.7692.

The modest rise in selling interest on Tuesday also pulled the RSI through the 50.00 centreline, which, as you can see, now currently serves as indicator resistance. To the downside, support resides within the walls of oversold space at 19.30.

Observed levels:

Short-term chart studies suggest the H1 timeframe is bound for the 100-period simple moving average, currently circling 0.7724. What’s technically noticeable is this dynamic value joins forces with a 38.2% Fib retracement at 0.7720.

H1 supply at 0.7783-0.7771, which houses H4 Quasimodo resistance at 0.7782, deserves attention should buyers make an appearance.

Another level worth keeping an eye on is the 0.78 psychological figure—aligning with daily (range) resistance at 0.7816.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading unchanged.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI remains stationed under resistance at 57.00 and is tackling the 50.00 centreline. Should a break come to pass, a test of oversold might be in store, targeting support at 28.19.

H4 timeframe:

Limited change was observed on Tuesday, though bulls did manage to maintain position north of demand at 109.02-109.20, which, as underlined in previous writing, represents a decision point to initially push above 109.71 tops. Also technically notable is trendline support, drawn from the low 107.48, intersecting with the noted demand base.

Assuming the market remains bid, supply is seen fixed just north of tops (110.33—last Thursday’s peak) at 110.85-110.46, which happens to house a 100% Fib projection at 110.59 and a 1.618% Fib expansion at 110.69.

H1 timeframe:

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

Demand at 109.07-109.19, given the base is fixed within H4 demand mentioned above at 109.02-109.20, welcomed price action on Monday and has so far held position.

What’s interesting is the RSI shows bullish divergence forming as the value left oversold territory. This informs traders that downside momentum could be pressing the pause button for the time being, consequently allowing bulls to make a show, which may see price upside make its way to the 100-period simple moving average around 109.71.

As evident from the H1 scale, we have seen buyers hold levels above 109.07-109.19 demand, with the majority of traders now likely eyeing the 100-period simple moving average now circling around 109.66. A break higher could see the unit touch gloves with the 110 neighbourhood (as well as H1 resistance from 109.95 and a trendline support-turned resistance, taken from the low 108.56).

Observed levels:

As noted in Tuesday’s analysis (italics):

Technically, we have H1 demand in play at 109.07-109.19 and H4 demand also active at 109.02-109.20, alongside the monthly timeframe attempting to forge support off a recently breached descending resistance line. Aside from the daily timeframe fading long-term resistance at 110.94-110.29, technical elements suggest a bullish wave is around the corner, targeting at least the 100-period simple moving average around 109.71 on the H1.

Given the SMA is a dynamic value, traders are now likely watching this indicator around the 109.66ish region on the H1 as the initial upside target, with subsequent buying to perhaps take aim at 110.

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 subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed, albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and recently witnessed the value bottom ahead of the 50.00 centreline.

H4 timeframe:

Technical structure largely unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact.

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Aside from short-term fluctuations developing around the 100-period simple moving average at 1.4148 on Tuesday, focus, as noted in previous reports, remains on the 1.42 and 1.41 figures (the latter joins with a 61.8% Fib), echoing a similar picture to the H4 (see above).

Outside of these levels, focus is drawn to support at 1.4078 and resistance formed from 1.4246.

The technical position of the RSI has the value navigating space just south of the 50.00 centreline, following a recovery ahead of oversold territory.

Observed levels:

Technical structure largely unchanged from previous analysis.

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure on these timeframes is limited for the time being. Despite this, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003.

The H4 timeframe’s range between 1.4096 and 1.4219 is likely still on the radar for medium-term traders, looking to fade range extremes. This will see H1 traders hone in on the 1.41/42 figures.

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.

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.

June 8th 2021: DXY Tentatively Sub 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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.2 percent as of current trade.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

A closer reading of price action on the daily timeframe has the currency pair modestly higher on Monday in response to the USD edging lower. This follows Friday’s lower-than-anticipated US non-farm payrolls data.

Since mid-May, technicians will note the unit has been hovering (consolidating) within reach of Quasimodo resistance at 1.2278. Territory south of current price unearths dynamic support around 1.1982: the 200-day simple moving average.

The RSI remains engaging with support at 51.36, with the value demonstrating signs of strength off the base yesterday.

H4 timeframe:

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

The blend of a 100% Fib projection at 1.2123 and a 61.8% Fib retracement at 1.2094 (green) served as a floor of support Friday. Harmonic traders will recognise the 100% Fib projection established what’s known as an AB=CD pattern.

Textbook AB=CD take-profit targets—derived from legs A-D— fell on the 38.2% and 61.8% Fib retracements at 1.2167 and 1.2206, respectively. As you can see, price struck the 38.2% base and formed a shooting star candlestick pattern (bearish signal) on Friday.

As evident from the H4 chart, Monday dethroned the 38.2% Fib retracement at 1.2167 and is now within striking distance of the 61.8% Fib retracement at 1.2206, which, for many traders, represents the final upside target out of the AB=CD formation. Traders may acknowledge additional resistance resides at 1.2244.

H1 timeframe:

The mood turned positive for Europe’s single currency heading into the early hours of US trading on Monday, a handful of hours following a test of trendline resistance-turned support, taken from the high 1.2254. Subsequent action led to price travelling through the 100-period simple moving average at 1.2178 to shake hands with the 1.22 figure (sheltered just south of resistance from 1.2211). As noted in Monday’s briefing, the ‘H4 AB=CD’ pattern’s 61.8% Fib retracement is also located between the aforesaid H1 levels at 1.2206.

The H1 timeframe’s RSI is toying with space just beneath overbought conditions around 65.00ish. Indicator resistance remains positioned at 78.97.

Observed levels:

Scope for further upside is visible on the monthly scale, with the daily timeframe chalking up a potential line in the sand at 1.2278: a Quasimodo resistance level from 1.2278.

However, lower timeframe technical structure positions H1 around the 1.22 figure, representing possible resistance. This—coupled with another layer of H1 resistance at 1.2211 and the H1 RSI hovering within reach of overbought territory, as well as the H4 timeframe’s 61.8% (AB=CD) Fib level at 1.2206—perhaps unlocks a bearish scenario today, with short-term sellers likely taking aim at the 100-period simple moving average at 1.2178 as an initial base (H1).

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Technical structure largely unchanged from previous analysis.

Despite the second half of last week snapping to a low of 0.7645, since April 20th, resistance at 0.7816 and support from 0.7699 continues to shape a defined range (yellow).

Support at 0.7563 remains in view as a potential objective should sellers attempt to take the wheel this week, a level deriving additional (dynamic) support from the 200-day simple moving average circling 0.7533. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, as noted in previous analysis, we have been higher since the early months of 2020. However, we must also take into account that the currency pair has been mostly directionless since the beginning of 2021.

The RSI shows the value took above the 50.00 centreline on Monday, a move highlighting trendline resistance, drawn from 80.12.

H4 timeframe:

The Australian dollar extended Friday’s bullish narrative (delivered from FRESH demand at 0.7632-0.7653) on Monday, rising 0.3 percent against a broadly softer greenback. Overhead resistance falls on peaks around 0.7769 and Quasimodo resistance from 0.7782, shadowed by daily resistance noted above at 0.7816.

H1 timeframe:

Supply at 0.7783-0.7771—capped upside pressure at the beginning of June—is within a stone’s throw of making an entrance, a range secured a few pips beneath the 0.78 psychological figure.

Should short-term flow take a step back today, visiting the 100-period simple moving average at 0.7724 could be on the cards, arranged just ahead of 0.77 psychological level.

RSI action remains around a key level of resistance at 72.21 on the indicator. Incapable of crossing above the resistance shows upside momentum is, in theory, potentially fading.

Observed levels:

The daily timeframe’s consolidation between 0.7816 and 0.7699 remains centre stage.

Across the page on the H4 and H1 timeframes, intraday action, as underscored in Monday’s briefing, is tipped to lock horns with H1 supply at 0.7783-0.7771, which houses H4 Quasimodo resistance at 0.7782. Consequently, a bearish scene could unfold from within H1 supply if tested.

Alternatively, traders are urged to pencil in a possible drive to 0.78, a level sharing chart space with daily (range) resistance at 0.7816.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading modestly on the backfoot by 0.2 percent.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

As highlighted in Monday’s technical briefing, the piece noted that the lower border of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), in cooperation with Friday’s USD weakness in response to the latest US employment situation report, watched sellers make a show on Friday.

Amidst downside in US Treasury yields and the US dollar index (ticker: DXY) hesitantly elbowing through the 90.00 figure, USD/JPY appears poised to cross with 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI remains stationed under resistance at 57.00 and is on course to tackle the 50.00 centreline. Should a break come to pass, a test of oversold might be in store, targeting support at 28.19.

H4 timeframe:

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

Through the lens of a price action trader, demand at 109.02-109.20—a decision point to initially push above 109.71 tops—will be on the radar, aligning with a trendline support, drawn from the low 107.48. What’s important to recognise is the higher low formed at 109.33 and subsequent higher high at 110.33. This activity draws the attention of trend traders (buyers) who may now have protective stops under the noted higher low. Knowing this, and by identifying demand nearby at 109.02-109.20, we could see a stop run form early this week.

Slipping through 109.33 not only triggers buyers’ protective stop-loss orders (sells), the move also fills breakout sellers’ sell-stop orders, and collectively helps fuel moves into bids at 109.02-109.20 (remember bids/offers represent liquidity, and market orders attempt to consume liquidity).

As you can see, price touched gloves with H4 demand at 109.02-109.20 on Monday and has, for the time being, shown promise as a supportive structure.

H1 timeframe:

Demand at 109.07-109.19, given the base is fixed within H4 demand mentioned above at 109.02-109.20, welcomed price action on Monday and has so far held position. Note this demand is placed within striking distance of the 109 figure.

What’s interesting is the RSI shows bullish divergence forming as the value left oversold territory. This informs traders that downside momentum could be pressing the pause button for the time being, consequently allowing bulls to make a show, which may see price upside make its way to the 100-period simple moving average around 109.71.

Observed levels:

Technically, we have H1 demand in play at 109.07-109.19 and H4 demand also active at 109.02-109.20, alongside the monthly timeframe attempting to forge support off a recently breached descending resistance line. Aside from the daily timeframe fading long-term resistance at 110.94-110.29, technical elements suggest a bullish wave is around the corner, targeting at least the 100-period simple moving average around 109.71 on the 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 subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed, albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and recently witnessed the value bottom ahead of the 50.00 centreline.

H4 timeframe:

Technical structure largely unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact as we move into the first full week of June.

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Attention on the H1 chart is largely centred on the 1.42 and 1.41 figures (the latter joins with a 61.8% Fib), echoing a similar picture to the H4 (see above). Within the zone, note we have the 100-period simple moving average trading at 1.4148.

Outside of these levels, focus is drawn to support at 1.4078 and resistance formed from 1.4246.

From the RSI, momentum pulled away from space just beneath oversold resistance yesterday and dipped under 60.00.

Observed levels:

Technical structure largely unchanged from previous analysis.

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure on these timeframes is limited for the time being. In spite of the above, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003 this week.

The H4 timeframe’s range between 1.4096 and 1.4219 is likely on the radar for medium-term traders, looking to fade range extremes. This will see H1 traders hone in on the 1.41/42 figures.

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.

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.

Weekly Technical Market Insight: 7th – 11th June 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

In the shape of back-to-back doji candles, the US dollar—measured by the US dollar index (ticker: DXY)—extended its indecisive atmosphere last week, ranging between 90.63 and 89.66 session extremes. Although doji candles allude to indecision, a doji pattern, subject to its location, can also be interpreted as a reversal signal.

