Charts: Trading View
EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)
Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).
Month to date, August trades 1.1 percent lower.
Based on trend studies, a primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Furthermore, price penetrated major trendline resistance, taken from the high $1.6038, in July 2020.
Daily timeframe:
Amidst increasing USD demand and higher US Treasury yields, EUR/USD eked out modest losses on Monday.
Maintaining a bearish trajectory lands the currency pair within a stone’s throw from the upper edge of a breached falling wedge (between $1.1847 and $1.1975), and a neighbouring Quasimodo support at $1.1688. It’s important to recognise 31st March low at $1.1704 is arranged above the Quasimodo—sell-stops, therefore, are likely positioned below here and could entice buyers into the market from the aforesaid Quasimodo base.
With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020. As for momentum, the relative strength index (RSI) shows the value extending position below trendline support, taken from the low 27.11, and recently navigating beneath the 50.00 centreline. This, according to the indicator, unlocks a bearish scene and possible movement to oversold space.
H4 timeframe:
Latest developments out of the H4 scale reveal the unit punctured 21st July low at $1.1751, consequently absorbing sell-stop orders around this base.
Quasimodo support at $1.1720 is a noticeable barrier and may, knowing sell-stops are perhaps present, contain sufficient oomph to drive EUR/USD back to $1.1800 resistance, a prior Quasimodo support level. $1.1720 failing to deliver will uncover a 100% Fib projection at $1.1680 (represents an AB=CD bullish pattern) and a 1.618% Fib extension at $1.1650.
H1 timeframe:
Early US hours Monday greeted trendline resistance, drawn from the high $1.1900, consequently attracting sellers. H4 Quasimodo support at $1.1720 is viewed as a reasonable downside target, closely shadowed by H1 Quasimodo support from $1.1711.
Also of technical note is supply at $1.1766-1.1754, which might welcome sellers if challenged.
Alternatively, above current supply we have resistance to work with at $1.1783, which, at current price, dovetails with a 100% Fib projection (AB-CD bearish pattern) and a nearby 38.2% Fib retracement value from $1.1791.
In terms of the relative strength index (RSI), the value is engaging resistance at 36.94, threatening a break higher to shake hands with the 50.00 centreline. Violating the latter is considered a bullish signal, informing traders that average gains exceed average losses.
Observed levels:
Between daily Quasimodo support at $1.1688 and H4 Quasimodo support from $1.1720, this is an area—given monthly price is seen trading within support at $1.1857-1.1352—which may pull in bullish interest if tested.
A potential short-term bearish scenario to also be aware of is a whipsaw through H1 trendline resistance, extended from the high $1.1900, to test H1 resistance at $1.1783, a base accompanied by AB=CD bearish structure. Shorts are likely to take aim at H4 Quasimodo support from $1.1720.
AUD/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)
Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.
Month to date, August is unchanged.
Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) is in play until breaking $0.8135 (January high 2018).
Daily timeframe:
Technical structure unchanged from previous analysis
July carving a bottom ahead of a 1.272% Fib projection at $0.7273 placed resistance at $0.7453-0.7384 in the frame early August. Territory above brings light to the 200-day simple moving average at $0.7600, a dynamic value sheltered south of resistance at $0.7626.
Friday observed sellers step forward, with Monday extending the bearish presence. This could lead to a test of $0.7273.
With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July.
In terms of momentum, the relative strength index (RSI) remained under the 50.00 centreline last week, and is currently testing the mettle of support at 41.63.
H4 timeframe:
Technical structure unchanged from previous analysis
A closer reading of price action on the H4 scale shows Monday came within a whisker of testing a head and shoulder’s profit objective at $0.7328 (the pattern emerged around the lower side of a 38.2% Fib retracement at $0.7408).
Fibonacci structure between $0.7293 and $0.7315 is visible just south of $0.7328 (green base). This is an area housing a 100% Fib projection at $0.7313 which is a level harmonic traders recognise as an AB=CD bullish formation. Harmonic AB=CD traders commonly set take-profit targets at 38.2% and 61.8% Fib retracement levels, derived from legs A-D. The 38.2% Fib retracement at $0.7408, as you can see, has proven stubborn resistance.
H1 timeframe:
For those who read Monday’s technical briefing you may recall the following (italics):
Following an earlier retest of $0.74, downside gained speed and linked with trendline support, taken from the low $0.7289. Dethroning the aforementioned trendline support, as the H4 timeframe suggests, directs awareness to Quasimodo support at $0.7323, closely followed by $0.73.
As evident from the chart, the noted trendline formation posed little threat to sellers and subsequently witnessed price dip to a low of $0.7328 and retest the ascending barrier to establish resistance. This places Quasimodo support at $0.7323 and $0.73 in the line of fire today.
