June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet, FP Markets

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is down 0.8 percent as of current trade.

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure unchanged from previous analysis.

In recent analysis, the chart breakdown highlighted softness south of Quasimodo resistance at 1.2278 since May 25th. This swings the technical pendulum in favour of shaking hands with a 50.00% retracement ratio at 1.1986, a horizontal level sharing chart space with the 200-day simple moving average around 1.1990.

The timeframe’s bearish setting is braced by the RSI value travelling through both support at 51.36 in addition to the 50.00 centreline (a 50.00 cross indicates a weakening of upside movement).

H4 timeframe:

Technical structure unchanged from previous analysis.

Against a basket of six foreign currencies, the US dollar index (ticker: DXY) eked out modest gains and clocked fresh monthly tops on Tuesday. In terms of news events, we had US retail sales register a lower-than-anticipated print of 1.3 percent in May, with the core metric lower by -0.7 percent. In a separate report, the Producer Price Index (PPI) increased by 0.8 percent in May vs. 0.6 percent in April. Next on tap, we have the US Fed taking centre stage.

Technically speaking, the H4 chart is unmoved. EUR/USD defended the 61.8% Fib retracement at 1.2094 on Monday—a value (green) stationed north of demand from 1.2044-1.2071—with Tuesday on track to maintain the short-term bullish narrative.

1.2044-1.2071 demand boasts a solid floor to be mindful of, infested with Fibonacci studies, including extension levels, expansions and projections. Space south of demand throws light on support coming in at 1.1990.

H1 timeframe:

The combination of a 1.618% Fib expansion at 1.2095, a 1.272% Fib projection at 1.2098, and the 1.21 figure, deserves notice as a support zone on the H1. To the upside, resistance at 1.2132, aligning to-the-pip with a 38.2% Fib retracement value, also recently made an entrance and developed a ceiling.

It is important to identify that should price move lower and challenge 1.21 again, demand at 1.2075-1.2085 is strategically positioned a touch under the psychological level. A whipsaw through the big figure—tripping sell-stops—could provide enough fuel for 1.2075-1.2085 bids.

North of current resistance shines light on the 100-period simple moving average, currently circling 1.2142.

As for the RSI indicator, we are seeing the value establish a mild recovery off 38.27 to reclaim 50.00+ status. Securing position north of here signals upside momentum may gather traction in the direction of overbought territory. Structure to be mindful of are resistance at 78.97 and support from 14.74.

Observed levels:

Placing longer-term monthly action on the back burner for now, we can see the daily timeframe on the verge of sinking further, taking aim at a 50.00% retracement ratio at 1.1986. This, therefore, places a question mark on H1 breakout buying north of resistance at 1.2132. In fact, moves above this barrier, along with the 100-period simple moving average around 1.2142, could help facilitate a bearish theme off H4 resistance from 1.2158 (buy-stops driving price into H4 resistance offers, essentially providing fuel to move lower, assuming offers are heavy).

Ultimately, despite the lacklustre presence, the daily, H4 and H1 exhibit a downside bias for the time being.

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet, FP Markets

AUD/USD:

Monthly timeframe:

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support is featured at 0.7394, with additional pressure targeting demand at 0.7029-0.6664 (prior supply).

June is currently down by 0.6 percent.

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

As anticipated (see Tuesday’s technical briefing), bearish forces took the wheel Tuesday. Helped lower by downbeat risk sentiment and a moderately buoyant greenback, the pair ruptured the lower side of a two-month range between resistance at 0.7816 and support from 0.7699 (yellow).

Support at 0.7563 is in view as a potential objective, deriving additional (dynamic) support from the 200-day simple moving average, circling 0.7545.

With respect to trend, despite a directionless tone since 2021, the currency pair has been higher for most of 2020 (from pandemic lows at 0.5506).

The RSI has worked with space south of the 50.00 centreline since May 20th—signs the value is headed for support at 37.92.

H4 timeframe:

A prominent technical ceiling exists at 0.7782: Quasimodo resistance, while downriver singles out familiar demand at 0.7632-0.7653—helped facilitate a sizeable rally at the beginning of the month.

H1 timeframe:

Latest developments out of the H1 chart reveals early London pulled the currency pair through 0.77 and retested the lower side of the horizontal base heading into US hours. Subsequent movement called price action lower, reaching a low of 0.7674.

Downstream, demand from 0.7634-0.7649 is on the radar, an area working with a 100% Fib projection at 0.7639, which many harmonic traders will note represents an AB=CD formation.

In terms of the RSI indicator’s position (38.16), bullish divergence is currently underway (note some traders require a simultaneous oversold signal to validate divergence).

Observed levels:

With H1 navigating below 0.77—and scope to approach demand at 0.7634-0.7649—in addition to the daily timeframe slicing through range support at 0.7699 and H4 bound for demand at 0.7632-0.7653, a (technical) bearish scenario is in the offing. Note H1 demand at 0.7634-0.7649 is enclosed within H4 demand at 0.7632-0.7653.

Traders are also urged to pencil in the possibility of H1 retesting 0.77, a level that may draw bearish curiosity.

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet, FP Markets

USD/JPY:

Monthly timeframe:

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

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.5 percent.

