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February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance

February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, 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)

Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply at 1.1857/1.1352 in August, EUR/USD, by way of two back-to-back bullish candles, welcomed 2021 in good health.

This reasons additional upside towards ascending resistance (prior support – 1.1641) may eventually be on the horizon. Though before we press higher, an 1.1857/1.1352 retest is also on the cards.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Since January 18, buyers arranged a moderate defence off 38.2% Fib support at 1.2059.

Monday, however, witnessed sellers step forward in force as the US dollar index chalked up bold moves to the upside.

A 1.2059 break invites the possibility of a dip to demand at 1.1923/1.2001—an area complemented by trendline support (1.0774).

Leaving resistance at 60.30 unchallenged, RSI fans will also note the value is navigating waters south of the 50.00 centreline.

H4 timeframe:

Demand at 1.2040/1.2065 has commanded a presence on the H4 chart since early December, withstanding three downside attempts. Equally impressive has been resistance at 1.2179—capping buyers since the middle of January.

Should 1.2040/1.2065 give way, another layer of demand is present at 1.1962/1.1976. Interestingly, this area is also housed within the daily demand zone mentioned above at 1.1923/1.2001.

H1 timeframe:

For those who read Monday’s report you may recall the following (italics):

Pattern traders will note Friday whipsawed north of resistance at 1.2145 and crossed paths with a textbook three-drive bearish pattern at 1.2156 (the 127.2% Fib projection). Common take-profit objectives derived from this pattern are the 38.2% and 61.8% Fib levels (taken from the low 1.2058 and Friday’s high at 1.2156) at 1.2117 and 1.2094, respectively.

As evident from the chart, price echoed a bearish stance Monday, slicing through 1.2117 and 1.2094, and testing support at 1.2058 (fixed just north of support at 1.2050).

Monday’s downside also drew the RSI indicator into oversold territory.

Observed levels:

Despite room seen for monthly price to correct as far south as 1.1857/1.1352, daily (from the 38.2% Fib support at 1.2059), H4 (from demand at 1.2040/1.2065) and H1 (from 1.2058 and 1.2050 support) all exhibit supportive structure.

Therefore, out of H4 demand at 1.2040/1.2065, which holds H1 supports and the daily Fib, buyers could make a show.

February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, FP Markets

AUD/USD:

Monthly timeframe:

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

Following two spirited months of gains off demand at 0.7029/0.6664 (prior supply), early 2021 pencilled in a half-hearted shooting star candle formation (a bearish signal at peaks).

This shines the light on a possible correction in the first quarter of 2021, though should buyers regain consciousness we could see continuation higher to 0.8303/0.8082—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 –

Latest developments on the daily chart unearths trendline support (0.5506).

Beyond trendline support, demand at 0.7453/0.7384 (prior supply) is next in line, though a continuation move breaking to fresh 2021 highs, could have 0.7937/0.7890 supply make a stand.

Out of the RSI indicator, the value is seen testing waters beneath the 50.00 centreline, following a trendline support breach last week.

H4 timeframe:

Brought forward from previous analysis –

Overall, there has been little change on the H4 timeframe’s front.

The break of demand at 0.7600/0.7625 last Thursday likely cornered many buyers in this region. This, alongside the Fib cluster at 0.7696 serving up resistance, suggests price is perhaps bound for territory south of demand.

Interestingly, below demand we have the daily trendline support close by around the 0.7583 neighbourhood.

H1 timeframe:

Monday spent the session fluctuating north of the 0.76 figure between 0.7662 and 0.7605.

To the upside, resistance is seen in the shape of a 100-period simple moving average at 0.7664, followed by the 0.77 figure. 0.77 demonstrated effective resistance over the course of last week, aided by RSI resistance at 60.18 and the H4 Fib cluster underlined at 0.7696.

Observed levels:

Partly modified from previous analysis –

Monthly could embrace higher levels in the coming weeks, yet before daily buyers join the fight a test of trendline support may unfold.