The previous weekly market insight cast light upon a descending wedge pattern (a shape exhibiting a decrease in downside momentum within its walls [91.43/90.42]). The report observed that since the DXY topped out at the 93.43 31st March peak, and cooked up reasonably decisive downside movement, the recent pattern formation and subsequent upside breach is perhaps regarded as a reversal signal. As you can see, Tuesday retested the upper boundary of the wedge and developed support which led the way to fresh three-week peaks at 90.62, despite Friday’s session finishing on the ropes.

The pattern’s upside target rests beneath resistance at 91.36 (red), stationed just south of the 200-day simple moving average, circling 91.62. Should pattern bids hold the buck higher this week, targeting 91.36 is a reasonably logical approach.

However, as also highlighted in previous writing, it’s important to note a bearish narrative has clouded the greenback since the early months of 2020, by way of well-defined lower lows and lower highs. Many analysts likely refer to this downward movement as a primary trend. Consequently, this unlocks the possibility of fresh lower lows beyond 89.34 support over the coming weeks (see black arrows), with sellers taking aim at Quasimodo support from 88.43.

Momentum studies, through means of the RSI indicator, shows the value failed to find acceptance north of the 50.00 centreline. Some may argue that cementing position above the latter signals the wedge pattern breakout has some muscle behind it, though do note indicator resistance falls in at 55.67.

  • Should an extension to the current pullback (from 89.53) materialise, a bearish scenario, in line with the current downtrend, unfolding off 91.36 resistance is a possible scenario this week. 91.36 is reinforced not only by a nearby 200-day simple moving average (dynamic resistance) at 91.62, but also the wedge pattern’s take-profit target around 91.32. At the same time, nonetheless, failure to explore higher levels shines the technical spotlight back on the possibility of a dip to support at 89.34, a level which echoes some vulnerability.

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a rocky start, down 0.5 percent.

April upside—alongside May’s optimism—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 major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Friday’s lower-than-expected US non-farm payrolls metric softened US yields and bruised the greenback, consequently elevating EUR/USD off weekly troughs.

Thursday hustling its way through support from 1.2169 had Friday’s bid retest the aforementioned level in the form of resistance. Sellers taking ownership here this week unearths dynamic support around 1.1980: the 200-day simple moving average. Reclaiming the said resistance, on the other hand, shifts interest to Quasimodo resistance at 1.2278.

Movement out of the RSI has the value engaging support at 51.36, which, as aired in previous analysis, follows May’s deterioration from highs at 68.70. Continued downside here unlocks a possible oversold signal this week.

H4 timeframe:

The blend of a 100% Fib projection at 1.2123 and a 61.8% Fib retracement at 1.2094 (green) served as a floor of support Friday. Harmonic traders will recognise the 100% Fib projection established what’s known as an AB=CD pattern; others may have noted the harmonic Gartley formation (however, a valid Gartley should ideally observe price test both the AB=CD level and the 78.6% Fib retracement [the latter was left unchallenged]).

Textbook AB=CD take-profit targets—derived from legs A-D— fell on the 38.2% and 61.8% Fib retracements at 1.2167 and 1.2206, respectively. As you can see, price struck the 38.2% base and formed a shooting star candlestick pattern (bearish signal) on Friday. As such, this could be all the upside buyers receive from the AB=CD move, throwing light on a potential move to familiar demand at 1.2044-1.2071 this week. Fibonacci traders will also view the close connection with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

Supporting the ‘H4 AB=CD’ pattern’s 38.2% Fib retracement at 1.2167 is H1 trendline resistance, taken from the high 1.2254. The descending structure made an entrance following Friday’s high-spirited advance a handful of pips ahead of the 1.21 figure, confirmed by RSI bullish divergence within oversold waters.

Upstream, nonetheless, somewhat muscular resistance comes in between 1.2211 and the 1.22 figure, combined with the ‘H4 AB=CD’ pattern’s 61.8% Fib retracement at 1.2206. Lower, technical elements reveal support at 1.2132.

The RSI is seen toying with space just beneath overbought conditions around 60.00ish. Indicator resistance remains positioned at 78.97.

Observed Levels:

Long term:

The technical setting on the monthly timeframe underlines scope to shake hands with 2021 pinnacles at 1.2349.

Before achieving higher levels, daily movement concluded the week addressing a support-turned possible resistance from 1.2169, action that may lead to a bearish phase unfolding this week, targeting the 200-day simple moving average around 1.1980.

Short term:

Meanwhile, shorter-term charts highlight resistance on the H4 and H1 timeframes. The H4 timeframe, after rebounding from a 100% Fib projection at 1.2123, bumped heads with a 38.2% Fib retracement at 1.2167, a level hardened by H1 trendline resistance, taken from the high 1.2254.

Therefore, the daily timeframe, the H4 timeframe, and the H1 timeframe echo resistance, confluence perhaps unbolting the door to a bearish theme early week, taking aim at H1 support from 1.2132, closely followed by the 100% Fib projection at 1.2123 on the H4 and then 1.21 (H1).

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Since April 20th, resistance at 0.7816 and support from 0.7699 have established a defined range (yellow).

The tail end of the week, however, witnessed price whipsaw the lower edge of the said range, initiating what’s known as a bear trap (a false breakout deceiving sellers).

Support at 0.7563 remains in view as a potential objective should sellers attempt to take the wheel this week, a level deriving additional (dynamic) support from the 200-day simple moving average circling 0.7530. Above 0.7816, supply falls in around 0.8045-0.7985.

With respect to trend, as noted in previous analysis, we have been higher since the early months of 2020. However, we must also take into account that the currency pair has been mostly directionless since the beginning of 2021.

Out of the RSI, the 50.00 centreline was taken on Friday, a move which brings light to support at 37.92.

H4 timeframe:

FRESH demand at 0.7632-0.7653 received price in the second half of the week, welcoming a sharp U-turn on Friday amidst NFP-induced USD softness. This is a demand the research team voiced as particularly significant, having it form a decision point to break 0.7661 and 0.7676 tops.

Overhead resistance falls on peaks around 0.7769 and Quasimodo resistance from 0.7782, shadowed by daily resistance noted above at 0.7816.

H1 timeframe:

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

Key developments on the H1 scale on Thursday was price touching gloves with demand at 0.7634-0.7649—an area bolstered by Fibonacci confluence: 1.272% Fib expansion at 0.7645, 1.272% Fib extension at 0.7649 and a 100% Fib projection at 0.7654. As you can see, buyers have made a show from the aforementioned demand area.

As evidenced from the chart, AUD/USD bulls, persuaded by Friday’s disappointing NFP number, run above 0.77 as well as the 100-period simple moving average at 0.7724. Supply now calls for attention at 0.7783-0.7771, sheltered under the 0.78 figure.

With reference to the RSI indicator, we finished the week within the overbought range, threatening a potential test of resistance at 80.85. This essentially shows momentum to the upside is at a point where it may slow and form a retracement.

Observed levels:

Long term:

The daily timeframe’s consolidation between 0.7816 and 0.7699 remains centre stage for the time being. A decisive breakout forming here will command attention, outlining either daily support at 0.7563 or supply at 0.8045-0.7985.

Short term:

In the wake of Friday’s upside pressure, intraday action is tipped to perhaps lock horns with H1 supply at 0.7783-0.7771 early week, which houses H4 Quasimodo resistance at 0.7782. Prior to this, technicians will be watching for H1 to retest the 100-period simple moving average around 0.7724, an event likely to stir lower timeframe dip-buying.

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 cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading unchanged.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

The lower border of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), in cooperation with Friday’s USD weakness in response to the latest US employment situation report, watched sellers make a show and reclaim the entire portion of Thursday’s advance.

108.60ish lows (green oval) represent a logical roadblock to the downside, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI, a popular gauge of momentum, struggled to gain approval above resistance at 57.00 last week, an S/R level that’s been in play since March 2020. Above this base shifts attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02, whereas below we’ll be looking at a possible test of oversold and support at 28.19.

H4 timeframe:

The technical setting on the H4 scale is interesting.

Through the lens of a price action trader, demand at 109.02-109.20—a decision point to initially push above 109.71 tops—will be on the radar, aligning with a trendline support, drawn from the low 107.48. What’s important to recognise is the higher low formed at 109.33 and subsequent higher high at 110.33. This activity draws the attention of trend traders (buyers) who may now have protective stops under the noted higher low. Knowing this, and by identifying demand nearby at 109.02-109.20, we could see a stop run form early this week.

Slipping through 109.33 not only triggers buyers’ protective stop-loss orders (sells), the move also fills breakout sellers’ sell-stop orders, and collectively helps fuel moves into bids at 109.02-109.20 (remember bids/offers represent liquidity, and market orders attempt to consume this liquidity).

H1 timeframe:

In the aftermath of Friday’s sell-off, H1 tested a pocket of bids at support from 109.45. This followed a muscular push through a number of supports, including the 110 psychological hurdle and trendline support, taken from the low 108.56.

Should sellers tunnel through 109.45, 109.07-109.19 demand inhabits territory above the 109 figure. A 109.45 recovery, on the other hand, reignites interest at 110—dovetails closely with resistance at 109.95 and trendline support-turned resistance.

Supporting a recovery, the RSI indicator settled the week within the walls of oversold and came within reach of support at 18.76.

Observed levels:

Long term:

Technical structure largely unchanged from previous analysis.

Long term, we have somewhat conflicting signals: monthly price attempting to forge support off a recently breached descending resistance line, and daily price touching gloves with the underside of resistance at 110.94-110.29.

Higher timeframe action tends to take precedence over lower timeframes, therefore rising through the aforesaid daily resistance base could be in store.

Short term:

Across the page, the short-term view places interest on H4 demand at 109.02-109.20. Aside from sharing chart space with H4 trendline support, the area encloses H1 demand from 109.07-109.19. With the monthly timeframe displaying support, and available stops below the H4 timeframe’s higher low at 109.33, the H4 demand is an area buyers may be drawn to this week.

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 subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed, albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 are pivotal barriers on the daily chart.

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar this week.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and witnessed the value mildly bottom ahead of the 50.00 centreline.

H4 timeframe:

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact as we move into the first full week of June.

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

The British pound received a healthy bid on Friday after weaker-than-anticipated US jobs data placed the greenback on the backfoot. This, coupled with technical buying off 1.41, as well as the supporting 61.8% Fib at 1.4099 and 1.272% Fib extension at 1.4087, saw the unit breach the 100-period simple moving average at 1.4159 and challenge 1.42. Going into US hours, nevertheless, a bout of profit taking surfaced and persuaded price to reclaim position under the aforementioned SMA value into the close.

The picture drawn from the RSI shows momentum pulled away from oversold resistance and ended the week poised to challenge the 50.00 centreline.

Observed levels:

Long term:

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure is limited for the time being.

In spite of the above, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003 this week.

Short term:

The H4 timeframe’s range between 1.4096 and 1.4219 is likely on the radar for medium-term traders this week, looking to fade range extremes.

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.

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.

May’s US Employment Situation Report in Focus

Release: June 4th at 1.30pm GMT+1

Reading time: 9 minutes

Two comprehensive surveys are used to provide economists and investors a snapshot of the employment situation in the United States each month, through the Household Survey and Establishment Survey—often referred to as the Payroll Survey. Both surveys provide a complete picture of the Labour market.

  • The Household Survey derives data from approximately 60,000 households, led by the Bureau of Census for the Bureau of Labour Statistics, or BLS. The survey includes farm, non-farm, self-employed (unincorporated) and domestic helpers.
  • The Establishment Survey tends to capture the spotlight. Through what’s known as the Current Employment Statistics (CES), each month the program gets in touch with approximately 144,000 businesses—representing nearly 700,000 worksites—targeting the payroll of non-farm businesses, non-profit groups and government organisations across the United States.

