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February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red

February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently provoking a hammer formation (though we will not know this until the month concludes).

To the downside, 1.1857/1.1352 represents demand, while northbound shines the technical spotlight on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

The combination of demand at 1.1923/1.2001 and support at 1.1965 (previous Quasimodo resistance), has served buyers well.

Tuesday extended recovery gains by 0.6 percent, finishing at session pinnacles. The next upside target on the daily scale can be seen around 1.2190 tops, with a break unmasking Quasimodo resistance from 1.2278.

Technicians are also urged to chalk up support at 1.1887, realised a touch south of the aforesaid demand area.

With reference to the RSI indicator, the value (currently trades at 52.00) is on the doorstep of RSI trendline resistance and neighbouring RSI resistance at 60.30.

H4 timeframe:

Early hours Tuesday observed an energetic push north of trendline resistance (1.2349)—movement throwing light on Quasimodo resistance priced in at 1.2142 and converging 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149. Space above may also call for resistance at 1.2179.

H1 timeframe:

Supply at 1.2136/1.2119 made its way into the light in recent hours, an area sharing space with a descending resistance, extended from the high 1.2189 (it should be noted this is not a textbook trendline resistance). Though given the convergence of the two areas, sellers are likely to try and guard noted supply.

Interestingly, above supply and descending resistance, the H4 Quasimodo resistance mentioned above at 1.2142 is plotted close by.

RSI devotees will see trendline support put in an appearance yesterday and nudged the value back into overbought space. RSI resistance is a key watch around 78.97—capped upside momentum on a handful of occasions since mid-January.

Observed levels:

Monthly, daily and H4 price action, according to our chart studies, call for higher levels. In light of this, H1 supply and descending resistance are perhaps fragile.

Anyone feel a fakeout of H1 stops to test the H4 Quasimodo level could be on the menu?

February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often interpreted as a bearish signal at peaks) has so far failed to seduce sellers. February, as you can see, trades around session highs, up by 1.3 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Following Friday’s recovery from trendline support (0.5506), Tuesday fashioned a third successive gain and finished the day around session peaks.

Sustained bullish interest may approach 0.7782 tops, along with the 2021 peak at 0.7820.

RSI flow elbowed back above 50.00 in recent moves, with the value now within a stone’s throw from reaching RSI trendline resistance.

H4 timeframe:

Quasimodo resistance-turned support stepped forward in recent trading at 0.7698, helping to facilitate Tuesday’s rally.

Additional Quasimodo resistance can be found at 0.7747, with a breach perhaps directing focus to resistance at 0.7805.

H1 timeframe:

As anticipated, the 0.77 figure did a superb job as support on Tuesday as buyers lifted the currency pair north of the aforesaid psychological level in early trade.

This has thrown light on 0.7750 resistance and, of course, H4 Quasimodo resistance underlined above at 0.7747.

Fresh short-term bearish RSI divergence on the RSI window also remains a key point to be mindful of.

Observed levels:

0.7750 resistance, together with H4 Quasimodo resistance at 0.7747, could attract a pocket of offers and thereby cap short-term buying.

However, having seen daily and monthly charts exhibit scope to navigate higher terrain, the 0.7750 neighbourhood is unlikely to deliver much to write home about.

With the above taken into account, a 0.7750 breach could trigger short-term breakout buying, potentially bound for 0.78 (H1) as a primary upside objective.

February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have struggled to find acceptance at higher levels. Consequent to this, February currently trades off best levels.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Amidst retreating yields and broad-based USD softness, USD/JPY came under reasonable pressure Tuesday and finished at session lows. This, of course, followed the recent rejection from the lower side of supply at 106.33/105.78 and 200-day simple moving average at 105.56.

Further selling could eventually pull things back to trendline resistance-turned support, taken from the high 111.71.

Technical eyes may also be drawn to the RSI indicator, as the value tunnelled through support at 57.00 and trendline support.

H4 timeframe:

Those who read Tuesday’s technical writing may recall the following (italics):

In conjunction with the daily timeframe recently crossing swords with supply and the 200-day simple moving average, recent movement saw H4 bump heads with an alternate AB=CD bearish pattern at the 127.2% Fib extension level from 105.63.

Traditional take-profit objectives from AB=CD formations are 38.2% and 61.8% Fib retracements, which in this case are 104.50 and 103.72, respectively—derived from pattern extremes: A-D legs.

As you can see, recent weakness prodded the 38.2% Fib level at 104.50, representing the initial take-profit objective from AB=CD resistance. Additional selling highlights possible bids around 104.16 support and intersecting trendline support.

H1 timeframe:

104.50 support (joins with the 38.2% H4 Fib level) is now in play thanks to recent selling, though buyers have yet to show much interest.

Fragile bids, therefore, may allow for demand at 104.21/104.37 to make a show sometime today, an area sitting on top of H4 support mentioned above at 104.16.

Although 104.50 shows signs of weakness, RSI action demonstrates bullish divergence out of oversold waters.

Observed levels:

The daily timeframe’s flow implies longer-term sellers still have the upper hand until crossing swords with trendline support around the 103.70 neighbourhood.

Short term, however, buyers could put in a temporary appearance. Buyers may be drawn to a whipsaw through 104.50 bids on the H1 which may snag fresh bids off H1 demand at 104.21/104.37.

February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance, movement that stirred major trendline resistance (2.1161), February recently refreshed multi-month highs at 1.3819.

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. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Since the latter part of January, resistance at 1.3755 has remained a problematic ceiling for buyers, despite a clear upside bias in place since 2020. As you can see, however, Tuesday witnessed buyers grow in confidence and overthrow 1.3755, drawing attention to supply at 1.3996/1.3918.

Interestingly, the RSI indicator is seen touching gloves with the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 65.00). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Resistance at 1.3763 stepped aside and served well as support on Tuesday, making way for supply coming in at 1.3837/1.3800 (sheltered under resistance at 1.3852, a previous Quasimodo support).

H1 timeframe:

Latest developments on the H1 scale shows price engulfed 1.38 resistance, with enough force to squeeze out the majority of sellers around this neighbourhood. Breakout buyers currently maintain position north of the psychological line, with increased upside interest to throw 1.3850 in the pot as possible resistance (made up of a 161.8% Fib projection at 1.3850 and a 100% Fib extension at 1.3855).

It should also be noted the RSI indicator continues to pursue overbought status, with downside attempts likely to target two trendline support structures.

Observed levels:

Monthly price calling for higher levels, along with daily action clearing resistance at 1.3755 in a market trending higher since the beginning of 2020, places long-term buyers in a strong position.

The above implies H4 supply at 1.3837/1.3800 could be hanging on by a thread. H1 buyers may interpret this as a bullish indication—particularly if H1 retests 1.38 and holds—targeting the 1.3850 region.

February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets

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  • February 10th 2021: Dollar Index Accelerates Losses and Registers Third Consecutive Session in the Red, FP Markets
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