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December 14th 2021: Technical Outlook

December 14th 2021: Technical Outlook, FP Markets

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Since mid-November, buyers and sellers have been squaring off around support at $1.1237-1.1281—made up of a 61.8% Fibonacci retracement at $1.1281 and a 1.618% Fibonacci projection from $1.1237.

‘Harmonic’ traders will acknowledge $1.1237 represents what’s known as an ‘alternate’ AB=CD formation.

Any upside derived from current support will likely be capped by resistance at $1.1473-1.1583; navigating lower, on the other hand, throws light on Quasimodo support as far south as $1.0778.

Interestingly, the pair took out 2nd November low (2020) at $1.1603 in late September. This suggests the beginnings of a primary downtrend on the weekly timeframe, reinforced by the monthly timeframe trending lower since mid-2008.

Daily timeframe:

Quasimodo support drawn from mid-June at $1.1213 (positioned beneath the weekly timeframe’s Fibonacci structure) made an entrance on 24th November and remains committed for the time being.

Continued interest to the upside points to a run back to trendline resistance, extended from the high $1.2254. Establishing a decisive close beneath $1.1213, however, exposes support on the daily timeframe at $1.0991 (not visible on the screen).

Regarding the relative strength index (RSI), the value recently recovered from oversold territory and is now on the doorstep of the 50.00 centreline. Crossing above here helps validate bullish interest: average gains exceeding average losses.

H4 timeframe:

Resistance at $1.1379 calls for attention on the H4 scale, a level accompanied by a 38.2% Fibonacci retracement at 1.1380 and a 100% Fibonacci projection from $1.1383.

Support at $1.1235 also deserves notice. Withstanding two downside attempts, the level also brings a 78.6% Fibonacci retracement to the table.

H1 timeframe:

As of writing, short-term flow is addressing the lower side of $1.13, following a modest breach of the $1.1262-1.1274 decision point. Of technical note, a lower decision point coming in at $1.1230-1.1244 also recently experienced a minor breach, albeit remaining in position.

Beyond $1.13, the technical radar is directed towards prime resistance from $1.1339-1.1328, arranged a handful of pips north of Friday’s high $1.1324.

From the relative strength index (RSI), the line recently climbed above the 50.00 centreline. This suggests a continuation higher, targeting overbought status—in particular resistance at 82.37.

Observed Technical Levels:

Despite uninspiring bullish commitment from higher timeframe supports, a pullback is not out of the question until reaching weekly resistance at $1.1473-1.1583.

Short term, nonetheless, prime resistance on the H1 timeframe at $1.1339-1.1328 is strategically located to welcome bullish momentum derived from buy-stops north of $1.13. Therefore, $1.1339-1.1328 may be an area sellers step in from, targeting $1.13.

December 14th 2021: Technical Outlook, FP Markets

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Bulls embraced an offensive phase last week from deep within prime support at $0.6968-0.7242. Not only did the move snap a five-week losing streak, it emphasised interest remains within the support.

Manoeuvring beneath $0.6968-0.7242, nevertheless, reveals support at $0.6673 and a gathering of Fibonacci ratios between $0.6687 and $0.6780. Included within this area is a 100% Fibonacci projection: an AB=CD bullish formation.

Trend on the weekly timeframe has been higher since pandemic lows of $0.5506 (March 2020); however, the monthly timeframe has been entrenched within a large-scale downtrend since mid-2011.

Daily timeframe:

Support at $0.7021 put in an appearance early last week, bolstered by a 38.2% Fibonacci retracement at $0.7057 (green). As a result, Quasimodo support-turned resistance is close by at $0.7221.

The trend on the daily timeframe has maintained a downside trajectory since late February. Momentum studies show momentum has picked up pace since exiting oversold space, though many will seek a move above the 50.00 centreline to confirm bullish intent.

H4 timeframe:

Shaking hands with resistance at $0.7170 has, as you can see, permitted a double-top pattern from 0.7183ish. Price recently breaching the formation’s neckline at $0.7132 signals short-term downside towards the pattern’s profit objective at $0.7079.

North of $0.7170, another layer of resistance resides at $0.7213.

The formation of the double-top pattern is aligned with daily and monthly timeframe trend direction.

H1 timeframe:

As evident from the H1 chart, attention has been on prime resistance drawn from $0.7190-0.7179, a level sheltered just south of $0.72. The response from the zone has seen a number of lows taken out, consequently shining the technical spotlight on $0.71.

The $0.7039-0.7055 decision point is seen beneath $0.71 should buyers fail to defend the psychological base.

