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December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside

December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, 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, buyers making an entrance in November and December trading higher by 1.9 percent 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:

Brought forward 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.

In recent movement, price has also processed a bullish flag pattern (1.2177/1.2078) off 1.2095, a level now serving as support. As you can seem, the pair modestly closed above the bullish flag’s upper side, suggesting not only could EUR/USD reach for the descending wedge pattern’s take-profit target at 1.2318 (yellow), but also the bullish flag’s take-profit level at 1.2384 (purple).

H4 timeframe:

Partly modified from previous analysis –

EUR/USD remains contained by demand at 1.2040/1.2065 (an area sharing space with a 127.2% Fib projection at 1.2052 and a 50.0% level at 1.2050) and supply at 1.2200/1.2170, extended from April, 2018. The aforesaid demand is particularly striking at the point it intersects with trendline support (1.1602).

Puncturing the recently tested supply communicates an early cue the pair may head for the daily descending wedge pattern’s take-profit target at 1.2318.

H1 timeframe:

Pattern traders will note H1 recently chiselled out an ascending wedge (1.2147/1.2059), with the lower side having been under pressure since Friday.

In the event the lower side of the wedge caves in, the 100-period simple moving average around 1.2121 and the 1.21 level demand attention.

Observed levels:

Technically we have a somewhat mixed market. Monthly and daily timeframes signal higher prices could be on the menu, while H4 recently crossed paths with supply at 1.2200/1.2170 and the H1 formed an ascending wedge pattern (a reversal signal).

The fact this market has been trending higher since the beginning of 2020, and the higher timeframes tend to take precedence over the lower timeframes, H4 supply and the ascending wedge formation on the H1 may struggle to attract selling.

December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, FP MarketsAUD/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 2.6 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:

Partly modified from previous analysis –

Last week brushed aside feeble supply at 0.7453/0.7384 and consequently waved RSI flow into overbought space and handed over supply at 0.7587/0.7528.

Candlestick fans will also note sellers welcomed price action within the upper range of 0.7587/0.7528 and forged two shooting star candlestick patterns, flashing a possible bearish cue to revisit 0.7453/0.7384.

With reference to the immediate trend, AUD/USD has been higher since bottoming in March.

H4 timeframe:

Momentum has noticeably slowed since Friday, following Thursday’s dominant showing through resistance at 0.7482, a move that led to fresh 30-month highs forming.

Moderate selling unfolded in Monday, guiding technical eyes back to 0.7482 support.

North of price, however, supply is seen at 0.7616/0.7591, an area that sits on top of daily supply at 0.7587/0.7528.

H1 timeframe:

The slowdown in momentum led H1 to form a consolidation between 0.7521/0.7572. External levels to be mindful of are the 0.75/76 psychological barriers. 0.75 aligns with the 100-period simple moving average and 0.76 is seen housed within H4 supply from 0.7616/0.7591.

RSI enthusiasts may also acknowledge the line recently made contact with support at 41.20, a level tied together with channel support.

Observed levels:

Although monthly price calls for higher levels, daily price recently stepping forward and forming two shooting star candle patterns from supply at 0.7587/0.7528 could spark profit taking and retest daily demand at 0.7453/0.7384.

Should daily sellers take hold, this may direct H4 beyond support at 0.7482 to the 0.7450 support on the H1, which unites with the upper side of daily demand at 0.7453. Monthly buyers taking hold, on the other hand, could see range traders fade the H1 range low at 0.7521 today, though do take into account a whipsaw into 0.75 bids and the 100-period simple moving average could also develop.

December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, FP MarketsUSD/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. We did see a hammer candle pattern form yesterday, though given the lack of support this is unlikely to attract buyers.

Technical levels, therefore, remain unchanged.

Trendline resistance (111.68) and supply from 106.33/105.78 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 this week.

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

H4 timeframe:

The ascending wedge pattern (103.67/104.31), as you can see, had its lower side breached Friday and led action lower on Monday. Price surpassed 103.70 support and tested nearby demand at 103.04/103.58 (an area that held the ascending wedge take-profit target [green] at 103.55).

Overall, though, the pair remains rangebound between the 103.70 support and resistance at 104.73.

H1 timeframe:

The lack of sell-side liquidity off support at 103.60 Monday allowed USD/JPY to reclaim 104. H1 currently retesting 104 may see additional bullish flow materialise towards supply from 104.28/104.21, conveniently positioned above tops around 104.15 (a location buy-stops are likely to be placed above).

In terms of RSI action, the value elbowed above 51.10 resistance and is on course to retest the line.

Observed levels:

Monthly price appearing to be on the verge of breaching descending triangle support at 104.62 continues to underline a relatively weak market. This throws light on H1 supply at 104.28/104.21 as a potential location sellers may be attracted to.

Dethroning the aforesaid H1 supply, nonetheless, sparks a possible bullish scene to at least 104.50 resistance, pinned just beneath the upper side of the H4 range at 104.73.

December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, FP MarketsGBP/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 pushing to highs at 1.3539 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:

Partly modified 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, sellers have since taken the lead, possibly eyeing 1.2645/1.2773.

The RSI, however, reveals the value rebounding from support around 47.00.

H4 timeframe:

Demand at 1.3325/1.3281 (prior supply) is now in play, thanks to a significant gap higher at the beginning of the week as investors reacted to upbeat Brexit flow. A rebound from 1.3325/1.3281 signifies a move to resistance at 1.3483 may be on the cards; bids giving way at 1.3325/1.3281, on the other hand, signals a retest of support around 1.3182 and 127.2% Fib projection at 1.3142.

H1 timeframe:

H1, as you can see, is clinging to the lower side of the 100-period simple moving average around 1.3330, with 1.33 support also lingering close by.

Above, 1.34 echoes a fragile tone after yesterday’s rally to highs at 1.3445, throwing light on supply at 1.3495/1.3462. Interestingly, rupturing 1.33 support highlights a possible gap fill and retest of 1.32.

RSI traders will observe the value testing the underside of 51.00, a support/resistance level since early December.

Observed levels:

Partly modified from previous analysis –

Monthly price flirting with trendline resistance, as well as sellers showing interest from daily supply at 1.3622/1.3467, communicates a bearish vibe back towards daily demand at 1.2645/1.2773.

H4 demand at 1.3325/1.3281 is in play, potentially aided by 1.33 support on the H1. However, knowing where we’re positioned on the higher timeframes suggests 1.33 (and H4 demand) is unlikely to attract buyers, highlighting a potential bearish theme south of the level towards the 1.32 neighbourhood.

December 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, FP MarketsDISCLAIMER:

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 15th 2020: Modest DXY Recovery off YTD Troughs; Pound Pares Upside, FP Markets
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