Currency

March 16th 2021: DXY Lower Ahead of Key Central Bank Meetings

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

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

March, as you can see, remains toying with the upper side of 1.1857/1.1352 demand, with the month currently lower by 1.2 percent.

Price action traders will have noted this demand test, and likely view this as a bullish signal.

Any decisive rebound from the aforesaid demand shifts attention back to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641).

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

Daily timeframe:

Leaving the 38.2% Fib level at 1.2021 unchallenged, price appears poised to revisit support at 1.1887, a level fixed nearby a 127.2% Fib projection at 1.1843, a 100% Fib extension at 1.1855, and a 200-day simple moving average at 1.1831.

The RSI oscillator, as you can see, continues to navigate terrain south of the 50.00 centreline. Above 50.00, however, resistance is found at 60.30, while to the downside, oversold territory calls for attention.

H4 timeframe:

The technical framework on the H4 scale is interesting.

In terms of resistance, traders are still likely eyeballing 1.2027, should buyers muster enough strength to overthrow last Thursday’s peak at 1.1989.

For support, however, the H4 chart’s spotlight remains firmly fixed between 1.1818 and 1.1860 (Quasimodo support at 1.1818, 161.8% Fib projection at 1.1835, and a 100% extension at 1.1860).

H1 timeframe:

As evident from the H1 chart, volatility thinned heading into London’s session Monday, shaking hands with the 100-period simple moving average and a modest Fib cluster from a 61.8% Fib level at 1.1916 and a 50.00% retracement at 1.1913.

Also calling for consideration is 1.19 support and neighbouring demand at 1.1881/1.1865, along with 1.1950 resistance.

Interestingly, the RSI breached trendline resistance and recently retested the broken line as support. The indicator’s value is currently within touching distance of 50.00.

Observed levels:

In the absence of a bullish presence off the H1 Fib cluster, 1.19 could make an entrance today, with a possible dip to demand at 1.1881/1.1865. Buyers could be drawn to the aforesaid demand, having seen the area share a close connection with daily support noted above at 1.1887.

AUD/USD:

Monthly timeframe:

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

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s also interesting was February’s movement came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082. Should sellers regain consciousness, demand at 0.7029/0.6664 is in view (prior supply).

March, as you can probably see, trades higher by 0.7 percent, and remains within February’s range.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

The Australian dollar managed to eke out minor gains against the US dollar on Monday, moulding what many traders may interpret to be a hammer candle—a bullish candlestick formation best found at troughs.

Technical action on the daily chart unearths a trendline support-turned resistance, taken from the low 0.5506.

February’s low at 0.7563 also deserves attention as a logical support target should sellers adopt more of a dominant position, with subsequent downside taking aim at demand from 0.7453/0.7384 (previous supply).

Traders who follow RSI movement will note the value to be testing the mettle of the 50.00 centreline, following lows formed at 42.00 earlier last week.

H4 timeframe:

Supply from 0.7811/0.7770 and ascending resistance (drawn from the low 0.7563), and demand coming in at 0.7696/0.7715, remain areas of focus on the H4 chart.

Recent hours witnessed demand welcome price action and propel the currency pair to within striking distance of the aforesaid supply.

Beyond supply, we have demand-turned supply coming in at 0.7848/0.7867—housing a 61.8% Fib level at 0.7859—whereas below current demand, another demand is seen at 0.7601/0.7627.

H1 timeframe:

Coming within a whisker of testing 0.77 bids heading into the US session Monday (closely shadowed by a 61.8% Fib level at 0.7689), formed by way of a near-perfect hammer pattern (bullish signal), AUD/USD bulls dethroned the 100-period simple moving average around 0.7743 and appears on course to revisit 0.78 (supply prior to this level, according to chart structure, seems relatively thin [consumed]) and neighbouring supply at 0.7818/0.7807.

With reference to the RSI oscillator, we can see the line broke through trendline resistance and is on track to perhaps cross swords with another trendline resistance plotted nearby.

Observed levels:

Partly modified from previous analysis –

Longer term, the monthly and daily charts suggest sellers are likely to remain behind the wheel until February 2nd low at 0.7563 enters view on the daily scale. However, before sellers make a show, a retest of daily trendline resistance could be on the cards.

Shorter term, it appears buyers could make a stand north of the 100-period SMA on the H1 today, targeting H4 supply priced in at 0.7811/0.7770. Whether or not the unit reaches the 0.78 figure on the H1 is difficult to estimate (located within the upper range of H4 supply).