Due to its timeliness, accuracy, and importance within the broader economy, the employment situation report is a closely monitored indicator.

In most cases, the non-farm payrolls report (taken from the establishment survey) attracts the majority of attention, often vibrating through financial markets. A favourable number (generally considered USD positive) reveals additional jobs were added to the economy, while a negative value (often viewed as USD negative), displayed as -100k or -90k, for example, means jobs were lost in non-farm business.

April’s non-farm payroll’s release was a huge disappointment. Payrolls increased by a less-than-impressive 266,000, following March’s downwardly revised 770,000 reading. With this, May’s figure will be widely watched. Note the three-month rolling average stands at 524,000, and the six-month rolling average falls in around 294,000.

According to the BLS[1], employment in leisure and hospitality increased more than 330,000 as a result of re-opening programmes across many parts of the country.

April’s figure weighed on the US dollar—as measured by the US dollar index (ticker: DXY)—though only a mild reaction was observed in US equities, through the S&P 500. This was largely due to the expectation the United States Federal Reserve is likely to maintain near-zero interest rates.

Additional notes:

  • Losses were observed in manufacturing employment (-18,000) after two consecutive months of gains in March and February.
  • Retail trade employment also fell in April by 15,000, following a 33,000 print in March.
  • Construction employment ended April unchanged, yet the survey highlighted employment in the industry is up by 917,000 over the year but remains 196,000 below its February 2020 level.

The general consensus for May’s US non-farm payrolls is an increase in the range of 650,000.

(Source: Reuters)

The Household Survey revealed unemployment was little changed in April, holding at 6.1 percent (March: 6.0 percent). Note the report’s official unemployment rate calculates by dividing the number of unemployed Americans (actively seeking employment) by the civilian labour force count.

Actively seeking is defined as those who applied for work in the past four weeks. Americans not seeking employment during the preceding four weeks are no longer counted in the civilian labour force, and are, therefore, included in the civilian noninstitutional population (figure found at the top of the household survey table).

According to the BLS, and also evident from the graph plotted below, April’s measures are significantly lower than April’s (2020) pandemic highs of 14.8 percent, but at the same time higher than pre-pandemic levels of 3.5 percent.

The real unemployment rate (U-6)[2]—a broader view of unemployment than the official (U-3) release—represents the total of unemployed in the United States, including all persons marginally attached to the labour force and total employed part time for economic reasons (The BLS notes that marginally attached are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule). As you can see, the official release is artificially depressed.

April’s U-6 unemployment figure came in at 10.4 percent, down 0.3 percentage points from March‘s 10.7 percent reading—the lowest reading since March 2020. It is also worth noting that April’s 2020 pandemic high came in at an eye-popping 22.9 percent, while the U-3 official release was, as noted above, 14.8 percent.

May’s official US headline unemployment reading is forecasted to tick lower at 5.9 percent.

C:\Users\AHill\AppData\Local\Temp\SNAGHTML193af307.PNG

(Source: Reuters)

Calculated by the Establishment Survey, average hourly earnings is another key metric watched by economists and investors, measuring the amount private employees earn each hour in the United States.

In April, average hourly earnings suggested rising demand for labour, increasing by 0.7 percent from March’s -0.1 percent reading—this is the highest percentage print this year. (average hourly earnings for all employees on private nonfarm payrolls increased by 21 cents to $30.17, following a decline of 4 cents in the prior month—a touch higher than April’s 2020 reading of $30.07).

The importance of this measure is relatively self-explanatory. The more income a worker earns bodes well for future spending. It is an important indicator of labour cost inflation—one of the data points the United States Federal Reserve pays close attention to when formulating interest rate decisions.

The consensus for May’s average hourly earnings is forecasted to decline 0.2 percent.

(Source: Reuters)

FP Markets Technical View

the US dollar index (ticker: DXY) provides traders and investors a benchmark value—a weighted geometric mean—of the US dollar relative to a basket of six major foreign currencies, including the euro (boasts the largest weighting of approximately 57.6%), Japanese yen, British pound, Canadian dollar, Swedish Krone and Swiss franc. Knowing Europe’s single currency plays a large role in the makeup of the DXY, it’s important to acknowledge the EUR/USD and DXY tend to be inversely correlated, as displayed in figure 1.A.

(Figure 1.A: EUR/USD Vs. US Dollar Index)

To gather an overall picture of the US dollar’s position ahead of today’s US employment release, the research team has analysed—from a technical perspective—the US dollar index according to the long-term monthly timeframe, the daily timeframe, as well as the H1 timeframe.

Monthly timeframe:

From the monthly chart, technicians will note April spun lower from a trendline support-turned resistance, extended from the low 72.69, with May extending downside to within striking distance of support from 88.55 (note we also have a 50% retracement level nearby at 88.28 and a 61.8% Fib at 88.27).

Overall, the major trend is lower (see arrows). Couple this with the recent trendline support breach, this emphasises a bearish USD market, long term.

(Source: Trading View—US dollar index monthly chart)

Daily timeframe:

A closer reading of price action on the daily scale shows we recently breached the upper side of what’s known as a declining wedge pattern (91.43/90.42). This—given the bearish narrative since March 31st peaks at 93.43—is likely considered a reversal signal, with buyers taking aim at 90.91 (the wedge pattern’s take-profit target, derived from taking the base measure and extending this value from the breakout point [red]).

As for trend on this timeframe, we can, in line with monthly price action, see this market has been entrenched within a downtrend since topping in early March 2020, just south of the 103.00 figure.

Also notable on the daily chart is we’re coming from support at 89.67 and, in recent days, elbowed north of resistance coming in at 90.10 (now labelled support).

Ultimately, traders are likely expecting a bearish reaction off 90.91, as sellers look to fade into the current pullback.

(Source: Trading View—US dollar index daily chart)

H1 timeframe:

From a shorter-term perspective, chart studies reveal the DXY recently touched gloves with a harmonic Gartley pattern (potential reversal zone [red] made up of a 78.6% Fib at 90.61, a 100% Fib projection at 90.57 and a 1.272% Fib extension at 90.66).

Should the above formation hold, support is considered an initial roadblock at 90.43, followed by the 38.2% Fib at 90.20 and the 61.8% Fib at 89.95 (values derived from legs A-D of the Gartley).

(Source: Trading View—US dollar index hourly chart)

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 carry a high level of risk; 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.

  1. https://www.bls.gov/news.release/empsit.nr0.htm
  2. https://www.bls.gov/news.release/empsit.t15.htm

June 4th 2021: Dollar Lifted on Healthy US Employment Data

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. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a rough start, down nearly 1 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:

Following stronger-than-anticipated US employment data, the US dollar scaled higher across the board on Thursday. According to the ADP National Employment Report, US private payrolls increased by 978,000 in May (consensus: 645,000); at the same time, US initial unemployment claims dropped to 385,000 (consensus: 400,000).

Recent events tested the resolve of buyers at support from 1.2169, guiding EUR/USD beneath the noted structure and throwing light on the 200-day simple moving average, circling 1.1978.

As underlined in previous analysis, the pair has been entrenched within a bullish theme since April’s low formed north of Quasimodo support at 1.1688, aided by the longer-term uptrend since early 2020.

Latest developments out of the RSI reveals the indicator sliced through support at 51.36, following May’s deterioration from highs at 68.70 (some analysts may view this as bearish divergence, though we tend to consider divergence signals within overbought and oversold territory). Continued downside here unlocks a possible test of oversold territory next week.

H4 timeframe:

Thursday’s decline—in the space of two back-to-back bearish candles—brought the currency pair south of 61.8% Fib support at 1.2133 to shake hands with a 61.8% Fib level at 1.2125.

With 1.2125 on the verge of giving way, familiar demand at 1.2044-1.2071 could welcome price action today. Fibonacci traders will also note the close connection with a 1.618% Fib expansion at 1.2049 and the 78.6% Fib retracement at 1.2044.

H1 timeframe:

Following a swift retest at the underside of 1.22, sellers, aided by the 100-period simple moving average at 1.2208, unearthed a series of bearish candles which took the currency pair beneath Quasimodo support at 1.2132. Candlestick enthusiasts may also acknowledge the 1.22 test established what is known as a shooting star candlestick formation (bearish signal at peaks).

The current short-term picture has candle action on the verge of retesting 1.2132 as resistance, unmasking a potential dip to 1.21 bids.

Interestingly, the RSI is seen toying with oversold conditions. Exiting this space is considered a bullish cue, movement that could draw the value back to the 50.00 centreline.

Observed Levels:

Based on charts studies, H1 resistance at 1.2132 calls for attention. Having seen limited bullish intent off the H4 61.8% Fib level at 1.2125, as well as daily support from 1.2169 recently moving aside, a 1.2132 test today shows a dip to 1.21 could be on the cards—a move that may interest short-term bearish strategies.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Since April 20th, resistance at 0.7816 and support from 0.7699 established a defined range (yellow).

Of late, however, AUD/USD experienced renewed bearish weight, pressured amidst optimistic US employment figures elevating the US dollar. Slicing through the lower edge of the said range has thrown support at 0.7563 in view as a potential objective should sellers maintain control. Note that the 200-day simple moving average is also close by at 0.7528.

With respect to trend, though, we have been higher since the early months of 2020. However, we must take into account that the currency pair has been directionless since the beginning of 2021.

Out of the RSI, the indicator convincingly nudged beneath the 50.00 centreline, following a dip from 60.30 peaks in May. Next stop could be oversold terrain.

H4 timeframe:

Despite the earnest attempt to take charge of 0.7696-0.7715 support, buyers failed to find acceptance north of the 0.7750ish region, consequently leaving tops at 0.7769 and Quasimodo resistance from 0.7782 unchallenged.

Thursday’s bearish theme proved too much for 0.7696-0.7715, action that invited a test of FRESH demand at 0.7632-0.7653.

H1 timeframe:

Key developments on the H1 scale on Thursday was price touching gloves with demand at 0.7634-0.7649—an area bolstered by Fibonacci confluence: 1.272% Fib expansion at 0.7645, 1.272% Fib extension at 0.7649 and a 100% Fib projection at 0.7654.

As you can see, buyers have made a show from the aforementioned demand area, with the majority of bids here likely taking aim at 0.7671-0.7687, a demand -turned supply, followed by a 38.2% Fib retracement at 0.7693 and the 0.77 figure.

As for the RSI indicator, the value recently bumped heads with support at 19.30, nestled within oversold space. Exiting this area will likely drive additional bullish awareness.

Observed levels:

Longer term, in light of the daily timeframe pushing below range support at 0.7699, technical elements indicate an approach to daily support from 0.7563.

Before sellers take the reins, nevertheless, H4 demand at 0.7632-0.7653, which holds H1 demand within its walls at 0.7634-0.7649 and associated Fibonacci confluence, could encourage a short-term bullish episode, targeting at least H1 demand-turned supply at 0.7671-0.7687.

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently higher by 0.7 percent.

Daily timeframe:

Thursday’s one-sided appreciation—bolstered on the back of solid US employment figures—observed USD/JPY cross paths with the lower edge of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19).

108.60ish lows (green oval) represent a logical roadblock to the downside, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI recently mustered enough oomph to overthrow resistance at 57.00, an S/R level that’s been in play since March 2020. Above this base shifts attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02.

H4 timeframe:

Leaving demand at 109.02-109.20 unchallenged—a decision point to initially push above 109.71 highs—USD/JPY bulls went on the offensive Thursday, clocking fresh weekly tops and throwing light on supply at 110.85-110.46, secured within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.59 as well as a 1.618% Fib expansion at 110.69.

