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December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion

December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets

EUR/USD:

Monthly timeframe:

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

Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply from 1.1857/1.1352 in August, a modest correction surfaced. However, with buyers making an entrance in November and December trading higher by 1.3 percent, this argues additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted.

The primary downtrend, nevertheless, remains unbroken until 1.2555 is engulfed (Feb high [2018]).

Daily timeframe:

Modified from previous analysis –

In tandem with monthly buyers, daily activity squeezed through the upper perimeter of a descending wedge pattern (correction) between 1.2011 and 1.1612 (some may interpret this arrangement as a descending triangle pattern) heading into the final rounds of November with December also overrunning resistance at 1.2095.

Since the week kicked off, however, thin bids have allowed price to gradually grind lower. Wednesday, off best levels, is currently seen attempting to topple 1.2095 support in the shape of a bullish flag pattern (1.2177/1.2078)

RSI action shows the value recently exited overbought space, down from peaks at 75.00.

H4 timeframe:

Recent developments on the H4 chart shows demand at 1.2040/1.2065 commanded attention Wednesday, an area sharing space with a 127.2% Fib projection at 1.2052 and a 50.0% level at 1.2050.

Could the above be enough to drive buying and force a breakout above the daily bullish flag? Failure to hold at the aforesaid H4 demand throws light on demand at 1.2026/1.1992 and trendline support (1.1602).

H1 timeframe:

Following a fleeting visit to supply at 1.2152/1.2133, gleaning additional impetus from the lower side of the 100-period simple moving average, H1 nosedived through 1.21 and welcomed demand at 1.2060/1.2076 and an AB=CD correction.

Confirmed by RSI oversold values, EUR/USD is seen echoing a modestly bullish tone right now.

Observed levels:

Wednesday’s research noted:

H1 demand at 1.2060/1.2076 is likely to stir interest today if the area puts in an appearance. Glued to the upper rim of H4 demand at 1.2040/1.2065, as well as in line with monthly direction and also within close range of daily support at 1.2095, the H1 demand area communicates reasonably healthy confluence.

In addition to the above, liquidity (sell-stops) beneath the 1.21 level may also tempt buying.    

Going forward, buyers may challenge 1.21 resistance, with a break perhaps reaching for H1 supply at 1.2152/1.2133.

December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets

AUD/USD:

Monthly timeframe:

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

Following a mild correction that addressed the upper border of demand at 0.7029/0.6664 (prior supply), buyers have so far responded well. Up by 4.5 percent in November, with December also trading higher by 1.3 percent, buyers appear free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In terms of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Modified from previous analysis –

Supply at 0.7453/0.7384 remains under attack, as Wednesday delivered a heavy-handed blow to its upper side and renewed year-to-date highs.

With the trend on the daily timeframe depicting a northerly course since March, this places a question mark on the aforesaid supply. Absorbing the latter helps confirm the current trend and throws light on supply from 0.7587/0.7528.

The RSI indicator continues to hover beneath overbought conditions, following the removal of 52.00 resistance at the beginning of November.

H4 timeframe:

Despite Tuesday’s characterless movement within the parapets of demand at 0.7398/0.7420, robust buying made a show Wednesday and struck highs at 0.7485, consequently taking in the ascending triangle take-profit target (pink) at 0.7463.

As you can see, though, a retreat formed and stopped a few pips ahead of the aforementioned demand zone and established a dragonfly doji candlestick pattern.

H1 timeframe:

Wednesday’s correction off year-to-date highs dropped the pair through 0.7450 support to test the mettle of the 100-period simple moving average around 0.7430.

From a technical stance, retaking the 0.7450 level today sends a bullish signal to this market.

As for the RSI indicator, the value recently generated bullish hidden divergence.

Observed levels:

Monthly price calling for higher levels, and daily supply from 0.7453/0.7384 having its upper side tested yesterday, suggests 0.7450 offers could be thin. With that, a push above the latter could emerge.

Failure to conquer 0.7450, focus is likely to be drawn to H1 demand at 0.7391/0.7401 (and the 0.74 level), fastened to the lower side of H4 demand at 0.7398/0.7420.

