January 13th 2022: DXY Probing Daily Trendline Support; EUR and AUD Pairs Boosted

January 13th 2022: DXY Probing Daily Trendline Support; EUR and AUD Pairs Boosted, 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).  

Buyers, however, recently regained consciousness and elevated the currency pair to within a stone’s throw of resistance at $1.1473-1.1583. In light of its long-standing position, the aforementioned resistance could be a location sellers attempt to make a show from. Adding to this, 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. As a result of recent upside, a 7-month trendline resistance entered the frame on Wednesday, extended from the high $1.2254.

Momentum studies derived from the relative strength index (RSI) reveals the value established support from the 50.00 centreline and nears indicator resistance at 63.66, closely shadowed by overbought territory.

Trend on this scale has been lower since June 2021. A decisive breach of the noted trendline, nonetheless, could offer a bullish tone, targeting as far north as Quasimodo resistance at $1.1667.

H4 timeframe:

Headline US inflation (CPI) rose 0.5 percent in December, following November’s 0.8 percent reading (consensus: 0.4 percent). Subsequent price action established a decision point at $1.1354-1.1379 and rallied through resistance at $1.1382. Recent hours also navigated above resistance at $1.1438 (now a marked support) and exposed Fibonacci resistance between $1.1506 and $1.1476.

H1 timeframe:

Against the backdrop of higher timeframes, demand formed at $1.1363-1.1375 as a result of CPI-induced bidding, dragging EUR/USD above $1.14 to within reach of Quasimodo resistance at $1.1452.

The view out of the relative strength index (RSI) has the indicator investigating overbought territory, a touch under resistance from 82.37.

Observed Technical Levels:

Long term, weekly resistance at $1.1473-1.1583 may hamper further buying. Before reaching the latter, however, the daily timeframe’s 7-month trendline resistance, extended from the high $1.2254, may be enough to stimulate a bearish showing.

Lower on the curve, H4 Fibonacci resistance between $1.1506 and $1.1476 is likely to arouse curiosity if tested, residing within the lower limits of the noted weekly resistance zone. Also of interest—and reinforcing daily trendline resistance—is current H1 Quasimodo resistance at $1.1452.

January 13th 2022: DXY Probing Daily Trendline Support; EUR and AUD Pairs Boosted, 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. Should buyers continue pressing higher, 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, trendline resistance, drawn from the high $0.7891, and the 200-day simple moving average at $0.7247—offers healthy (technical) confluence on this chart.

Obvious support at $0.7021 calls for attention to the downside in the event sellers track lower price levels from the above resistance.

The relative strength index (RSI) has shaped 50.00 centreline support, action informing traders and investors that average gains surpass average losses: positive momentum.

H4 timeframe:

Quasimodo support-turned resistance at $0.7287 elbowed its way into the spotlight on Wednesday, a level placed a handful of pips above prime resistance drawn from $0.7323-0.7308. Larger prime resistance is also visible at $0.7338-0.7292. Note that the larger prime resistance is glued to the lower side of daily resistance highlighted above between $0.7247 and $0.7315.

H1 timeframe:

Following a recent break of resistance at $0.7273, influenced on the back of latest US CPI figures weighing on the dollar, $0.73 is visible to the upside. Note that should sellers make a play and close back under $0.7273, demand is arranged at $0.7205-0.7217.

Alongside short-term flow tipped to test the mettle of $0.73, the relative strength index (RSI) is testing space high within the walls of overbought territory—a space sellers will be watching closely for signs of bearish intent on the price chart.

Observed Technical Levels:

The combination of daily resistance between $0.7247 and $0.7315, H4 prime resistance at $0.7338-0.7292 and the $0.73 figure on the H1 scale is likely enough technical confluence to attract bearish attention. Focus, however, is perhaps to remain within the H4 prime resistance zone.

The caveat to lower prices developing from said resistances, of course, is the weekly timeframe’s prime support coming in at $0.6968-0.7242.

January 13th 2022: DXY Probing Daily Trendline Support; EUR and AUD Pairs Boosted, FP Markets

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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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