H1 timeframe:

Heading into US hours on Thursday, lifted on the back of a healthy USD bid, USD/JPY recoiled off the 100-period simple moving average at 109.65 and jumped above 110 to within a stone’s throw of Quasimodo resistance from 110.41.

Note that should the pair decline from current levels, 110 calls in as potential support, aided by Quasimodo resistance-turned support at 109.95 and a neighbouring trendline support, taken from the low 108.56.

The technical picture from the RSI reveals we’re trekking overbought terrain, currently fading tops around 82.00 and poised to exit the overbought area. The value exiting overbought tends to be viewed as a bearish cue, though given the prevailing uptrend, this could prove a false signal.

Observed levels:

Long term, we have somewhat conflicting signals: monthly price forging support off a recently breached descending resistance line, alongside daily price touching gloves with the underside of resistance at 110.94-110.29. Higher timeframe action tends to take precedence over lower timeframes, therefore rising through the aforesaid resistance base could be in store.

Across the page, the shorter-term view shows that should a 110 retest develop on the H1 scale, given the level joins closely with a Quasimodo resistance-turned support at 109.95 and a neighbouring trendline support, this may stir a short-term bullish scenario. Alternative action, of course, might have H4 shake hands with supply at 110.85-110.46 and, by extension, test the mettle of H1 Quasimodo resistance at 110.41. A H1 close above the latter signals H4 supply is unlikely to offer much to sellers and could, in line with the monthly technical view, encourage additional buying.

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 subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent and closed near YTD highs.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Quasimodo resistance at 1.4250 made a show earlier this week and sponsored a bearish phase, with Thursday extending losses to lows of 1.4086 and bringing light to 1.4003 support. South of support, traders will note demand resides at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Trend in this market has remained firmly to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position in recent movement, following a period of diminishing upside momentum since May 11th.

H4 timeframe:

Despite the H4 chart exhibiting a consolidation phase between 1.4105 and 1.4219 since mid-May, yesterday clawed through the lower edge of the said range and simultaneously engulfed trendline support, taken from the low 1.3668.

While whipsaws beyond range extremes are common, the fact price dethroned a trendline support adds weight to the breach. Support at 1.4007, therefore, could greet price should sellers remain in the driving seat.

H1 timeframe:

1.42 welcomed sellers mid-way through London hours on Thursday, capping upside almost to the pip. Subsequent activity slipped through the 100-period simple moving average at 1.4177 to then nosedive into 1.41, a level arranged just north of support at 1.4078.

What’s technically evident is the Fibonacci studies around 1.41. Joining the latter is a 61.8% Fib at 1.4099, while a touch below we can see a 1.272% Fib extension at 1.4087 recently received price action. Also notable is a 1.272% Fib expansion at 1.4076, a few pips under support mentioned above at 1.4078.

Following an earlier decline from resistance at 56.58, the RSI value is currently in the process of recovering from oversold levels.

Observed levels:

Absent of support until 1.4003 on the daily timeframe, together with the H4 timeframe trading sub range lows at 1.4105 as well as taking out a neighbouring trendline support, the combination of H1 support at 1.4078 and 1.4100 may struggle to entice buying. As a result, a H1 close south of 1.4078 unbolts a possible bearish scene to as far south as the key figure 1.40, which, as you can see, aligns with daily support at 1.4003.

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.

June 3rd 2021: Greenback Reluctant North of 90.00 as US Jobs Data Nears

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. May also extended recovery gains, trading higher by 1.7 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:

Europe’s shared currency found some legs on Wednesday, aided not only on the back of the US dollar index (ticker: DXY) fading session tops (90.25), but also technical bids off Quasimodo resistance-turned support at 1.2169.

Quasimodo resistance from 1.2278 demands attention to the upside; navigating south, on the other hand, shines the technical spotlight back on the 200-day simple moving average, circling 1.1977.

The currency pair, as you can see, has been entrenched within a bullish theme since April’s low just north of Quasimodo support at 1.1688, helped by the longer-term uptrend since early 2020.

The RSI continues to echo weakening upside momentum (some analysts may view this as bearish divergence, though we tend to consider divergence signals within overbought and oversold territory). Indicator support is seen around 51.36.

H4 timeframe:

Technical studies out of the H4 chart pins attention on resistance drawn from 1.2244—a level which capped upside on Tuesday—and the 61.8% Fib support at 1.2133 (arranged north of another 61.8% Fib level at 1.2125).

Between the aforesaid levels, this appears to be no man’s land.

H1 timeframe:

Following the formation of hidden bullish RSI divergence, price welcomed support at 1.2168—a level bolstered by a 61.8% Fib at 1.2178. Subsequently, short-term flow climbed the 1.22 figure and overthrew the 100-period simple moving average at 1.2205.

However, before breakout buyers can find acceptance, resistance at 1.2211 must be dethroned, a move potentially clearing the technical pathway towards two Quasimodo resistances at 1.2241 and 1.2257 (note in between the aforesaid levels, H4 resistance mentioned above at 1.2244 is visible).

RSI action is now toying with the 50.00 centreline; a decisive move north of this angle suggests overbought status could be on the cards, followed by resistance at 78.97.

Observed levels:

Having observed daily flow rebound from support at 1.2169, in addition to the monthly timeframe exhibiting scope to pursue higher levels, H1 resistance at 1.2211 is unlikely to deliver much bearish activity. A H1 close north of 1.2210, therefore, may inspire a short-term bullish scenario towards the H1 Quasimodo resistances at 1.2241 and 1.2257 (along with H4 resistance at 1.2240).

Alternatively, a retest at 1.22 (H1) could stir lower timeframe dip buyers.

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 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Unchanged technical view from previous analysis.

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 non-committal tone, consolidating between the aforementioned resistance and support from 0.7699 (yellow). Of late, we can see the currency pair shook hands with the lower wall of the said range and adopted a mild bullish vibe.

Below the consolidation, technicians have support at 0.7563 in sight.

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

Out of the RSI, the indicator remains flirting with the 50.00 centreline, following a dip from 60.30 peaks in May.

H4 timeframe:

Buyers picked up 0.7696-0.7715 support again on Wednesday—served as support and resistance since the end of January.

Quasimodo resistance from 0.7782 calls for attention north of yesterday’s peaks around 0.7773, though should sellers regain consciousness and take the currency pair south of 0.7696-0.7715, demand is featured at 0.7632-0.7653.

H1 timeframe:

Supply at 0.7783-0.7771, an area which essentially formed a decision point to hammer through last Tuesday’s low at 0.7733, made an entrance yesterday and, following a reasonably spirited shooting star candle pattern (bearish signal), price exhibited a one-sided decline.

Brushing aside the 100-period simple moving average around 0.7737, a recovery subsequently developed within striking distance of support at 0.7714. This had price reclaim the 100-period SMA.

Beyond current supply, technicians will likely have 0.78 noted. South of 0.7714, 0.77 is in sight, closely followed by demand at 0.7671-0.7687.

Traders who follow the RSI indicator will note the value pierced the oversold threshold yesterday, yet wrapped up the session on the front foot, north of the 50.00 centreline (a centreline cross indicates a strengthening of the trend).

Observed levels:

The monthly chart is not offering much at this point. The daily timeframe, however, emphasises a bullish theme off range lows at 0.7699. This is further emphasised on the H4 scale following a rebound from familiar support at 0.7696-0.7715, with Quasimodo resistance at 0.7782 representing an upside target.

Knowing both daily and H4 are open to additional upside, H1 is likely to explore territory north of the 100-period simple moving average at 0.7737 today, crossing swords with supply at 0.7783-0.7771.

Unchanged technical view from previous analysis (italics).

However, knowing H4 Quasimodo resistance resides at 0.7782 (essentially the upper edge of the noted H1 supply), this could draw a move through the supply to form a bull trap, movement which larger traders may look to fade (sell into) to take aim at the 100-period SMA.

An alternative scenario, of course, is H1 price tests 0.78. Having seen this level dovetail closely with daily resistance at 0.7816, between the latter and 0.78 could stir a bearish theme.

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support.

Daily timeframe:

We remain a touch off long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), with Wednesday finishing considerably off session highs. 108.60ish lows (circle) represent a logical roadblock, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI recently engaged resistance at 57.00, a level that’s been in play since March 2020. Above this base shifts attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02, whereas below welcomes support around 28.19.

H4 timeframe:

The benchmark 10-year US Treasury note fell in excess of 1 percent on Wednesday, hauling the US dollar (DXY off session tops around 90.24) and the USD/JPY lower.

Demand at 109.02-109.20—a decision point to initially push above 109.71 resistance which aligns closely with trendline support, drawn from the low 107.47—is in view should sellers demand further control.

Traders are also urged to note space north of last week’s peak at 110.20 throws light on supply at 110.85-110.46, secured within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.59 as well as a 1.618% Fib expansion at 110.69.

H1 timeframe:

Combining trendline support-turned resistance, pencilled in from the low 108.56, and a 61.8% Fib at 109.87 was sufficient to lure sellers into the market off 109.88 tops. As evident from the H1 scale, the unit settled just south of the 100-period simple moving average at 109.68, with technical eyes now pinned on neighbouring support at 109.45.

Lower on the curve, demand at 109.07-109.20 commands attention, sharing chart space with a 61.8% Fib level at 109.20 (set within the upper range of H4 demand at 109.02-109.20).

Technical information derived from the RSI shows the value travelled through the 50.00 centreline yesterday, following an earlier rotation out of overbought territory. Support at 31.10 is seen as a possible downside target, arranged just north of oversold.

Observed levels:

Short term, attention is on H1 support at 109.45, having seen the base serve as a floor in recent movement. Despite this, the H4 timeframe echoes a possible continuation lower to cross paths with demand at 109.02-109.20 (H1 demand seen within its upper range at 109.07-109.20) before buyers make any serious attempts to push higher, as suggested by monthly flow trying to forge support off a recently breached descending resistance line.

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 subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent and closed near YTD highs.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Unchanged technical view from previous analysis.

Buyers and sellers have been squaring off (consolidating) a touch south of Quasimodo resistance at 1.4250 since May 18th, following an earlier 1.4003 support retest. Tuesday, however, witnessed the currency pair touch gloves with the Quasimodo and deliver a relatively forceful bearish showing.

Renewed interest to the upside will see 1.4250 likely attempt to form a ceiling again, though a break throws light on the 1.4376 April 2018 high (see monthly analysis).

South of support at 1.4003, traders will note demand resides at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Trend in this market has remained firmly to the upside since March 2020.

The RSI recently came in contact with trendline support, taken from the low 36.14, following a period of diminishing upside momentum since May 11th.

H4 timeframe:

Although an earnest attempt to find acceptance north of the H4 chart’s current consolidation between 1.4105 and 1.4219 was seen at the beginning of the week, the range remains intact.

Despite the overall trend facing a northerly trajectory, the range break to the upside connected with the daily Quasimodo resistance mentioned above at 1.4250. One can only imagine the number of range sellers caught out here and breakout buy-stops tripped (bull trap).

Also of technical note is a H4 61.8% Fib level at 1.4099 and a nearby trendline support, taken from the low 1.3668, is seen supporting the lower base of the aforesaid range.

H1 timeframe:

Tuesday watched sellers step forward from a double-top resistance formation at 1.4246, consequently guiding short-term flow sub-1.42.

Leaving 1.41 unchallenged on Wednesday, GBP/USD bulls adopted an offensive phase and retested the underside of the 100-period simple moving average around 1.4182, set alongside a 50.00 retracement at 1.4179. Upstream, we can see that an attempt to cross above the SMA could have price test 1.42 resistance.

From the RSI, the value recovered from support at 33.00 and is currently retesting resistance at 56.58. Overbought space is also nearby, with resistance parked at 84.66.