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 further outperformance in February, March closes in (up by 2.5 percent) on descending resistance, etched from the high 118.66.

To the downside, support inhabits 101.70.

Daily timeframe:

Partly modified from previous analysis –

Latest movement out of the daily chart watched price action come within two pips of testing Quasimodo resistance from 109.38, before withdrawing and eroding the majority of daily gains. Of particular note is the Quasimodo formation joins hands with the monthly timeframe’s descending resistance.

Price action traders are likely to be watching the aforementioned Quasimodo. However, recognising supply resides at 110.94/110.29, stops above the Quasimodo head (blue arrow—109.85) could be taken.

Areas of note to the downside are support at 107.64—a previous Quasimodo resistance—and supply-turned demand at 107.58/106.85.

With respect to trend, 2021 has firmly pointed to the upside.

Based on the RSI oscillator, the value continues to explore overbought space, hovering a touch beneath resistance at 83.02.

H4 timeframe:

Quasimodo resistance at 109.16 did a reasonably stellar job holding back buyers on Monday, a horizontal level placed below supply drawn from 109.59/109.37 (holds daily Quasimodo resistance at 109.38).

Any downside attempt could have sellers address demand coming in at 108.31/108.50, followed by support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

The bullish flag pattern (109.16/108.90) highlighted in Monday’s technical briefing, as you can see, had its upper side breached on Monday. This was followed up with a subsequent retest, aided by 109 psychological support.

According to the pattern’s rules of engagement, the take-profit objective (yellow) is set just south of the 110 figure (109.90).

With respect to the RSI oscillator, on the other hand, we can see the value testing trendline support-turned resistance, but remains circling above the 50.00 centreline.

Observed levels:

Partly modified from previous analysis –

Longer term, with daily Quasimodo resistance at 109.38 and the monthly timeframe’s descending resistance joining hands, this area may welcome selling if tested. However, before sellers put in an appearance, a whipsaw to daily supply at 110.94/110.29 could take shape.

The immediate trend facing north since the beginning of the year may help lift breakout buyers above the bullish flag on the H1 timeframe. However, buyers still have their work cut out for them with H4 supply from 109.59/109.37, together with merging daily Quasimodo resistance at 109.38 and the monthly descending resistance, in close proximity.

GBP/USD:

Monthly timeframe:

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

The pendulum, as you can see, swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. March, on the other hand, has so far been lacklustre, down by 0.2 percent as of current price.

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

Daily timeframe:

Partly modified from previous analysis –

Thanks to GBP/USD registering a second successive session in the red on Monday, we’re now within close proximity of trendline support, drawn from the low 1.1409, closely shadowed by support coming in at 1.3755.

Quasimodo resistance drawn from 1.4250 is also worth a shout, should buyers enter the scene, while territory beneath 1.3755 elbows Quasimodo support at 1.3609 in the line of fire.

The trend, clearly visible on this scale, has faced higher since early 2020.

The RSI indicator remains buoyed by support between 46.21 and 49.16, with the value seen holding above 50.00.

H4 timeframe:

After testing space beneath Quasimodo resistance at 1.4007 (aligns with a 50.00% retracement) last week, Monday extended its corrective slide to within a pip of 1.3852 support.

Beyond 1.4007, resistance appears thin until the 1.42ish point; beneath 1.3852, demand at 1.3761/1.3789 is seen, followed by another layer of demand at 1.3730/1.3749.

H1 timeframe:

Confirmed by RSI bullish divergence, US trading Monday had price bump heads with clear-cut support at 1.3861—note this level’s recent history holding as both resistance and support at the beginning of March—and retest the lower side of the 1.39 figure.

In the event buyers take on 1.39, and clear the 100-period simple moving average around 1.3923 and tops located just beneath 1.3950, the widely watched 1.40 figure could make a show. Sellers governing control, on the other hand, shines the technical spotlight on 1.38 and Quasimodo support at 1.3786.

Observed levels:

Monthly price remains optimistic above trendline resistance, though before buyers strive for fresh 2021 tops, we may see daily trendline support make an entry, and possibly support at 1.3755.

What the above could mean is we whipsaw through H1 support at 1.3861 (tripping stops) and test H4 support at 1.3852 and nearby daily trendline support. Assuming this comes to fruition, this may be movement we see buyers find interest in.

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