Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

EUR/USD continues to exhibit difficult trading conditions, consequently establishing a bearish flag pattern on the daily timeframe. Technicians will recognise that a flag is considered a continuation signal, which assuming a breakout to the downside in this case, could watch daily flow take aim at daily Quasimodo support from $1.0377. Also of technical relevance on the daily chart is price fluctuating between the lower side of the pandemic low of $1.0638 (March 2020) and two 100% Fibonacci projections between $1.0494 and $1.0526. In terms of the relative strength index (RSI), the indicator’s value exited oversold territory, following a near-test of support at 21.87 late April. Traders may also acknowledge early regular bullish divergence forming; a bullish failure swing would likely be a welcomed formation to help confirm the divergence. As of now, therefore, this appears a tentative signal.

Interestingly, trend studies support a bearish push. Seen clearly from the monthly timeframe, the overall vibe has been to the downside since topping in April 2008. Adding to this, the weekly chart has welcomed a clear downside bias since 2021 pinnacles. This, of course, places a strong technical question mark on Quasimodo supports between $1.0467 and $1.0517 from the weekly timeframe. Territory beneath the aforesaid barriers shine light on 2^nd January low at $1.0340 (2017), pinned a touch under the daily timeframe’s Quasimodo support underlined above.

Across the page, price movement on the H4 scale remains contained between prime resistance from $1.0680-1.0640 (an area accompanied by a 38.2% Fibonacci retracement at $1.0649 and a 1.272% Fibonacci projection at $1.0646) and Quasimodo support stationed at $1.0483. This area essentially marks the outer boundaries of the daily timeframe’s bearish flag.

Focus on the H1 timeframe remains centred on resistance above $1.06 between $1.0631 and $1.0613. Made up of a Quasimodo resistance and two 100% Fibonacci projection ratios, this area is placed to receive any whipsaw that emerges above $1.06—common occurrence around psychological levels. To the downside on the H1 scale, $1.05 calls for attention, closely followed by Quasimodo support at $1.0481 and a nearby 100% Fibonacci projection at $1.0492.

Technical Outlook:

Attention remains on $1.06, a level applied to the H1 chart. Technically, sellers appear to still be in the driving seat, therefore a whipsaw above $1.06 that’s welcomed by H1 resistance from $1.0631-1.0613 may motivate a bearish scenario.

Leaving $1.06 unchallenged, on the other hand, directs candle action to $1.05 and nearby supports. How much of a floor is generated from a test of this area, given the overall bearish picture, is difficult to estimate at this point.

AUD/USD:

Latest technical developments out of the AUD/USD has witnessed weekly price tunnel through prime support at $0.6948-0.7242, a base capping downside since September 2020. Follow-through selling unearths weekly support at $0.6673 and neighbouring 50.0% retracement at $0.6764. Supporting the possibility of further bearish pressure is long-term trend direction. The monthly timeframe has portrayed a downtrend since August 2011, indicating the rally from the pandemic low of $0.5506 (March 2020) to a high of $0.8007 (February 2021) on the weekly timeframe is likely to be viewed as a DEEP pullback, with recent downside therefore potentially seen as a move to explore lower over the coming weeks.

Recent flow, as you can see, has daily price on the doorstep of a Quasimodo support at $0.6901, with Quasimodo support-turned resistance from $0.6995 overhead. According to the relative strength index (RSI), the indicator is now within reach of oversold space after failing to shake hands with the underside of the 50.00 centreline. Indicator support also remains sketched in at 21.38.

Lower on the curve, it’s all about H4 support coming in at $0.6924 right now. Upstream, however, has $0.70 to target on the H1 chart, though beneath here technicians will likely account for H4 resistance from $0.6968 (28^th January low).

Technical Outlook:

This remains a sellers’ market for now, and therefore a sell-on-rally scene could unfold in upcoming sessions. As a result, resistance between $0.70 (H1) and $0.6968 (H4) may serve as a target base for sellers.

USD/JPY:

We do not need a momentum indicator to demonstrate momentum has slowed in recent weeks, with current price pretty much unchanged. In terms of technical structure, here’s where we left the weekly timeframe:

Weekly support remains obvious at ¥125.54 and scope for further gains to as far north as ¥135.16 is seen: 28th January high (2002). With that, traders and investors are still urged to pencil in the possibility of a retest of ¥125.54 prior to viewing a ¥135.16 attempt.

