January 12th 2022: Technical Outlook Ahead of US CPI Data

January 12th 2022: Technical Outlook Ahead of US CPI Data, FP Markets

Charts: TradingView

(Italics: Previous Analysis Due to Limited Price Change)

EUR/USD:

Weekly timeframe:

Since mid-November (2021), buyers and sellers have been squaring off around support at $1.1237-1.1281—made up of a 61.8% Fibonacci retracement at $1.1281 and a 1.618% Fibonacci projection from $1.1237. ‘Harmonic’ traders will acknowledge $1.1237 represents what’s known as an ‘alternate’ AB=CD formation (extended D-leg).  

Any upside derived from current support will likely be capped by resistance at $1.1473-1.1583; navigating lower, on the other hand, throws light on Quasimodo support as far south as $1.0778.

Interestingly, despite current support, the pair took out 2nd November low (2020) at $1.1603 in late September (2021), suggesting the early stages of a downtrend on the weekly timeframe. This is reinforced by the monthly timeframe’s primary downtrend since mid-2008.

Daily timeframe:

Quasimodo support drawn from mid-June at $1.1213 (positioned beneath the weekly timeframe’s Fibonacci structure) made an entrance on 24th November (2021) and remains committed. Trendline resistance, extended from the high $1.2254, remains overhead.

Analysis out of the relative strength index (RSI) reveals the value attempting to establish support from the 50.00 centreline: positive momentum. Indicator resistance resides at 63.66, tucked just under the overbought threshold of 70.00.

Trend on this scale has been lower since June 2021.

H4 timeframe:

Key levels to be mindful of on the H4 scale:

  • Quasimodo support from $1.1272.
  • Resistance at $1.1379, accompanied by a 38.2% Fibonacci retracement at $1.1381. Note these levels are now close by.
  • Beyond resistance, a 100% Fibonacci projection is visible at $1.1422 (AB=CD bearish pattern), followed by Quasimodo support-turned resistance at $1.1438. Lower on the curve, support falls in around $1.1235.

H1 timeframe:

Out of the H1 chart, technicians will note short-term flow currently touching resistance at $1.1364. Overhead, H4 resistance is seen at $1.1379, sharing chart space with a 100% Fibonacci projection at $1.1381 and a 1.618% Fibonacci extension at $1.1376 (as well as the H4 timeframe’s 38.2% Fibonacci retracement at $1.1381).

Alongside the above technical resistance, the relative strength index (RSI) is on the doorstep of overbought levels. Indicator resistance is also present at 82.37.

Observed Technical Levels:

Weekly Fibonacci support between $1.1237 and $1.1281 interacting with price may be enough to pull daily action to trendline resistance, extended from the high $1.2254. In view of the daily timeframe trending lower since June 2021, traders are urged to pencil in the possibility of a bearish attempt from the noted trendline resistance.

Shorter term, H4 resistance at $1.1379 is key right now, a level reinforced by a number of Fibonacci points on H1 and H4 timeframes (see above).

January 12th 2022: Technical Outlook Ahead of US CPI Data, FP Markets

AUD/USD:

Weekly timeframe:

Prime support at $0.6968-0.7242 continues to play a crucial role on the weekly timeframe. Bulls, as you can see, welcomed a bullish phase into the close of 2021, though appetite for higher prices subsided last week. Should buyers regain footing, resistance is formed at $0.7501; manoeuvring beneath $0.6968-0.7242 reveals support at $0.6673 and a 50.0% retracement at $0.6756.

Since mid-Feb 2021, a downside bias has been seen, following higher prices since pandemic lows of $0.5506 (March 2020). However, from the monthly timeframe the unit has been entrenched within a large-scale downtrend from mid-2011.

Daily timeframe:

Resistance—made up of a 61.8% Fibonacci retracement at $0.7340, a 100% Fibonacci projection at $0.7315, an ascending resistance, drawn from the low $0.7106, and trendline resistance, drawn from the high $0.7891—offers healthy (technical) confluence on this chart. Support at $0.7021 calls for attention to the downside in the event sellers track lower price levels.

The relative strength index (RSI) is seen attempting to make room above the 50.00 centreline, action informing traders and investors that average gains surpass average losses: positive momentum.

H4 timeframe:

As of current trade (US afternoon Tuesday), the currency pair is within a stone’s throw from trendline support-turned resistance, taken from the low $0.6993, and a 61.8% Fibonacci retracement at $0.7222. Furthermore, an AB=CD bearish formation is positioned within the aforementioned zone (black arrows), adding weight to the zone.

Assuming a resistance breach, the technical pendulum swings in favour of a continuation to Quasimodo support-turned resistance at $0.7287.

H1 timeframe:

In conjunction with H4 resistances, H1 dethroning $0.72 unlocks the technical door towards Quasimodo support-turned resistance at $0.7229 which dovetails closely with H4 levels.

On top of said resistances, the relative strength index (RSI) is nearing overbought territory, a space short-term sellers will be watching closely for signs of bearish intent on the price chart.

Observed Technical Levels:

H4 resistances—trendline support-turned resistance, a 61.8% Fibonacci retracement at $0.7222 and an AB=CD bearish approach—converging with H1 Quasimodo support-turned resistance at $0.7229 echoes strong resistance and may be enough to encourage a short-term bearish theme, if tested.