Observed levels:

From a short-term perspective, the combination of the 100-period simple moving average around 1.4182 and the 50.00 retracement at 1.4179 on the H1 may be enough to tempt an intraday bearish setting today. However, a spike higher to collect unfilled orders around 1.42 should not surprise before any downside attempt takes shape (1.42 aligns closely with the upper side of the H4 range at 1.4219).

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.

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows

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. May traded higher by 1.7 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:

Partly modified from previous analysis.

Friday’s test of Quasimodo resistance-turned support at 1.2169, established in the shape of a dragonfly doji candlestick pattern (bullish signal), welcomed moderate upside on Monday.

Despite holiday-thinned liquidity (US and UK), the US dollar index (ticker: DXY) navigated deeper water and elevated Europe’s shared currency.

Although the RSI displays bearish divergence, EUR/USD trend studies suggest further upside is favourable (trending higher since March 2020) which reinforces the recent bullish narrative. A buy-on-dip scenario, therefore, appears underway, taking aim at Quasimodo resistance from 1.2278.

H4 timeframe:

As anticipated, EUR/USD extended recovery gains on Monday, following Friday’s healthy bid from a 61.8% Fib level at 1.2133 heading into US hours—stationed just north of another 61.8% Fib level at 1.2125.

Resistance is parked at 1.2244, a handful of pips south of the daily Quasimodo resistance level underlined above at 1.2278.

H1 timeframe:

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

In conjunction with the bigger picture, H4 displays scope to approach resistance at 1.2244. With H1 testing the resolve of 1.22 offers Friday, the technical outlook suggests a break of this psychological level early week, leaning towards H1 supply drawn from 1.2240-1.2228, sited just south of H4 resistance mentioned above at 1.2244.

As evident from the H1 chart, despite a brief consolidation beneath 1.22, US trading hours on Monday witnessed EUR/USD bulls adopt an offensive phase and overthrow the 100-period simple moving average at 1.2205 to shake hands with supply from 1.2240-1.2228. Upstream, technicians will note Quasimodo resistance resides close by at 1.2257, sharing chart space with a 1.618% Fib expansion at 1.2249 as well as a 100% Fib projection at 1.2257.

Interestingly, out of the RSI, we are seeing upside momentum somewhat level off ahead of overbought space. Should the value enter 70.00, resistance calls for attention around 78.97.

Observed levels:

Longer term reveals a reasonably healthy uptrend (since early 2020). Together with monthly making its way out of demand at 1.1857-1.1352 in April, and the daily timeframe displaying scope to approach Quasimodo resistance at 1.2278, EUR/USD bulls may remain in the driving seat for the time being.

Short term shows H4 price closing in on resistance at 1.2244, implying H1 could run through supply at 1.2240-1.2228 and perhaps cross swords with H1 Quasimodo resistance at 1.2257 (reinforced by Fibonacci studies). Therefore, technical expectations show a possible (short-term) bearish attempt forming around 1.2250ish.

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, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Unchanged technical view from previous analysis.

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 non-committal tone, consolidating between the aforementioned resistance and support from 0.7699 (yellow). Of late, however, the currency pair shook hands with the lower wall of the aforementioned range.

Below the consolidation, technicians have support at 0.7563 in sight.

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

Out of the RSI, the indicator remains flirting with space south of the 50.00 centreline, following a dip from 60.30 peaks in May.

H4 timeframe:

Risk currencies were among the outperformers on Monday against a broadly softer USD. AUD/USD, as you can see from the H4 scale, built on Friday’s modest recovery from 0.7696-0.7715 support (served as support and resistance since the end of January), clocking session tops around 0.7741.

Overhead, Quasimodo resistance at 0.7782 is calling for attention, with a break unmasking daily resistance at 0.7816. Below 0.7696-0.7715, however, demand is featured at 0.7632-0.7653.

H1 timeframe:

Early hours Monday watched a muscular close establish north of Quasimodo support-turned resistance at 0.7714, which led to price action crossing paths with the 100-period simple moving average at 0.7740ish. Until now, the SMA has delivered a ceiling of resistance.

Upstream, Quasimodo resistance is visible at 0.7755, closely shadowed by supply coming in from 0.7783-0.7771 (houses H4 Quasimodo resistance at 0.7782).

The RSI value rotated south on Monday, leaving overbought territory unchallenged and testing the 50.00 centreline. Crossing beneath the latter signals the possibility of downside momentum, with the indicator potentially taking aim at oversold space.

Observed levels:

Technically, two possible scenarios are on the table today.

  1. H1 continues to retreat and revisits support at 0.7714 (with a possible whipsaw into 0.77 bids). A bullish theme from here could emerge, having seen room on the H4 timeframe to advance as far north as Quasimodo resistance at 0.7782, and the daily timeframe rebounding from the lower side of a month-long range at 0.7699.
  2. H1 dethrones the 100-period simple moving average around 0.7740—reinforced on the back of the daily timeframe’s support at 0.7699—and attempts to reach for H1 Quasimodo resistance from 0.7755.

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May held the breached descending resistance, echoing potential support.

Daily timeframe:

As highlighted in Monday’s technical briefing, a few pips shy of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), we witnessed price fade gains on Friday and shape what’s known as a shooting star candlestick pattern (bearish signal).

The above fed a bearish theme on Monday, reaching session lows of 109.35. 108.60ish lows (circle) represent a logical roadblock, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI recently nudged above resistance at 57.00, with the value now retesting the aforementioned level as possible support. Holding this base shifts attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02.

H4 timeframe:

In line with the US dollar index (ticker: DXY), USD/JPY explored deeper terrain on Monday and slipped back under support from 109.71 (now stands as resistance).

Demand at 109.02-109.20—a decision point to initially push above 109.71 resistance and aligns closely with trendline support, drawn from the low 107.47—is next in view should sellers demand further control today.

In the event the currency pair reclaims 109.71 resistance, the technical radar is fixed on supply at 110.85-110.46, secured within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.59 as well as a 1.618% Fib expansion at 110.69.

H1 timeframe:

Quasimodo resistance-turned support at 109.45, as well as intersecting trendline support, pencilled in from the low 108.56, and the 100-period simple moving average at 109.38, made an entrance on Monday, following a one-sided decline through 109.50.

Lower on the curve, demand is seen at 109.07-109.20, sharing chart space with a 61.8% Fib level at 109.20 (set within the upper range of H4 demand at 109.02-109.20).

From the RSI, the value rebounded from oversold levels on Monday (at the time price action connected with 109.45 support) and is seen climbing 40.00, as we write.

Observed levels:

While an attempt to hold H1 support at 109.45 is underway, and despite the level joining hands with additional support (trendline formation and the 100-period simple moving average), the H4 timeframe echoes a possible continuation lower to cross paths with demand at 109.02-109.20 (contains H1 demand within its upper range at 109.07-109.20) before buyers make any serious attempts to push higher.

Of course, any bullish move is supported by the monthly flow trying to forge support off a recently breached descending resistance line.

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 subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent and closed near YTD highs.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Unchanged technical view from previous analysis.

Buyers and sellers have been squaring off (consolidating) a touch south of Quasimodo resistance at 1.4250 since May 18th, following an earlier 1.4003 support retest.

Renewed interest to the upside will see 1.4250 likely attempt to form a ceiling, though a break throws light on the 1.4376 April 2018 high (see monthly analysis). South of support at 1.4003, demand resides at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Trend in this market has remained firmly to the upside since March 2020.

The RSI informs traders that upside momentum is levelling off, movement which may have trendline support, taken from the low 36.14, make an entrance.

H4 timeframe:

Unchanged technical view from previous analysis.

GBP/USD remains within a defined range at 1.4105-1.4219.

Having noted the overall trend faces a northerly trajectory, a break to the upside to cross swords with the daily Quasimodo resistance at 1.4250 could be on the cards.

Of technical note is also a H4 61.8% Fib level at 1.4092 and a nearby trendline support, taken from the low 1.3668.

H1 timeframe:

Similar to the H4 scale, we can see short-term H1 traders have been playing the range between 1.42 and 1.41 since mid-May. As you can see, though, Monday rallied above 1.42 and, in recent hours, retested the psychological figure as support, suggesting movement towards double-top resistance around 1.4246 is in store.

From the RSI, we can see the value is now retesting resistance-turned support at 56.58. Overbought could be targeted today, in particular resistance at 84.66.

Observed levels:

Unchanged technical view from previous analysis. Scope to advance on the monthly scale to 1.4376—as well as a defined uptrend visible on the daily timeframe since pandemic lows around March 2020—shows the daily chart’s Quasimodo resistance at 1.4250 is perhaps vulnerable.

Knowing the bigger picture suggests higher levels, and seeing H1 retesting 1.42 as support, this may encourage a buy-the-dip theme to at least H1 resistance at 1.4246. This, of course, would entail breaking the upper side of the H4 range at 1.4219.

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.

Weekly Technical Market Insight: Week Ending June 4th 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Against a basket of foreign currencies, the US dollar index (ticker: DXY) left behind a colourless vibe last week, ranging between 90.44/89.53 session extremes.

Support at 89.34 continues to command technical relevance on the daily chart, extended from as far back as early 2009. Pattern structure, on the other hand, reveals the unit pierced the upper side of a descending wedge (a pattern displaying a decrease in downside momentum within its walls [91.43/90.42]). With the DXY in decline since topping at the 93.43 31st March peak, the recent upside pattern breach is likely viewed as a reversal signal.

While the pattern break shines the technical spotlight on a possible run back to 91.36 resistance, Friday’s shooting star candlestick pattern—a bearish signal—implies upside pressure is perhaps fragile and a dip into 89.34 support could also be on the cards this week.

With respect to trend, as noted in previous writing, a bearish narrative has clouded the greenback since the early months of 2020, in the shape of well-defined lower lows and lower highs. Many analysts likely refer to this downward movement as a primary trend. Interestingly, the 93.43 31st March peak—and subsequent downside—echoes seller strength within the current downtrend, unlocking the possibility of fresh lower lows beyond 89.34 support over the coming weeks (see black arrows).

The RSI indicator, a popular gauge of momentum, reveals the value remains south of resistance at 45.51. This suggests upside momentum lacks impetus, emphasising we may drop in on oversold space, possibly greeting support at 21.36. Should 45.51 move aside, another layer of indicator resistance is visible at 55.67.

  • Chart studies highlight a bearish vibe. Not only will traders see Friday’s bearish candlestick formation, they’ll likely take into account the current downtrend. Consequently, the break above the descending wedge is unlikely to bear much fruit, in which case a bearish move may materialise this week and shake hands with support at 89.34. Beyond here, Quasimodo support rests at 88.43.

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-turned support at 1.2169 has established a resilient floor, welcoming price action on Friday by way of a dragonfly doji candlestick pattern (bullish signal). Note, a mirror version was seen on the US dollar index in the form of a shooting star candlestick pattern (see above).

Although the RSI displays bearish divergence, EUR/USD trend studies suggest further upside is favourable (trending higher since March 2020) and reinforces Friday’s bullish candle off 1.2169 support. A buy-on-dip scenario, therefore, could unfold, taking aim at Quasimodo resistance from 1.2278 this week.

H4 timeframe:

Friday’s risk events witnessed a higher-than-anticipated PCE price index (core: excluding food and energy) reading, increasing by 0.7 percent, yet failed to ignite much immediate USD upside momentum. The Bureau of Economic Analysis also showed the core PCE price index rose 3.1 percent y/y[1].

Technically, we can see EUR/USD price gathered fresh bullish impetus off a 61.8% Fib level at 1.2133 heading into US hours, stationed just north of another 61.8% Fib level at 1.2125. According to the chart, more topside is in the offing this week, targeting resistance parked at 1.2244.