December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets

USD/JPY:

Monthly timeframe:

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

Since kicking off 2017, USD/JPY has been carving out a descending triangle pattern between 118.66/104.62.

November, as you can see, worked with the lower edge of the aforesaid pattern and finished the month down by 0.3 percent – a third successive monthly loss.

104.62 ceding ground shines light on demand from 96.41/100.81, followed by trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Brought forward from previous analysis –

Since November 20, price movement on the daily chart has offered a low-key stance.

Technical levels, therefore, remain unchanged.

Supply from 106.33/105.78 and trendline resistance (111.68) are prominent areas north of price.

Light falls on demand at 100.68/101.85 (fixed to the upper base of monthly demand and drawn from September 2016) if sellers make a push.

RSI enthusiasts will note the unit has remained under 57.00 resistance since July.

H4 timeframe:

Modified from previous analysis –

Support at 103.70 made its presence known again last Thursday, arranged just ahead of demand from 103.04/103.58, extended from March 2020. Traders will also note resistance is seen at 104.73.

Having both support and resistance welcome at least two consecutive tests, the H4 chart is considered rangebound for the time being.

An additional feature worth considering is the ascending wedge pattern (103.67/104.31).

H1 timeframe:

USD/JPY flow on Wednesday, following an earlier retest at the 100-period simple moving average around 104.06, greeted the 61.8% Fib level at 104.34 and trendline resistance (prior support – 103.67). Further interest to lower levels today shines light back on the simple moving average, with subsequent weakness to possibly fill 104 bids.

Observed levels:

Modified from previous analysis –

Monthly price appearing to be on the verge of breaching descending triangle support at 104.62 continues to underline a relatively weak market.

The above implies H4 sellers may attempt to overrun any defence around the lower side of the H4 ascending wedge pattern, implying a possible breach of 104 could be in the offing.

December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets

GBP/USD:

Monthly timeframe:

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

November trading higher by 2.9 percent and December currently higher by 0.3 percent recently stirred trendline resistance (2.1161).

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high 2018.

Daily timeframe:

Brought forward from previous analysis –

Since crossing paths with demand at 1.2645/1.2773 and the 200-day simple moving average in late September, GBP/USD has displayed a gradual interest to the upside and generated an AB=CD pullback concluding at 1.3392.

With monthly trendline resistance making an entrance and daily supply also recently joining the fight at 1.3622/1.3467 (together with Wednesday forming a shooting star candle pattern), sellers may eventually take the lead.

RSI followers will also see the line is beginning to round ahead of overbought territory, currently navigating space below 60.00.

H4 timeframe:

Governed largely on the back of Brexit headlines yesterday, GBP/USD rushed resistance at 1.3396 and topped just ahead of another resistance from 1.3483, before collapsing back beneath 1.3396.

In addition to the above resistances, demand at 1.3240/1.3273 is also a primary area of interest on the H4 chart, plotted above support at 1.3182.

H1 timeframe:

The supply from 1.3495/1.3462 and joining AB=CD pullback proved effective resistance heading into Wednesday’s US session. Following the formation of a shooting star candle configuration out of the aforesaid supply, sellers made a strong showing, retaking 1.34 (and the 100-period simple moving average) and retesting the lower side of the figure before spiking to lows ahead of 1.33. Demand is seen below at 1.3249/1.3274.

RSI flow also nudged beneath 50.00, poised to possibly reach oversold conditions today.

Observed levels:

Modified from previous analysis –

Monthly price flirting with trendline resistance, as well as daily supply stepping forward at 1.3622/1.3467, communicates a bearish vibe. Although the immediate trend faces higher on the daily timeframe, the bearish structure (on both daily and monthly charts) and monthly downtrend suggests sellers still have the advantage.

Consequent to the above, a bearish extension off the lower edge of 1.34 would not surprise today.

Another scenario to be watchful of is a whipsaw through the 1.33 level into demand at 1.3249/1.3274. However, any upside derived from this move is unlikely to be anything to write home about due to the pair’s stance on the higher timeframes.

December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • December 10th 2020: Dollar Index Reclaims 91.00 on Risk Aversion, FP Markets
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