Fragile H4 demand at 0.7600/0.7625 could suffer another blow today, removing any remaining buyers and causing a bear trap as daily buyers might defend nearby trendline support (red arrows). A similar picture may arise on the H1 this week: a whipsaw through 0.76 bids into daily trendline support (blue arrows).

Overall, the picture appears to still favour buyers south of 0.76.

February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, FP Markets

USD/JPY:

Monthly timeframe:

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

Over the span of four years, USD/JPY carved out a descending triangle pattern between 118.66/104.62.

Although December pursued terrain south of 104.62, January chalked up a comeback and retested the level. 104.62 ceding ground throws light on support from 101.70, with a break here uncovering trendline support (76.15) and the descending triangle’s take-profit objective at 91.04 (red).

Daily timeframe:

Against the backdrop of the monthly chart demonstrating a 104.62 retest (a potential bearish signal), the daily timeframe shows upside gained speed on Friday and extended recovery gains on Monday. Recent movement also stripped trendline resistance (111.71) and fuels a possible continuation to the 200-day simple moving average at 105.61, and supply at 106.33/105.78.

In addition, RSI resistance at 57.00—a level hindering upside since July 2020—also gave in last week, with the value now on the doorstep of overbought space.

H4 timeframe:

Monday’s technical report highlighted the following (italics):

Last week’s spirited advance channelled price action to within close range of a harmonic Gartley pattern’s potential reversal zone (PRZ) between 105.17 and 105.00. Support is found at 104.16, with interest also likely directed to trendline support (102.59).

As you can see from Monday’s action, we have tested the harmonic Gartley pattern’s PRZ at 105.17/105.00 and sellers have held ground thus far.

H1 timeframe:

The 105 figure, a psychological level located within the harmonic Gartley pattern’s PRZ at 105.17/105.00, also made an entrance on Monday and responded by way of a bearish outside reversal candle.

RSI fans will also note trendline support is having its limits tested.

Observed levels:

Partly modified from previous analysis –

As noted in Monday’s report, monthly price circling the lower side of a descending triangle at 104.62 may pressure daily breakout buyers above trendline resistance.

Given monthly resistance at 104.62 in play, the H4 timeframe’s Gartley pattern’s PRZ between 105.17 and 105.00, and the 105 psychological resistance on the H1, offers substantial confluence (resistance) to work with today.

February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, FP Markets

GBP/USD:

Monthly timeframe:

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

December’s 2.5 percent extension elevated GBP/USD and stirred trendline resistance (2.1161), with January recording fresh multi-month highs and logging a 0.2 percent gain.

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:  

Brought forward from previous analysis –

While the monthly timeframe favours further upside, since January 21, buyers and sellers have been squaring off around the lower side of resistance at 1.3755 on the daily timeframe.

Breaching 1.3755 brings light to supply at 1.3996/1.3918.

The RSI indicator has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region. It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Brought forward from previous analysis –

Demand at 1.3618/1.3637 has proven an effective base in the latter part of January, withstanding numerous downside attempts.

Overhead, resistance is seen at 1.3763, with a break unveiling supply at 1.3837/1.3800.

H1 timeframe:

Between the 1.3611 low and the high 1.3758, pattern traders will note an ascending triangle forming. Within the pattern’s range, the 1.37 figure is seen alongside the 100-period simple moving average at 1.3704. Note that H1 is currently seen rebounding from the lower side of the ascending triangle’s limit.

In terms of the RSI indicator, mild bullish divergence formed ahead of the oversold region. The value currently stands at 42.00.

Observed levels:

The monthly timeframe holding things north of trendline resistance carries a bullish atmosphere. This, of course, places a question mark on daily resistance at 1.3755, and also emphasises possible strength behind H4 demand at 1.3618/1.3637.

With this, buyers extending off the lower side of the H1 ascending triangle could see the candles overthrow 1.37 and the 100-period simple moving average today.

February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, FP Markets

DISCLAIMER:

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • February 2nd 2021: US Dollar Index Tackling 91.00 Figure Following 0.5 Percent Advance, FP Markets
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