H1 timeframe:

For those who read Friday’s technical briefing you may recall the research team underlined a pennant pattern (1.2214/1.2175) that established around the 1.22 figure.

As you can see, Friday navigated beneath the pattern’s lower edge and nosedived to within touching distance of Quasimodo support at 1.2132, before pulling back and crossing swords with the 1.22 figure (those short based on the pennant pattern were likely eyeing lower price levels, as the textbook take-profit level is formed by taking the height of the earlier move from 1.2262 and extending this value from the breakout point). Space north of 1.22 has the 100-period simple moving average in range at 1.2212 this week, followed by supply coming in at 1.2240-1.2228.

Interestingly, the RSI value rebounded from trendline resistance-turned support (taken from the high 75.04) at the same time H1 bottomed ahead of the noted Quasimodo support.

Observed levels:

Long term:

The overall trend facing higher, and monthly price exiting demand at 1.1857-1.1352 in April, positions the daily timeframe’s (dragonfly doji candle pattern) test of Quasimodo resistance-turned support at 1.2169 in favourable light this week. Buying from here has resistance to target at 1.2278 (another Quasimodo formation).

Short term:

In conjunction with the bigger picture, H4 displays scope to approach resistance at 1.2244. With H1 testing the resolve of 1.22 offers Friday, the technical outlook suggests a break of this psychological level early week, leaning towards H1 supply drawn from 1.2240-1.2228, sited just south of H4 resistance mentioned above at 1.2244.

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, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

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:

Unchanged technical view from previous analysis.

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 non-committal tone, consolidating between the aforementioned resistance and support from 0.7699 (yellow). Of late, however, the currency pair shook hands with the lower wall of the aforementioned range.

Below the consolidation, technicians have support at 0.7563 in sight.

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

Out of the RSI, the indicator remains flirting with space south of the 50.00 centreline, following a dip from 60.30 peaks in May.

H4 timeframe:

The Australian dollar staged a modest comeback against the US dollar on Friday as the US dollar index trimmed earlier upside from two-week tops. In addition, the risk-on setting weighed on the safe-haven buck and aided the risk-sensitive Aussie dollar.

The technical landscape on the H4 scale saw 0.7696-0.7715 support welcome price action on Friday. Arranged as a support/resistance zone since the end of January, price action traders will likely be watching for this area to hold and ultimately encourage an advance to at least Quasimodo resistance at 0.7782, with a break unmasking daily resistance at 0.7816.

Below 0.7696-0.7715, demand resides at 0.7632-0.7653.

H1 timeframe:

Amidst the opening hours of US trading on Friday, short-term movement whipsawed through 0.77. Sell-stops fuelling moves into bids off neighbouring demand at 0.7671-0.7687 was clearly sufficient enough to elevate the currency pair back above 0.77 and cross paths with resistance at 0.7714—a previous Quasimodo support level.

Overhead resistance to be mindful of this week falls in around the Quasimodo formation at 0.7755, closely shadowed by supply coming in from 0.7783-0.7771 (houses the H4 Quasimodo resistance at 0.7782).

With reference to the H1 chart’s RSI, the value rebounded north of oversold support at 19.30 on Friday and subsequently exited oversold space. The 50.00 centreline could prove to be a roadblock this week (resistance), yet a breach throws light on overbought resistances at 70.61 and 80.85.

Observed levels:

Long term:

The daily timeframe’s consolidation between 0.7816 and 0.7699 remains a key watch this week. Technically, a run off the lower edge of the said range promotes a bullish scenario. Beneath the range, nonetheless, reveals possible downside to daily support at 0.7563.

Short term:

Against the backdrop of higher timeframes, H1 resistance at 0.7714 is another key watch early week. Fuelled by Friday’s 0.77 retest, movement north of 0.7714 opens up a possible test of H1 Quasimodo resistance at 0.7755 (plotted above the 100-period simple moving average at 0.7746), with subsequent buying unlocking supply at 0.7783-0.7771, which, as noted above, contains H4 Quasimodo resistance at 0.7782.

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May is currently holding the breached descending resistance, up by 0.5 percent and echoing potential support.

Daily timeframe:

USD/JPY—in lockstep with the US dollar index—powered higher for a third successive session on Friday. However, unlike prior sessions, a few pips shy of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), we witnessed price fade earlier gains and shape what’s known as a shooting star candlestick pattern (bearish signal).

Should Friday’s action rejuvenate a bearish theme, 108.60ish lows (circle) represent a logical roadblock, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI value has moved above resistance at 57.00, shifting attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02.

H4 timeframe:

Off multi-week tops at 110.20, USD/JPY modestly recoiled on Friday and concluded the session within touching distance of support coming in from 109.71.

Traders are urged to note territory beneath the said support shows scope to drop as far south as demand at 109.02-109.20—a decision point to initially push above 109.71 resistance—which aligns closely with trendline support, drawn from the low 107.47.

Upstream, nevertheless, the technical radar is fixed on supply at 110.85-110.46, secured within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.59 as well as a 1.618% Fib expansion at 110.69.

H1 timeframe:

As evident from the H1 scale on Friday, price action whipsawed above the 110 psychological level—movement likely viewed as a bull trap—and concluded the session around local lows at 109.74. Above 110, however, we can see Quasimodo resistance at 110.40.

It is sub 109.74 sellers may find space to work with, directing towards a Quasimodo resistance-turned support at 109.45 and intersecting trendline support, pencilled in from the low 108.56.

Lower on the curve, demand is seen at 109.07-109.20, sharing chart space with a 61.8% Fib level at 109.20 (set within the upper range of H4 demand at 109.02-109.20).

For those who watch the RSI, the value rebounded from the 50.00 centreline in closing trade, helped by trendline support, taken from the low 25.47.

Observed levels:

Long term:

Monthly flow is attempting to forge support off a recently breached descending resistance line, which underscores a potential bullish scenario.

Therefore, daily sellers—based on Friday’s shooting star candlestick formation just south of longer-term daily resistance at 110.94-110.29—face monthly muscle (see above).

Short term:

H4 support at 109.71 is a relatively clean level, having seen the base serve as healthy resistance during April and May. As such, in conjunction with the monthly timeframe’s technical structure, buyers making an entrance off 109.71 this week could be seen.

A H1 close back above the 110 figure would help confirm bullish intent off the aforementioned H4 support and likely welcome additional buyers in the form of breakout orders.

Alternatively, should H4 support at 109.71 give way, technical expectations are for a dip to H1 support at 109.45 and intersecting H1 trendline support.

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 subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, trades firmly on the front foot, up by 2.6 percent MTD.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Buyers and sellers have been squaring off (consolidating) a touch south of Quasimodo resistance at 1.4250 since May 18th, following an earlier 1.4003 support retest.

Renewed interest to the upside will see 1.4250 likely attempt to form a ceiling, though a break throws light on the 1.4376 April 2018 high (see monthly analysis). South of support at 1.4003, demand resides at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Trend in this market has remained firmly to the upside since March 2020.

The RSI informs traders that upside momentum is levelling off, movement which may have trendline support, taken from the low 36.14, make an entrance.

H4 timeframe:

Similar to the AUD/USD (see daily timeframe), GBP/USD is clearly a patience game right now, fluctuating within the walls of a reasonably defined range at 1.4105-1.4219. Understandably, having noted the overall trend faces a northerly trajectory, the majority of traders are likely anticipating a break to the upside to cross swords with the daily Quasimodo resistance at 1.4250.

Of technical note is also a H4 61.8% Fib level at 1.4092 and a nearby trendline support, taken from the low 1.3668.

H1 timeframe:

In similar fashion to the H4 scale, we can see short-term H1 traders playing the range between 1.42 and 1.41, with Friday fading the upper edge of this range. In between the area, the 100-period simple moving average is seen circling 1.4158ish.

Outside of the aforesaid consolidation, technical elements reveal double-top resistance around 1.4246 and support priced in at 1.4078.

In regards to the RSI, the value retested the underside of resistance at 56.58 on Friday and wrapped up just ahead of the 50.00 centreline. Below the latter, shaking hands with support at 33.00 is possible, stationed ahead of oversold space.

Observed levels:

Long term:

With scope to advance on the monthly scale (to 1.4376), as well as a defined uptrend visible on the daily timeframe since pandemic lows around March 2020, the daily chart’s Quasimodo resistance at 1.4250 is perhaps vulnerable.

Short term:

Both H4 and H1 timeframes exhibit rangebound environments.

Therefore, short-term strategies are likely to favour range-based methods this week.

Breakout traders will also likely be closely monitoring the ranges. A breakout, which given the current uptrend, is likely to be north, with an initial target set around the H1 double-top resistance at 1.4246, followed by the daily timeframe’s Quasimodo resistance at 1.4250.

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.

  1. https://www.bea.gov/news/2021/personal-income-and-outlays-april-2021

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.

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.

Weekly Technical Market Insight: 17th – 21st May 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

Despite an optimistic mid-week bid off 90.00 support, the US dollar, as measured by the US dollar index (ticker: DXY), concluded the week considerably off best levels, to end at 0.1 percent. This follows the prior week’s one-sided decline, aided by resistance forged between the 200-day simple moving average at 91.85 and resistance from 91.36 (previous Quasimodo support).

90.00 support remains a key level to note going forward, though a break will unmask longer-term support at 89.34 (extended from as far back as early 2009). Also of technical relevance is 91.85-91.36 resistance highlighted above.

With respect to trend, a bearish narrative has clouded the greenback since the early months of 2020, in the shape of well-defined lower lows and lower highs. Many analysts likely refer to this downward movement as a primary trend. Interestingly, the 93.43 31st March peak—and subsequent downside—echoes seller strength within the current downtrend, consequently unlocking the possibility of fresh lower lows over the coming weeks (see black arrows).

The RSI indicator, a popular gauge of momentum, reveals a relatively low reading formed last week, anchored around the lower side of resistance at 45.51. This implies we may drop in on oversold space, possibly greeting support at 21.36. Should 45.51 move aside, on the other hand, another layer of indicator resistance is visible at 55.67.

  • Technically speaking, while 90.00 support served buyers last week, the level communicates a somewhat vulnerable tone. Not only did buyers fail to build on mid-week gains from the support, the longer-term trend favours sellers. Challenging 89.34 support would be interesting this week; should a break come to pass, this suggests a resumption of the longer-term downtrend.

 

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 1.1 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:

Although the Quasimodo formation at 1.2169 played its part as resistance last week, Friday—following Thursday’s modest low of 1.2051—witnessed EUR/USD stage a comeback amidst USD softness (DXY < 90.50). Climbing 1.2169 this week shines the technical spotlight on another Quasimodo resistance at 1.2278. Downside objectives to be mindful of, however, are the 1.1985 May 5th low, arranged just north of the 200-day simple moving average (currently circling 1.1952).

The vibe out of the daily chart has been mostly bullish since price crossed above the 200-day simple moving average in early April. Additionally, the trend, despite the 2021 retracement, remains to the upside (trending higher since early 2020).

Movement out of the RSI indicator shows the value rebounding from support at 51.36, threatening continuation moves to overbought territory (in particular resistance at 80.39).

H4 timeframe:

Areas of demand that achieve something on the chart will always capture the hearts of price action traders. Demand at 1.2044-1.2071 welcomed (and contained) price during mid-week movement (represents a decision point to break through the 1.2150 top [April 29]) and, along with trendline support (taken from the low 1.1712), provided a platform for buyers to push from on Friday.

Commanding attention to the upside this week is Quasimodo resistance from 1.2180, followed by resistance at 1.2222.

