December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50

December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, 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, buyers made an entrance in November, up by 2.5 percent.

With 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 (since July 2008) remains intact until 1.4940 is engulfed (May 2 high [2011]). 

Daily timeframe:

In tandem with monthly buyers flexing some financial muscle, daily buyers squeezed through the upper perimeter of an early descending wedge pattern (correction) between 1.2011 and 1.1612 (some may interpret this arrangement as a descending triangle pattern) and is on track to join hands with resistance at 1.2095.

Above resistance, pattern traders will likely have their eye on the descending wedge pattern’s take-profit target at 1.2309 (yellow).

RSI fans will note the value crossed paths with overbought space.

H4 timeframe:

Fuelled amidst USD softness, EUR/USD arrived at fresh year-to-date peaks on Tuesday, adding more than 1.2 percent.

Absorbing offers at supply from 1.2026/1.1992, this throws light on another layer of supply at 1.2130/1.2096, extended from April 2018. Traders will note this supply zone is perched on top of daily resistance at 1.2095.

H1 timeframe:

Discovering support off the 100-period simple moving average late Monday fuelled an early 1.1950 resistance breach Tuesday, followed by a 1.20 breach heading into the US session.

After a brief period of hesitation under 1.2050 resistance, the pair steamrolled over the latter into the closing stages of Tuesday’s session.

While 1.21 is in view, RSI action recently touched familiar overbought resistance at 81.50.

Observed levels:

1.21 marks interesting resistance, joined closely by daily resistance at 1.2095 and is located within H4 supply from 1.2130/1.2096. The reaction from this region, however, may be short-lived having seen monthly price eyeballing higher levels, in line with the current uptrend (visible on the daily chart).

With the above taken on board, a 1.2050 support retest could be on the watchlist for some buyers today.

December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, 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, 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 –

In spite of Monday’s bearish engulfing pattern out of 0.7453/0.7384 supply, buyers, as you can see, staged a revival off demand at 0.7345/0.7287 (prior supply) on Tuesday.

The trend on this timeframe has remained to the upside since March 2020, in spite of the lengthy correction since September. Therefore, buyers could be preparing to dethrone 0.7453/0.7384.

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

H4 timeframe:

Partly modified from previous analysis –

Monday’s retracement carted price action back to 0.7340, gifting traders another opportunity to buy this market.

Last week had H4 take over the upper boundary of an ascending triangle, made up between resistance at 0.7340 and trendline support from 0.7221. Those initially long the 0.7340 breakout have likely tied up stops beneath the pattern’s associated trendline support (0.7221).

Buying off 0.7340 throws light on Monday’s peaks at 0.7407 and the September peak at 0.7413.

H1 timeframe:

Tuesday’s mildly bullish vibe appears to be setting up a bearish pennant pattern between 0.7373/0.7339, leading to a potential dip through 0.7350 support towards the 0.73 area. Note the 100-period simple moving average is circling 0.7368.

RSI traders, however, will see the value trending higher, recently establishing a higher high and making its presence known above 50.00.

Observed levels:

Monthly price trading strongly from demand at 0.7029/0.6664, along with daily price trending higher and rebounding from daily demand at 0.7345/0.7287, places a question mark on the H1 bearish pennant pattern.

Therefore, this could generate a H1 close above the 100-period simple moving average, or maybe even form a 0.7350 retest to allow additional buyers into the market.

December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, 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:

Partly modified from previous analysis –

Aside from Monday developing a bullish engulfing candle, which was mostly disregarded Tuesday, technical levels 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:

 

Areas of consideration on the H4 chart are:

 

  • Demand from 103.04/103.58, extended from March 2020.

 

  • Traders are also perhaps focused on the area formed through a 127.2% Fib projection at 105.06 and a 61.8% Fib level at 104.89. Inside, harmonic traders will also recognise the potential ABCD pullback at 104.93.

 

  • Above, supply is seen at 105.42/105.35, along with a 161.8% Fib projection at 105.45.

 

H1 timeframe:

Off the 100-period simple moving average, Tuesday watched H1 spike through 104.50 (and the 127.2% Fib projection at 104.49) to join with supply at 104.66/104.55.

As we make our way into Wednesday’s segment, the 100-period SMA is nearby, with a break perhaps pushing for the 104 level.

Observed levels:

Monthly price appears to be on the verge of breaching descending triangle support at 104.62, emphasising a weak market.

Limited resistance is present on the H4 timeframe until reaching 105.06/104.89 (Fib zone), though H1 is threatening another visit to the 100-period simple moving average. Breaking below here could trigger an intraday bearish scene towards 104.

December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, 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 nearly 1 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:

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.

Sellers have so far been reluctant to commit, though with monthly trendline resistance making an entrance and daily supply up ahead at 1.3622/1.3467, sellers may lead the way.

RSI followers will also see the line has produced a series of higher highs and lows since late September, on course to welcome overbought conditions.

H4 timeframe:

Since mid-November, an ascending wedge has been in the process of forming between 1.3105/1.3313. Fracturing its lower edge brings light to demand at 1.3240/1.3273 and then 1.3182 support.

H1 timeframe:

Recent flow, as you can see, is in the midst of establishing a small bullish flag between 1.3441/1.3415. This follows Tuesday’s 1.34 breach during the US session.

As for the RSI indicator, a double-top pattern formed just ahead of overbought levels Tuesday. Although considered a possible bearish signal (beneath its 45.00 neckline), sellers currently appear hesitant.

Observed levels:

Although monthly price flirts with trendline resistance, daily has room to manoeuvre until reaching supply at 1.3622/1.3467. This may give H1 buyers a push to breakout above the currently forming bullish flag. A 1.34 retest may be in order before buyers pull the trigger.

December 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, FP Markets

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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 2nd 2020: Euro Strikes Fresh YTD Peaks as DXY Tunnels Through 91.50, FP Markets
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