Daily timeframe:

Technical structure unchanged from previous analysis.

USD/JPY demanded a bullish setting on Monday, but motivated limited follow-through buying Tuesday.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains within reaching distance, sheltered a handful of pips under supply from 111.73-111.19.

108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85, are positioned downriver, should sellers regain consciousness.

Trend studies reveal the pair has been trending higher since the beginning of the year, though discovered a top heading into early April.

The RSI continues to oscillate around resistance at 57.00. Additional structure can be found at support from 28.19 and resistance drawn from 83.02.

H4 timeframe:

USD/JPY left behind a muted vibe on Tuesday, as markets await today’s Fed meeting.

For those who read Tuesday’s technical briefing, the piece underlined the following (italics):

Monday’s supportive tone was likely a welcomed sight for USD/JPY buyers out of demand at 109.02-109.20—an area joining the fight at the beginning of last week and noted in previous analysis as a base to keep an eye on. Technical eyes will also note the nearby trendline support present, taken from the low 107.48.

A key feature to remain aware of is the chart demonstrates scope to rally as far north as supply at 110.85-110.46 (houses Fib studies).

H1 timeframe:

Given Tuesday’s lacklustre performance, it’s worth reminding ourselves of where we stand on the H1 chart. Tuesday’s technical briefing highlighted the following (italics):

This supply [110.18-110.09] is strategically positioned to help facilitate a stop run above 110. Unhinging 110.18-110.09 reveals Quasimodo resistance at 110.41. What adds credibility to the aforementioned supply zone—recently welcomed price action—is the overriding bearish position out of its base (red arrow), disturbing 109.63 and 109.52 lows. With this, and stops triggered above 110 fuelling 110.18-110.09 offers, a bearish theme is possible back under 110.

Note that demand from 109.44-109.55 offers a reasonable technical target south of the 110 base.

Adding to the above, the RSI indicator recently dropped through trendline support, drawn from the low 20.25.

Observed levels:

Recent technical research noted the following (italics):

Although H1 supply at 110.18-110.09 stresses sturdy position, the concern is higher timeframes. The monthly chart has buyers attempting to take hold of a breached descending resistance, and the daily chart demonstrates scope to test long-term resistance at 110.94-110.29 (located above H1 supply), as well as the H4 chart also displaying room to reach for supply at 110.85-110.46 (boasts a connection with the daily timeframe’s resistance area).

With this in mind, bearish attempts from 110.85-110.46 are unlikely to deliver anything earthshattering. In fact, 110 serving as support should not surprise, with a reaction perhaps targeting 110.29 as an initial base.   

As we can see, 110 did indeed prove supportive, though H1 supply remains in the frame at 110.18-110.09. Ultimately, a breakout beyond either area will be interesting and likely witness follow-through momentum. With 110.29 arranged as a possible upside target, below 110 could have bears target H1 demand from 109.44-109.55.

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet, FP Markets

GBP/USD:

Monthly timeframe:

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.9 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Sterling dropped to one-month lows versus the US dollar on Tuesday; the catalyst is unclear.

From a technical perspective, the decline moved GBP/USD to within a stone’s throw of support from 1.4003, forged north of demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Overhead, Quasimodo resistance remains stationed at 1.4250.

Trendline support, taken from the low 36.14 on the RSI, recently gave up position. This, coupled with the value tunnelling through the 50.00 centreline, suggests downside momentum may be on the cards.

H4 timeframe:

The passage below is taken from previous analysis (italics):

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. Interestingly, an additional consolidation pencilled in its presence at the beginning of June between 1.4188 and 1.4083. As you can see, the fact price left the larger upper range resistance at 1.4219 unchallenged informs traders that sellers could be gaining muscle. To confirm this, of course, traders would require a breakdown that not only conquers the lower edge of both consolidations (1.4096/1.4083), but also trendline support, drawn from the low 1.3668, consequently unmasking support at 1.4007.

As evident from Tuesday’s drop, price action sliced below both H4 consolidation supports and took on the aforementioned trendline support, perhaps squeezing out longs around the latter.

Does the above mean we’re making our way to 1.4007 support?

H1 timeframe:

Tuesday’s spirited whipsaw to lows ahead of Quasimodo support at 1.4026 caught a number of traders off guard.

Interestingly, price reclaimed 1.4078 as support heading into US hours and, as we write, remains moderately loyal, despite 1.41 clouding the base.

Recent movement had the RSI dip a toe in oversold water, with the value circling space under the 50.00 centreline.

Observed levels:

Having recognised scope to drop in on support at 1.4003 via the daily chart, in conjunction with H4 moving through the lower side of two consolidation areas (1.4096/1.4219 and 1.4188/1.4083), the 1.41 figure based on the H1 chart is in position to perhaps forge resistance.

As noted in Tuesday’s technical briefing, should 1.4078 break, H1 Quasimodo support at 1.4026 and the key figure 1.40 are in view—joins closely with daily support from 1.4003.

June 16th 2021: Dollar Index Moderately off Tops Ahead of Fed Meet, FP Markets

CLAUSE DE NON-RESPONSABILITÉ:

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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