H1 timeframe:

Following earlier moves out of a familiar Fib support at 1.2059-1.2073 (green), European hours on Friday pulled EUR/USD above 1.21, tripping protective stops and filling breakout buyers. A short-lived pause emerged around the 100-period simple moving average (at 1.2117), yet buyers stood their ground and subsequently marched to Quasimodo resistance at 1.2149 during US trading.

Upstream, beyond 1.2149, the river appears ripple free until reaching another layer of Quasimodo resistance at 1.2178, sheltered south of the 1.22 figure.

The RSI value wrapped up the week hovering within striking distance of overbought territory. RSI resistance is seen at 78.97, with trendline support also stationed nearby (etched from the low 23.69).

Observed levels:

Long term:

With the overall trend facing higher, and monthly price exiting demand at 1.1857-1.1352 in April, daily flow navigating space above Quasimodo resistance at 1.2169 this week is potentially on the cards, targeting Quasimodo resistance at 1.2278.

Short term:

The H4 timeframe, in conjunction with the higher timeframes, also demonstrates scope to climb this week, at least until reaching Quasimodo resistance at 1.2180 (positioned just above daily Quasimodo resistance at 1.2169). This analysis, therefore, places a question mark on H1 Quasimodo resistance at 1.2149 and opens the curtain on a possible short-term bullish scenario, targeting H1 Quasimodo resistance at 1.2178 (plotted just beneath the H4 Quasimodo).

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, breakout buyers north of the base emphasised a non-committal tone last week. Subsequent action witnessed muscular selling on Wednesday, though follow-through moves were limited and resulted in a bullish revival on Friday.

From a technical perspective, the aforesaid resistance is hanging by a thread—recent visits (from April 20th) to the resistance have proved fruitless, echoing weakness. Nevertheless, any downside attempt has support at 0.7563 on the radar. Closing above 0.7816 this week, however, and holding gains, throws light on supply at 0.8045-0.7985 (plotted just south of monthly supply at 0.8303-0.8082).

With respect to trend, we have been higher since the early months of 2020. In line with this, the RSI value holds above the 50.00 centreline (a positive for the current uptrend), with trendline resistance placed overhead, taken from the high 79.74.

H4 timeframe:

Delivering support and resistance since late January this year, 0.7696-0.7715 made a show on Thursday and, with the help of USD downside, encouraged a healthy bid on Friday.

Daily resistance mentioned above at 0.7816 also has a home on the H4 chart, with a break uncovering Quasimodo resistance at 0.7862, as well as another resistance from 0.7899.

Space below current support, should sellers take the reins, directs attention to demand at 0.7632-0.7653—a decision point to break local peaks at 0.7661 and 0.7676.

H1 timeframe:

As evident from the H1 chart, early London on Friday forged demand at 0.7728-0.7747. Further buying took the currency pair north of trendline resistance, drawn from the high 0.7890, and resistance at 0.7755 (now labelled support), along with the 100-period simple moving average at 0.7776.

Overhead, 0.78 is likely to demand a response, having seen the level drawing a close connection with daily resistance at 0.7816. Above here, 0.7850 is recognised as another form of resistance.

The RSI indicator made its way into overbought territory in the closing hours of Friday’s session, directing the spotlight to a potential test of resistance at 80.85.

Observed levels:

Long term:

Daily resistance at 0.7816 is key on the bigger picture. With the level failing to express much bearish interest Since April 20th, moves to daily supply at 0.8045-0.7985 could be in the offing this week (plotted below supply at 0.8303-0.8082).

Short term:

The 0.78 figure on the H1, aligning closely with daily resistance at 0.7816, has the ability to spark a short-term bearish theme early week. Interested sellers, nonetheless, are urged to pencil in the possibility of breaking higher, according to the daily timeframe (see above in bold).

Therefore, although a bearish setup may form off 0.78, a break of the figure is equally likely, movement unlocking a possible bullish wave to 0.7850 resistance on the H1.

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Mid-week trading watched USD/JPY extend its rebound from trendline support, extended from the low 102.59, and power into the walls of supply at 109.97-109.18. As you can see, sluggish selling into the second half of the week provides a basis for longer-term resistance at 110.94-110.29 to possibly enter the frame, posted under supply at 111.73-111.19. However, a retest of nearby trendline support is still not out of the question before buyers attempt to regain footing.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

In line with the current trend, the RSI value is looking to try and secure position above resistance at 57.00, shifting attention to overbought terrain and RSI resistance at 83.02.

H4 timeframe:

The combination of a 61.8% Fib level at 109.60 and supply at 109.97-109.72 witnessed the pair steadily decline in the latter part of the week.

Demand at 108.64-108.91 calls for attention lower on the curve, an area fastened above familiar demand at 108.20-108.43. North of current supply, the technical radar is fixed on supply at 110.85-110.46 (fixed within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.64 and a 1.272% Fib expansion at 110.37).

H1 timeframe:

Friday watched H1 filter through trendline support, extended from the low 108.35, with price subsequently shaping a retest of the ascending line which held as resistance. Also of technical note was price challenging a 38.2% Fib level at 109.23 (along with a 50.00% retracement).

Technical elements overhead show additional (more local) trendline resistance present, taken from the high 109.78. A break here, as well as pushing through local tops, could eventually nudge price action towards resistance at 109.95.

Below Fib support, the 100-period simple moving average is seen around 109.18, closely shadowed by the 109 figure.

The RSI delivered a late test of trendline resistance on Friday, taken from the high 79.10, with the value now pursuing terrain south of the 50.00 centreline. Momentum, therefore, may see further downside this week.

Observed levels:

Long term:

We have monthly price possibly forging support off a recently breached descending resistance line, which underscores a potential bullish scenario. This may have daily buyers attack supply at 109.97-109.18 this week, and make a run for longer-term daily resistance at 110.94-110.29.

Short term:

Before buyers make an entrance, a test of H4 demand at 108.64-108.91 (set just beneath 109 on the H1) could come about. What’s also interesting is the H4 demand area intersects with daily trendline support. Therefore, according to chart studies, a bullish theme emerging from the aforementioned H4 demand is perhaps in store this week.

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 subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, trades firmly on the front foot, up by 2 percent MTD.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Thursday’s near-test of support at 1.4003 (situated above demand at 1.3857-1.3940—an area where a decision was made to break above 1.4003 resistance), as you can see, finished by way of what’s known as a doji indecision candle. Friday, on the back of a renewed USD selling bias, observed GBP/USD bulls regain position and close nearby session peaks (1.4111).

Aside from last week’s tops around 1.4167, price is likely to discover resistance at 1.4250 in the form of a Quasimodo pattern.

Trend in this market has remained firmly to the upside since March 2020.

From the RSI, traders will note the value rotated lower just south of overbought last week, movement which may see trendline support, taken from the low 36.14, make an entrance.

H4 timeframe:

Support at 1.4007—a previous Quasimodo resistance level—welcomed price action on Thursday.

Bullish energy from 1.4007, though, did not come about until Friday, elevated higher not only on technical buying but also USD weakness across the board. This signals the unit may navigate towards 1.4162 resistance this week.

In the absence of follow-through buying, territory beneath 1.4007 shines light on trendline support, extended from the low 1.3668, with subsequent selling taking aim at support coming in from 1.3919.

H1 timeframe:

Heading into US trade on Friday, following an earlier advance above 1.4050, price action entered a narrow range around the lower side of 1.41 and the 100-period simple moving average. Interestingly, the ranging motion established a pennant pattern (continuation patterns that generally form after decisive movement). If a breakout higher comes to pass, local trendline resistance, taken from the high 1.4166, is seen. And should we clear the aforesaid trendline, Quasimodo resistance is located around 1.4176.

While pennant patterns are considered continuation formations, traders are urged to take into account the RSI value exited overbought space and nudged beneath trendline support on Friday, extended from the low 26.37. This indicates downside momentum could take shape early week.

Observed levels:

Long term:

With scope to advance on the monthly scale, and the daily timeframe’s rebound from just north of support at 1.4003, in line with the current trend (see daily chart), further buying could be in the offing this week, targeting last week’s tops around 1.4167, and maybe daily resistance at 1.4250.

Short term:

Room to scale higher on the H4 to resistance at 1.4162, suggests H1 voyaging above 1.41 and neighbouring trendline resistance is possible this week, perhaps clearing the runway to H1 Quasimodo resistance at 1.4176 (located a touch above H4 resistance at 1.4162).

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.

May 14th 2021: $1.40 Calling for Attention on GBP/USD

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 also currently trades higher by 0.5 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 also breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

The dollar index (ticker: DXY) left behind a muted vibe on Thursday, with EUR/USD emulating the action.

On the data front, US jobless claims fell more than expected at 473,000 versus a forecast of 487,000. In addition, the Producer Price Index rose 0.6 percent in April, beating forecasts of 0.3 percent. This follows Wednesday’s upbeat inflation release.

EUR/USD extended losses south of Quasimodo resistance at 1.2169 on Wednesday, nudging the 1.1985 May 5th low in view, arranged just north of the 200-day simple moving average at 1.1950.

As mentioned in previous technical briefings, the trend, despite the 2021 retracement, remains to the upside (trending higher since early 2020).

Momentum, as measured by the RSI indicator, failed to clock overbought tops at the beginning of the week and is poised to potentially revisit support at 51.36.

H4 timeframe:

Technical structure largely unchanged from previous analysis.

Demand at 1.2044-1.2071 welcomed (and contained) price movement in recent action. According to the H4 timeframe, this area represents a decision point to break through not only 1.2108 resistance, but also the 1.2150 top (April 29).

South of current demand exposes support at 1.1990.

H1 timeframe:

As highlighted in Thursday’s analysis, 1.2059-1.2073 Fib support made a show following Wednesday’s aggressive downside pressure. Interestingly, this area provided enough fuel for buyers to make an entrance on Thursday and retest the lower side of 1.21. Consequent to this, a short-term consolidation is forming between the said areas.

Territory beneath the Fib zone shines the technical headlights on support drawn from 1.2035. Upstream—north of 1.21—the 100-period simple moving average calls for attention around 1.2128, followed closely by resistance parked at 1.2135.

Note, the Fib zone also benefits from connecting with H4 demand underscored above at 1.2044-1.2071, while the 1.21 figure is seen stationed just under H4 resistance at 1.2108.

Resistance at 47.50 on the RSI indicator is proving a tough nut to crack right now. Breaking the level, nonetheless, shows a relatively clear river north to overbought space.

Observed levels:

Short term, the H1 Fib support between 1.2059 and 1.2073, and the 1.21 figure, provide a range for traders to work with.

What’s interesting about this consolidation is its bolstered by H4 structure: H4 demand at 1.2044-1.2071 and H4 resistance at 1.2108.

With the overall trend facing higher, and monthly price exiting demand at 1.1857-1.1352 in April, a break higher could eventually take form. Therefore, a bullish breakout scenario may emerge above 1.21 on the H1, assuming a decisive close above the base—initially targeting H1 resistance at 1.2135.

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, on the other hand, 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:

Technical structure largely unchanged from previous analysis.

The Australian dollar ended Thursday marginally off worst levels against the US dollar, for what was an uninspiring session all in all.

To the upside, resistance can be found at 0.7816, while lower on the curve, support at 0.7563 is on the radar.

With respect to trend, despite a two-month retracement and yesterday’s down move, we have been decisively higher since the early months of 2020.

Downside momentum, as you can see from the RSI indicator, pulled the value through the 50.00 centreline—indicating additional losses may be on the cards.

H4 timeframe:

Support at 0.7696-0.7715 made a show on Thursday, greeting price action following a trendline support breach (drawn from the low 0.7531). As you can see, for now, upside attempts from the noted support zone have been contained by the underside of the trendline support in the form of resistance.