Also of note on the H1 timeframe is the relative strength index (RSI) touched gloves with oversold levels and has since rebounded to 40.00+.

Observed Technical Levels:

According to the weekly timeframe, buyers could attempt to climb out of prime support at $0.6968-0.7242. Daily Quasimodo support-turned resistance at $0.7221, however, may hamper upside.

The H4 timeframe’s double-top pattern is likely to interest technical pattern traders, targeting $0.7079. This might eventually pull H1 through $0.71 and unlock chart space to the H1 decision point at $0.7039-0.7055.

Also noteworthy is the connection between H4 resistance at $0.7213 and daily Quasimodo support-turned resistance at $0.7221.

December 14th 2021: Technical Outlook, FP Markets

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

Since the beginning of October, the USD/JPY crossed swords with resistance from ¥114.38 and put in a 4-year pinnacle at ¥115.52.

Above current resistance is a 1.272% Fibonacci projection from ¥116.09, while directly below has support in view at ¥112.16.

In terms of trend, the unit has been advancing since the beginning of this year.

Daily timeframe:

Supply-turned demand at ¥112.66-112.07 welcomed buyers in recent candles. Despite holding the area, follow-through buying has been subdued. The ¥111.18-111.79 decision point is seen below should price dip. Pushing for higher levels may take the unit as far north as Quasimodo resistance from ¥116.33.

RSI (relative strength index) analysis reveals clear support between 40.00 and 50.00 (amid prolonged uptrends, indicator support often forms around the 50.00 area and operates as a ‘temporary’ oversold base). As you can see, the value has been testing the area since late November.

H4 timeframe:

Since late November, price action has been confined between a decision point at ¥113.32-113.66 and support coming in from ¥112.73.

Above the decision point are two neighbouring resistances at ¥114.76 and ¥114.46, while below the aforementioned support we can see support falls in around ¥111.98 (not visible on screen).

H1 timeframe:

A consolidation is in the process of forming between ¥113.31 and ¥113.77.

Outside of the aforesaid range are ¥113 and ¥114, serving as possible support and resistances.

In terms of the relative strength index (RSI), the value is currently engaging the 50.00 centreline after forming a low of 42.00.

Observed Technical Levels:

Short-term traders will likely observe H1 range limits between ¥113.31 and ¥113.77. As the upper boundary is supported by the H4 decision point at ¥113.32-113.66, the H1 timeframe’s range resistance could be a location sellers target.

December 14th 2021: Technical Outlook, FP Markets

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 recently surrendered position.

Couple this with price closing under a double-top pattern’s ($1.4241) neckline at $1.3669 in August, and the monthly timeframe trading lower since late December 2007, the weekly chart reflects a bearish technical outlook. The double-top pattern’s profit objective—measured by taking the distance between the highest peak to the neckline and extending this value lower from the breakout point—delivers a downside target around $1.3093.

Daily timeframe:

Quasimodo support at $1.3119 is firmly in the headlights on this timeframe.

Resistance remains at $1.3602, plotted nearby trendline resistance, taken from the high $1.4250—both forming clear upside objectives should buyers regain consciousness.

Longer-term sentiment has remained biased to the downside since June. This has caused the relative strength index (RSI) to form indicator resistance between 60.00 and 50.00 (common in downtrends). Note, however, the indicator recently rebounded from oversold space.

H4 timeframe:

Trendline resistance, extended from the high $1.3815, was taken out in recent candles, shining light on a possible run back to resistance at $1.3353.

Traders are also urged to pencil in a potential retest of the recently breached trendline resistance.

H1 timeframe:

Meanwhile, lower down on the curve, the H1 candles are on the verge of retesting $1.32, a psychological base accompanied by a 78.6% Fibonacci retracement at $1.3195 and a 1.272% Fibonacci projection from $1.3199. Technicians will also acknowledge $1.32 joins hands with a channel support, taken from the low $1.3160.

Upstream, channel resistance, drawn from the high $1.3244, is clear, followed by $1.33 resistance.

From the relative strength index (RSI), we can see the value dipped a toe under the 50.00 centreline, a move informing traders we could be headed for oversold terrain.

Observed Technical Levels:                     

While a modest rotation could emerge from $1.32 on the H1 scale, given surrounding technical confluence (see above), the higher timeframes display scope to explore lower levels.

Therefore, traders are urged to pencil in the possibility of a $1.32 breach.

December 14th 2021: Technical Outlook, 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.

 

 

 

 

 

 

 

 

 

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