With regards to the relative strength index (RSI), the indicator rebounded from support at 27.02 in early trading on Monday and tested the spirit of the 50.00 centreline heading into US trading. As you can see, the level remains a ceiling for now, showing us that momentum is to the downside for the time being.
Observed levels:
Scope to navigate deeper water on the monthly timeframe places any bearish wave from daily resistance at $0.7453-0.7384 in a favourable light. The daily timeframe’s 1.272% Fib projection at $0.7273, therefore, could call for attention.
Higher timeframe pressure will likely override any upside attempt from the H4 head and shoulder’s profit objective at $0.7328 and H1 Quasimodo support at $0.7323. This suggests short-term bearish movement towards $0.73 and, by extension, H4 support at Fibonacci structure between $0.7293 and $0.7315.
USD/JPY:
Monthly timeframe:
(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)
Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥ 126.10-122.66.
Month to date, August trades 0.6 percent in the green.
Daily timeframe:
Following Friday’s move above local trendline resistance, forged from the high ¥111.66, Monday maintained a bullish spot and further cemented a possible move to resistance at ¥111.88-111.20, which happens to merge closely with neighbouring supply at ¥112.68-112.20.
When it comes to trend, USD/JPY has been higher in 2021.
Momentum studies out of the relative strength index (RSI) shows the value remains above the 50.00 centreline, displaying average gains outweigh average losses. Despite this, the indicator has resistance around 54.00 to overcome before reaching for overbought territory. As such, 54.00 should be monitored.
H4 timeframe:
Demand at ¥109.42-109.68 resides to the downside, while upstream has stacked supply between ¥110.99-110.80 and ¥110.73-110.58 on the list. However, it must be noted that each supply has already been tested and are susceptible to breaking.
H1 timeframe:
Technical structure largely unchanged from previous analysis
Short-term flow caught a bid going into US trading on Monday, forming support just north of ¥110. Resistance is seen overhead at ¥110.38, accompanied by Quasimodo resistance at ¥110.65.
Should we retreat and challenge ¥110, demand at ¥109.77-109.84 is in a unique position. Not only is it located south of ¥110—a psychological level prone to whipsaws—it’s situated in line with market direction (each higher timeframe analysed displays scope to navigate higher terrain).
From the relative strength index (RSI), the indicator is bound for overbought territory after forging support off the 50.00 centreline. Resistance is seen at 78.38.
Observed levels:
Recognising room to advance on the monthly, daily and H4 timeframes, breaching H1 resistance at ¥110.38 is perhaps in the offing, targeting H1 Quasimodo resistance at ¥110.65, which is plotted within H4 supply underlined above at ¥110.73-110.58.
GBP/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)
Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.
Month to date, August trades 0.4 percent lower.
Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.
Daily timeframe:
Technical structure largely unchanged from previous analysis
Quasimodo support at $1.3609 welcoming buyers on 21st July not only elevated the currency pair above the 200-day simple moving average at $1.3747, technicians will also note price elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250). Therefore, subsequent recovery gains have likely drawn in sellers in search of better pattern entry levels.
The flipside, of course, is last week introduced the possibility of a bullish pennant, formed between two converging descending lines taken from $1.3983 and $1.3888.
With reference to trend on this chart, the pair has been somewhat rangebound since late February.
As for momentum studies, we’re seeing upside momentum diminish, with the value edging slightly under the 50.00 centreline.
H4 timeframe:
A 100% Fib projection at $1.3851 and a corresponding 1.27% BC Fib extension at 1.3852 made an entrance on Monday and attempted to chalk up support. Yet, in recent hours we have observed sellers take the wheel and challenge bullish interest. Any upside attempts could take aim at 38.2% and 61.8% Fib retracement levels drawn from $1.3983 (this can only be applied once a firm bottom has materialised).
South of here we can see an additional gathering of Fibonacci ratios between $1.3813 and $1.3826.
H1 timeframe:
In light of Monday’s mild decline, weighed by increased USD demand, price movement wrapped up the session on the doorstep of support at $1.3840—a previous Quasimodo resistance level. You will note the barrier is fixed above demand at $1.3803-1.3827, which represents a decision point to push north of $1.38 and take local highs at $1.3833.
Higher up on the curve, Quasimodo resistance can be seen from $1.3882, sheltered under the 100-period simple moving average at $1.3900.
With reference to the relative strength index (RSI), we’re seeing mild bullish divergence emerge (price action forming lower lows while the indicator produces higher lows). This shows traders that momentum to the downside is slowing and buyers could be gearing up to take control.
Observed levels:
Support between $1.3813 and $1.3852 on the H4 (green) may still produce bullish interest, and ultimately reinforce bulls alongside the lower edge of the daily timeframe’s bullish pennant pattern. Additional areas to be mindful of, as highlighted in recent analysis, are H1 demand at $1.3803-1.3827, which happens to unite with the lower part of H4 support at $1.3813.
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.
Access +10,000 financial
instruments