Space below current support directs attention to demand at 0.7632-0.7653—a decision point to break local peaks at 0.7661 and 0.7676. Should we manoeuvre back above trendline resistance, on the other hand, resistance (daily) can be seen at 0.7816.

H1 timeframe:

Heading into the early hours of US trading on Thursday, AUD/USD went on the offensive from 0.77 (held price higher since April 21st) and now shines the technical spotlight on resistance at 0.7755 (dovetailing with trendline resistance, drawn from the high 0.7890).

0.7671-0.7687 demand is visible beneath 0.77.

As for the RSI indicator, following RSI support at 19.40 entering the frame on Wednesday (capping downside since mid-April 2020), the value is now seen navigating territory just south of the 50.00 centreline.

Observed levels:

Technically speaking, H4 action offers a limited perspective until either trendline support-turned resistance or the support at 0.7696-0.7715 gives way. Areas outside of the aforementioned barriers to be mindful of are demand at 0.7632-0.7653 and daily resistance at 0.7816.

On the H1, resistance at 0.7755 may catch the attention of short-term players today, having seen the base coincide with trendline resistance (red zone).

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Following last Friday shaking hands with trendline support, extended from the low 102.59, Wednesday had USD/JPY enter supply at 109.97-109.18 which prompted mild selling on Thursday. North of 109.97-109.18 casts light on longer-term resistance at 110.94-110.29, stationed under supply at 111.73-111.19.

Trend studies reveal the pair has been trending higher since the beginning of 2021. In line with this, the RSI is attempting to secure position above resistance at 57.00, shifting attention to overbought space and RSI resistance at 83.02.

H4 timeframe:

The combination of a 61.8% Fib level at 109.60 and supply at 109.97-109.72 sparked mild selling on Thursday. This follow’s Wednesday’s energetic push higher, movement forming demand at 108.64-108.91—the next downside target should sellers remain in the driving seat.

North of current supply, the technical radar is fixed on supply at 110.85-110.46 (fixed within daily resistance at 110.94-110.29 and joined by a 100% Fib projection at 110.64 and a 1.272% Fib expansion at 110.37).

H1 timeframe:

Despite an early test of supply-turned demand at 109.52-109.39, upside interest was limited, failing to find acceptance beyond 109.78.

As you can see, price ended Thursday within the walls of 109.52-109.39, threatening a potential break lower for nearby trendline support, extended from the low 108.35, and a 38.2% Fib level at 109.23 (along with a 50.00% retracement).

RSI resistance stepped forward at 79.60 yesterday and fuelled an overbought exit that subsequently watched the value nosedive through the 50.00 centreline. This implies additional downside momentum could be seen.

Observed levels:

We have monthly price attempting to forge support off a recently breached descending resistance line, which underscores a potential bullish scenario. From the H1 timeframe, short-term flow shows trendline support around the 109.23ish range, aligning with Fib studies. This, if tested, prompts a bullish scene.

Both the daily and H4 timeframes, however, demonstrate supply (109.97-109.18 and 109.97-109.72 [located within the upper range of daily supply]) and could hamper buying.

 

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 subsequently 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 and April witnessed decreased volatility.

May, nonetheless, trades firmly on the front foot, up by 1.7 percent MTD.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

It was a somewhat muted session Thursday, following Wednesday’s decisive 0.6 percent decline. Support at 1.4003, nevertheless, came within touching distance of entering the fray. Note this level served relatively well as resistance since March. 1.3857-1.3940 demand is plotted just beneath the said support.

Out of the RSI, traders will note the value rotated lower just south of overbought, movement which may see trendline support, taken from the low at 36.14, make an entrance.

H4 timeframe:

Support at 1.4007—a previous Quasimodo resistance level—welcomed price action on Thursday.

Bullish energy from 1.4007, though, has been relatively light thus far. This signals the unit may navigate deeper water and shake hands with trendline support, extended from the low 1.3668.

In the event buyers change gears, 1.4162 resistance demands attention.

H1 timeframe:

Limited action was observed Thursday, with price scoring a narrow range ahead of the widely watched 1.40 figure, which happens to align with a 50.00% retracement level at 1.4003. Lower on the curve, support is found at 1.3929, and to the upside we can see the 1.41 figure (and nearby 100-period simple moving average).

From the RSI, the value penetrated trendline resistance, drawn from the peak 83.68. This signals we may see the 50.00 centreline give way.

Observed levels:

Analysis unchanged due to Thursday’s lacklustre performance.

The combination of daily support at 1.4003, H4 support at 1.4007 and the 1.40 figure on the H1, may be enough to lure bullish moves.

Traders are, however, urged to pencil in the possibility of a whipsaw forming around 1.40, as this level will attract a number of orders.

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.

May 13th 2021: Dollar Index Higher Following Surge in US Consumer Prices

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 also currently trades higher by 0.5 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 also breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

USD bids strengthened their grip Wednesday, lifted on the back of a rise in US Treasury yields (benchmark 10-year note rose 4 percent) in addition to stronger-than-anticipated US inflation data (headline inflation jumped 0.8% m/m versus the 0.2% consensus estimate).

Technically, EUR/USD extended losses south of Quasimodo resistance at 1.2169 yesterday, nudging the 1.1985 May 5th low in view, arranged just north of the 200-day simple moving average at 1.1949.

As mentioned in previous technical briefings, the trend, despite the 2021 retracement, remains to the upside (trending higher since early 2020).

Momentum, as measured by the RSI indicator, failed to clock overbought tops and is poised to potentially revisit support at 51.36.

H4 timeframe:

Wednesday’s bearish vibe watched H4 candles surpass support at 1.2108 (now labelled resistance) to shake hands with demand at 1.2044-1.2071 (this area, according to the H4 timeframe, represents a decision point to break through not only 1.2108, but also the 1.2150 top [April 29]).

South of current demand exposes support at 1.1990.

H1 timeframe:

1.2059-1.2073 Fib support made a show following Wednesday’s downside pressure.

As you can see, buyers have begun to establish a modest floor, which could stir a retest at the lower side of 1.21. Note, this Fib zone also benefits from connecting with H4 demand underscored above at 1.2044-1.2071.

Territory beneath the Fib zone shines the technical headlights on support drawn from 1.2035.

Short-term momentum dipped a toe in oversold space yesterday, though exited the zone late US trade (modest bullish cue), according to the RSI indicator.

Observed levels:

Short term, the H1 Fib support between 1.2059 and 1.2073—a base dovetailing with H4 demand at 1.2044-1.2071 and forming in line with the overall trend—triggering a bullish scenario is possible, with H1 targeting 1.21, followed by H4 resistance at 1.2108.

The drawback to longs, of course, is the daily timeframe informing technicians of room to drive as far south as 1.1985 troughs.

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, on the other hand, 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:

Upbeat headline inflation inspired a healthy USD bid Wednesday, movement weighing on the risk-sensitive Australian dollar. Erasing 1.5 percent, and overturning support at 0.7816 (now labelled resistance), further selling could unfold to cross paths with support at 0.7563.

With respect to trend, however, despite a two-month retracement and yesterday’s down move, we have been decisively higher since the early months of 2020.

Downside momentum, as you can see from the RSI indicator, pulled the value through the 50.00 centreline—indicating additional losses may be on the cards.

H4 timeframe:

Shortly after voyaging beneath daily support at 0.7816, price action on the H4 timeframe reveals the pair retested the latter and subsequently cruised to trendline support, drawn from the low 0.7531. Technical elements also reveal a support area resides close by at 0.7696-0.7715.

Space below current supports direct attention to demand at 0.7632-0.7653—a decision point to break local peaks at 0.7661 and 0.7676.

H1 timeframe:

Despite H1 reclaiming 0.78+ status early London, buyers failed to find grip above the psychological figure as the 100-period simple moving average delivered (dynamic) resistance at 0.7816.

The currency pair settled around the 0.7724ish neighbourhood, threatening a dip to 0.77 (held price higher since April 21st and benefits from additional support in the shape of a Quasimodo formation at 0.7704).

RSI support at 19.40 also entered the frame in recent movement (capping downside since mid-April 2020), a base situated deep within oversold space.

Observed levels:

Looking ahead, H4 trendline support, and support at 0.7696-0.7715, is an area likely to stir short-term bullish interest. However, according to the H1 scale, a move to 0.77 could be seen before buyers attempt to make an appearance (fixed deep within the aforementioned H4 demand).

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.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Following last Friday shaking hands with trendline support, extended from the low 102.59, Wednesday—on the back of gains in US Treasury yields and a healthy USD bid across the board—witnessed USD/JPY enter supply at 109.97-109.18 and add 1 percent.

North of 109.97-109.18 casts light on longer-term resistance at 110.94-110.29, stationed under supply at 111.73-111.19.

Trend studies reveal the pair has been trending higher since the beginning of 2021. In line with this, the RSI climbed above resistance at 57.00 yesterday, shifting attention to overbought space and RSI resistance at 83.02.

H4 timeframe:

Support between 108.20 and 108.50 (made up of demand from 108.20-108.43, a 1.618% Fib expansion at 108.36, a 1.272% Fib projection at 108.48, and support at 108.50) has served buyers well since late April.

Wednesday’s combination of technical buying from the aforementioned support, and broad USD upside, not only formed demand at 108.64-108.91, it guided price to a 61.8% Fib level at 109.60, set beneath familiar supply at 109.97-109.72.

H1 timeframe:

Latest developments out of the H1 timeframe show price overrun supply at 109.52-109.39 and swiftly retested the upper walls of the area as support. This followed a somewhat energetic move north of the 109 figure.

Although the RSI indicator currently engages with resistance at 79.60 (lodged within overbought), price space displays scope to reach resistance at 109.95.

Observed levels:

H1 price retesting 109.52-109.39 and establishing support may motivate short-term gains today. While in harmony with the monthly timeframe attempting to secure support from descending resistance, H4 reveals supply at 109.97-109.72 could hamper upside (an area pinned within the upper range of daily supply at 109.97-109.18).

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 subsequently 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 and April witnessed decreased volatility.

May, nonetheless, trades firmly on the front foot, up by 1.8 percent MTD.

Despite the trendline breach (which could serve as possible support if retested), 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 withdrew against a healthy USD on Wednesday, following stronger-than-expected US inflation numbers.

Yesterday snapping a three-day bullish phase directed attention back to support at 1.4003, highlighting a possible retest play. Note this level served relatively well as resistance since March.

Out of the RSI, traders will note the value rotated lower just south of overbought, movement which may see trendline support, taken from the low at 36.14, enter the fight.

H4 timeframe:

After 1.4162 resistance welcomed sellers on Tuesday, Wednesday followed through to the downside and delivered the currency pair to within striking distance of demand at 1.4014-1.4045, plotted north of support at 1.4007.

Navigating deeper water, on the other hand, implies we might have trendline support, pencilled in from the low 1.3668, make a show.

H1 timeframe:

As you can see, an almost picture-perfect head and shoulders top pattern (yellow) formed a stone’s throw from Quasimodo resistance at 1.4176.

1.41 stepped aside, despite an earnest attempt to hold the figure during early US trade on Wednesday, allowing H1 candles to connect with the 100-period simple moving average around the 1.4062ish region. A decisive break here unlocks the trapdoor for a possible run to the widely watched 1.40 figure, which happens to align with a 50.00% retracement level at 1.4003.

The RSI nudged into oversold in recent trade, threatening a move to support at 12.22. Any upside from oversold today has trendline resistance, drawn from the peak 83.68, to target.

Observed levels:

The combination of daily support at 1.4003, H4 support at 1.4007 (located under H4 demand at 1.4014-1.4045) and the 1.40 figure on the H1, may be enough to lure bullish curiosity if tested.

Traders are, however, urged to pencil in the possibility of a whipsaw forming around 1.40, as this level will attract a number of orders.

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.