Out of the daily timeframe, Monday’s shooting star pattern from the lower side of daily supply at ¥131.93-131.10 has held in recent movement. Despite the shooting star forming from the lower side of daily supply, it’s unlikely to garner much attention for two reasons. Firstly, the shooting star formed close to neighbouring price action, and secondly the trend in this market is aggressively to the upside (trending higher since the beginning of 2021).

In addition to the above, further technical study on the daily timeframe revealed the following:

The daily timeframe reveals price action ruptured the upper boundary of a flag pattern on 28^th April, drawn from a high of ¥129.41 and a low of ¥127.80. Assuming price overcomes neighbouring supply at ¥131.93-131.10, traders will be looking to a take-profit objective circa ¥136.63 (drawn by extending the pole’s distance and adding this to the breakout point). Note that this profit objective sits above the weekly timeframe’s ¥135.16 high. Also of interest, the relative strength index (RSI) has been attempting to exit overbought territory in recent weeks. It’s important to recognise that any decisive departure from the overbought area triggers a double-top pattern (neckline stationed around the 66.78 31^st March low and peaks were established from indicator resistance at 87.52) and could lead the RSI to familiar support at 40.00-50.00 (a temporary oversold zone since May 2021). Yet, an important caveat to be aware of is the RSI can remain overbought for prolonged periods in uptrends and initiate a number of false bearish signals.

Against the backdrop of the bigger picture, ¥131 did a good job of holding price on the H1 scale in recent hours, a base complemented by support from ¥129.89. The concerning point, however, is to test the aforementioned support, a H1 trendline support, taken from the low ¥128.62, had to be engulfed. And, as evident from recent H1 price movement, we’re now retesting the lower side of this breached ascending line which may discourage further upside. In the event of a break higher, ¥131 warrants attention as a reasonable upside objective, while voyaging lower casts light on trendline resistance-turned support, drawn from the high ¥131.25.

Technical Outlook:

Ultimately, direction remains tilted to the upside despite a slowdown in momentum in recent days. This underpins the rebound from the H1 area of technical confluence between ¥129.89 and ¥130, which is perhaps enough to fuel a break of H1 trendline support-turned resistance, drawn from the low ¥128.62, to target ¥131.

GBP/USD:

Tuesday welcomed another hesitant session as buyers and sellers ended the day mostly even and confined within the prior day’s range ($1.2406-1.2261). Price action, based on the daily timeframe, continues to work with Quasimodo support from $1.2334, but appears poised to overthrow the noted level and take aim at the weekly timeframe’s Quasimodo support from $1.2164. For those who follow our analysis on a regular basis you may recall the test of Quasimodo support followed the formation of a daily bearish flag pattern, made up between $1.2411 and $1.2614 (the profit objective can be plotted as far south as $1.18).

What’s technically interesting on the weekly chart is the absence of clear support until reaching the Quasimodo formation, in a market demonstrating a clear downside bias from February 2021 tops ($1.4241) as well as a long-term downtrend since late 2007 tops at $2.1161 (check monthly timeframe). This supports a break of current support on the daily scale. We do, nonetheless, see the daily timeframe’s relative strength index (RSI) pencilling in the possibility of bullish divergence, though given the bearish landscape right now this is questionable. Bear in mind that the RSI can register oversold signals for extended periods in a downward facing market.

Structure on the H4 scale is unchanged: Quasimodo support plotted at $1.2186 and a resistance base overhead at $1.2441. From the H1 timeframe, the currency pair discovered support from $1.23. If the aforementioned level holds, $1.24 and neighbouring Quasimodo support-turned resistance at $1.2421 is on the radar, which happens to be positioned closely with a 100% Fibonacci projection from $1.2439 (red zone). South of $1.23 points to H1 Quasimodo support coming in from $1.2248.

Technical Outlook:

$1.24 represents an interesting level on the H1. Engaging with this level again might have price whipsaw above the barrier to test nearby H1 resistance between $1.2439 and $1.2421. This—coupled with the higher timeframes indicating sellers have the upper hand—might be interpreted as a bearish zone.

Alternatively, seizing $1.23 may motivate breakout sellers to zero in on H1 Quasimodo support at $1.2248.

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