January 12th 2022: Technical Outlook Ahead of US CPI Data, FP Markets

USD/JPY:

Weekly timeframe:

After touching gloves with a 1.272% Fibonacci projection from ¥116.09, bearish flow is on the verge of reconnecting with resistance-turned support from ¥114.38, a level capping upside since early 2017.

Also of technical note is the currency pair recently refreshing multi-year pinnacles, reaching levels not seen since January 2017.

In terms of trend, the unit has been advancing since the beginning of 2021, welcoming a descending resistance breach, drawn from the high ¥118.61.

Daily timeframe:

Quasimodo resistance at ¥116.33 made a show early last week, influencing a modest ‘throwback’. Taking the market’s current trend into account (north), the ¥116.33 reaction prompting a dip-buying phase from ¥114.97 remains a possibility, a Quasimodo resistance-turned support.

Together with the above price analysis, the relative strength (RSI) is fast approaching support between 40.00 and 50.00 (a ‘temporary’ oversold range since 10th May).

H4 timeframe:

Two nearby Quasimodo resistance-turned support levels at ¥115.15 and ¥115.24 put in an appearance in recent trading. Due to higher timeframe resistances weighing on upside sentiment, a follow-through bullish move from noted supports is questionable.

According to the H4 scale, further underperformance is possible south of ¥115.15-115.24 to as far south as support from ¥114.50, closely shadowed by trendline support, taken from the low ¥112.56.

H1 timeframe:

Quasimodo support-turned resistance at ¥115.59 welcomed price heading into US hours on Tuesday and established a technical ceiling. This directs the spotlight towards the ¥115 figure, a level underlined in Tuesday’s technical outlook. You may recall ¥115 joins hands with a 1.618% Fibonacci projection and a Quasimodo support (left shoulder [black arrow]). Also of importance is ¥115 benefitting from the daily Quasimodo resistance-turned support at ¥114.97.

Note also that just south of the psychological number, a 100% Fibonacci projection at ¥114.90 is stationed nearby, followed by Quasimodo support at ¥114.83.

Observed Technical Levels:

Technically, support between daily Quasimodo resistance-turned support at ¥114.97 and ¥115 on the H1 (and associated H1 confluence) remains on the radar.

Though as highlighted in recent analysis, traders are urged to pencil in the possibility of price whipsawing through ¥115 to the H1 100% Fibonacci projection at ¥114.90 and H1 Quasimodo support at ¥114.83, before a bullish attempt takes shape.

January 12th 2022: Technical Outlook Ahead of US CPI Data, FP Markets

GBP/USD:

Weekly timeframe:

The beleaguered resistance at $1.3629-1.3456 appears to be hanging by a thread. Could the recent bid—ahead of the double-top pattern’s ($1.4241) profit objective around $1.3093 (red boxes)—be the beginning of a dip-buying phase, in line with the weekly timeframe’s current uptrend?

It’s important to recognise that while the trend on the weekly timeframe demonstrates an upside bias, the monthly timeframe’s long-term trend has been lower since late 2007.

If resistance at $1.3629-1.3456 fails to deliver, ‘consumed supply’ (blue area) is visible between $1.4001 and $1.3830. Considering this, a resistance breach might guide the currency pair as far north as resistance from $1.4371-1.4156.

Daily timeframe:

Trendline resistance-turned support, taken from the high $1.4250, currently underpins GBP/USD and guided the pair above resistance at $1.3602 on Tuesday. Recent action, assuming support forms, swings the pendulum in favour of buyers, tipping the weight towards the 200-day simple moving average at $1.3733 and underlines weakness within weekly resistance mentioned above at $1.3629-1.3456.

The relative strength index (RSI), unsurprisingly, is on the brink of shaking hands with overbought levels. Note the indicator has not visited overbought since February 2021.

H4 timeframe:

Supply at $1.3665-1.3625, as you can see, made an entrance in recent hours. Clearance of this base casts light on resistance at $1.3710.

Demand is equally important to note at $1.3428-1.3444. As a result, if sellers regain consciousness, traders may witness a dip back to the aforementioned demand zone.

H1 timeframe:

$1.36 finally surrendered its position on Tuesday, leading price to Quasimodo support-turned resistance at $1.3627. Downstream, $1.36 might deliver support, aided by demand at $1.3580-1.3600.

Price testing both H4 supply at $1.3665-1.3625 and the H1 Quasimodo support-turned resistance at $1.3627 gives rise to a possible whipsaw (stop-run scenario), as price snaps through buy-stops north of $1.36.

The relative strength index (RSI), as you would expect, trades nearby overbought terrain, ‘suggesting’ short-term buying may level off in today’s sessions.

Observed Technical Levels: 

Long term, GBP/USD bulls appear to be gaining the upper hand above daily resistance at $1.3602.

Short term, the (bearish) whipsaw north of $1.36 and subsequent test of H4 supply at $1.3665-1.3625, as well as H1 Quasimodo support-turned resistance from $1.3627, could fuel a short-term dip lower.

Conservative sellers will likely watch for a successful test of $1.3665-1.3625 and a close back under $1.36 (H1 demand at $1.3580-1.3600) to form before pulling the trigger.

January 12th 2022: Technical Outlook Ahead of US CPI Data, 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.

 

 

 

 

 

 

 

 

 

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