December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels

December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, 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 2.4 percent.

With December trading higher by a healthy 1.6 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:

Partly modified from previous analysis –

In tandem with monthly buyers flexing their 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) last week, with yesterday modestly toppling resistance at 1.2095.

Above resistance, pattern traders will likely be monitoring the descending wedge pattern’s take-profit target at 1.2309 (yellow).

RSI fans will note the value recently crossed paths with overbought space, following November’s rally staged ahead of oversold territory.

H4 timeframe:

Wednesday registering a second successive advance established demand from 1.2040/1.2065, and elevated EUR/USD into the walls of a supply area 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.

Clearing 1.2130/1.2096, as the weekly and daily timeframes suggest, unlocks the trapdoor to another area of supply forged between 1.2200/1.2170.

H1 timeframe:

US trading on Wednesday, following a 1.2050 retest, exhibited a relatively one-sided market, movement that eventually ousted the 1.21 level and threw light on the 1.2150 region. However, with the RSI indicator presenting bearish divergence within overbought space, a 1.21 retest could be on the cards.

Observed levels:

Monthly price demonstrating scope to scale higher, together with daily recently dethroning resistance at 1.2095 (albeit marginally), and H1 closing above 1.21, is likely to place pressure on sellers shorting H4 supply from 1.2130/1.2096.

Intraday buyers above 1.21 are likely eyeballing at least 1.2150 resistance, with 1.2170 also located close by (the lower side of H4 supply).

December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, 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 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 –

In spite of Monday’s bearish engulfing pattern out of 0.7453/0.7384 supply, buyers staged a revival off demand at 0.7345/0.7287 (prior supply) on Tuesday, a move that triggered further buying Wednesday.

The trend on this timeframe has remained to the upside since March, therefore buyers could be preparing to dethrone 0.7453/0.7384.

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

H4 timeframe:

Partly modified from previous analysis –

Regular readers will note recent analysis announced Monday’s retreat carted price action back to 0.7340 (the upper boundary of an ascending triangle). This was a move buyers clearly welcomed and is a common setup among pattern traders in technical analysis.

With Monday’s peaks at 0.7407 submerged on Wednesday, the September peak at 0.7413 is now being challenged. Above here, crosshairs are likely directed towards 0.7463, the ascending triangle take-profit target (pink).

H1 timeframe:

US trading witnessed a bottom ahead of 0.7350 support, taking the currency pair above the 100-period simple moving average at 0.7373 and eventually unseating 0.74.

Not only did Wednesday’s rally overrun 0.74, the move constructed a demand area around the psychological figure at 0.7391/0.7401, a rally-base-rally zone. This is an interesting area as it was here a decision was made to take out remaining offers at 0.74.

RSI traders, however, will see the value modestly tested overbought levels on Wednesday.

Observed levels:

Monthly price trading from demand at 0.7029/0.6664, along with daily price depicting an uptrend and rebounding from demand at 0.7345/0.7287, signals bullish strength.

Do higher timeframes suggest we’re headed for the ascending triangle take-profit target on the H4 at 0.7463? If so, a 0.74 retest on the H1 could be interesting.

December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, 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 –

Technical levels remain unchanged, though daily price finished Wednesday by way of a shooting star candlestick pattern.

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:

Brought forward from previous analysis –

Areas of consideration on the H4 chart:

 

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

 

  • Traders are also perhaps focused on the area formed by way of a 127.2% Fib projection at 105.06 and a 61.8% Fib level at 104.89. Inside, harmonic traders will also recognise a 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:

Demand at 104.34/104.46, as you can see, made a show in early Asia following a slide from session highs at 104.75. Buyers from here have their work cut out for them, however, facing 104.50 resistance and supply posted at 104.66/104.55.

A demand breach could lead things towards the 100-period simple moving average at 104.26, with subsequent downside targeting the 104 level.

Observed levels:

Monthly price appearing to be on the verge of breaching descending triangle support at 104.62, together with Wednesday’s bearish candle pattern, highlights a weak market. Limited resistance, however, is present on the H4 timeframe until reaching 105.06/104.89 (Fib zone).

In response to the higher timeframes, H1 demand at 104.34/104.46 is unlikely to glean much attention today; 104.50 resistance and nearby H1 supply at 104.66/104.55 could prove too much for buyers to handle. For that reason, a bearish scene may emerge today, with the 100-period simple moving average targeted, in addition to 104.

December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, 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:

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, as you can see, displayed some interest on Wednesday, but finished the session somewhat off lows. Though with monthly trendline resistance making an entrance and daily supply up ahead at 1.3622/1.3467, sellers may eventually take the lead.

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:

Recent developments reveal the ascending wedge pattern, formed between 1.3105/1.3313, had its lower side engulfed Wednesday. Potentially forming a reversal signal, sellers, either those who entered on the breakout, or on the recent pullback, are likely to take aim at 1.3149: the pattern’s take-profit target plotted just under support at 1.3182. This also implies a breach of demand at 1.3240/1.3273.

H1 timeframe:

US trading had buyers and seller square off at 1.33, a familiar area of support since November 23. Confirmed by RSI oversold conditions, buyers swiftly commanded position with enough force to overtake the 100-period simple moving average at 1.3355. The latter, as you can see, is currently being retested as support, with 1.34 resistance next on tap.

The technical setting sub 1.33 is interesting; the absence of demand hints at a possible run to 1.32. With the exception of local tops around 1.3440, the path beyond here also appears reasonably free of supply until 1.35 resistance.

Observed levels:

Partly modified from previous analysis –

Although monthly price flirts with trendline resistance, daily supply at 1.3622/1.3467 is calling to be tested.

The recent ascending wedge breach on the H4 helps confirm the bearish setting depicted on the higher timeframes. However, before sellers attempt to make a show, traders are urged to consider the possibility price action may first test daily supply. This could mean a break of 1.34 and H1 tops at 1.3440, as well as a deeper test of the underside of the H4 ascending wedge.

December 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, 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 3rd 2020: Brexit Issues Weigh on GBP/USD; Technicals Also Point to Lower Levels, FP Markets
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