Charts: Trading View
(Italics: Previous Analysis Due to Limited Price Change)
Long-standing resistance from $1.1473-1.1583 (active S/R since late 2017) entertained a bearish showing last week, with this week currently underwater by 0.8 percent. Familiar support resides 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, this area, as you can see, delivered a floor heading into the close of 2021. ‘Harmonic’ traders will acknowledge $1.1237 represents what’s known as an ‘alternate’ AB=CD formation (extended D leg).
Strengthening the aforementioned resistance area’s presence, EUR/USD took out 2nd November low (2020) at $1.1603 in late September (2021), suggesting a downtrend on the weekly timeframe. This is reinforced by the monthly timeframe’s long-term (some would say ‘primary’) downtrend since mid-2008.
Joining the lower edge of weekly resistance at $1.1473-1.1583 is a 7-month trendline resistance on the daily timeframe, extended from the high $1.2254. Last week challenged the aforesaid descending line, established by way of a bearish engulfing candle (a reversal pattern in which focus is directed to the real candle body rather than upper and lower shadows). Should bearish follow-through emerge, Quasimodo support offers an obvious target at $1.1213.
Upside momentum, according to the relative strength index (RSI), remains fatigued; the indicator is threatening to navigate south of the 50.00 centreline, movement communicating negative momentum (average losses outweighing average gains) and, thus, in agreement with the near-term bearish landscape.
Trend on this scale has also been lower since June 2021.
Having noted soft US Treasury yields, aided (technically) by a Fibonacci resistance between 1.939% and 1.867% on the daily timeframe, EUR/USD responded well to resistance at $1.1354-1.1379—a prior decision point positioned a handful of pips beneath resistance at $1.1382.
Two neighbouring trendline supports (drawn from lows $1.1186 and $1.1235) warrant attention, closely followed by Quasimodo support tucked just beneath at $1.1272.
For those who read Thursday’s technical briefing you may recall the following (italics):
The technical framework out of the H1 chart exposes demand-turned supply from $1.1363-1.1375 and intersecting trendline resistance, extended from the high $1.1483. Couple this area with H4 resistance underlined above at $1.1354-1.1379, a bearish narrative may develop from here.
$1.1363-1.1375 did indeed welcome sellers in early London Thursday, feeding the possibility of a $1.13 test on this scale.
The relative strength index (RSI), following a test of the lower side of 50.00, is bound for oversold territory (keep a tab on indicator support at 18.00), currently circling 35.00ish.
Observed Technical Levels:
The weekly timeframe coming from resistance at $1.1473-1.1583, the daily timeframe holding south of trendline resistance, and the H4 trading from resistance at $1.1354-1.1379 which holds H1 supply within at $1.1363-1.1375 informs traders we might take on $1.13 on the H1. Note that should the latter enter the frame, a whipsaw beneath the psychological boundary could play out, tagging the upper edge of weekly support at $1.1281 and rebounding higher.
Prime support at $0.6968-0.7242 continues to play a crucial role on the weekly timeframe. Bulls, as you can see, embraced a modestly bullish stance into the close of 2021. 2022, on the other hand, has been relatively undecided so far. 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 modest downside bias has been seen. This followed higher prices since pandemic lows of $0.5506 (March 2020). However, it is important to note that from the monthly timeframe the unit has been entrenched within a large-scale downtrend from mid-2011.
AUD/USD bulls regaining consciousness on Thursday, extending Wednesday’s push, throws resistance between $0.7413 (the 200-day simple moving average) and $0.7315 (a 100% Fibonacci projection) back into the mix. Considering the subdued bullish showing since rebounding from support at $0.7021, a spirited rejection could develop from the noted resistance, if challenged.
Aside from the $0.7130 low (7th January) and the $0.7082 (20th December ) low, obvious support at $0.7021 calls for attention in the event sellers regain control.
The relative strength index (RSI) is establishing support off the 50.00 centreline, action that may lift the indicator to overbought surroundings.
The $0.7294-0.7267 decision point—arranged just south of prime resistance at $0.7323-0.7308—has price movement easing from the area, following a half-hearted shooting star candlestick pattern (bearish signal).
Demand at $0.7169-0.7187 (sat just above Quasimodo support from $0.7146) offers a reasonable downside objective.
Touching gloves with resistance at $0.7273, the currency pair made its way lower in early US trading on Thursday despite a rebound in risk appetite and healthy Aussie employment figures earlier in Asia.
Supply-turned demand from $0.7254-0.7238 is now in play, with a break reaffirming bearish commitment towards the $0.72ish neighbourhood. In conjunction with this, a 50.00 centreline breach on the relative strength index (RSI) to the downside would help confirm seller intent, currently exploring 55.00ish.
Observed Technical Levels:
Long term, a jump to daily resistance between $0.7413 and $0.7315 could be on the cards before higher timeframe shorts put in an appearance.
Short term, breaching H1 demand at $0.7254-0.7238 may liberate sellers towards $0.72.
After touching gloves with a 1.272% Fibonacci projection from ¥116.09 in the shape of a shooting star and refreshing multi-year pinnacles, USD/JPY tumbled 1.2 percent last week. While modest recovery efforts developed in recent trading, sellers remain at the wheel with the path of least resistance towards support at ¥112.16.
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. In consideration of the trend, a dip-buying theme from ¥112.16 is a reasonable assumption.
Thursday finished another session underwater, extending losses south of Tuesday’s shooting star candlestick pattern from ¥115.06.
The technical framework to be mindful of on this chart remains unchanged:
Quasimodo resistance is visible to the upside at ¥116.33, whereas downstream shines light on demand at ¥112.66-112.07, tailed closely by a decision point from ¥111.18-111.79 and the 200-day simple moving average at ¥111.43.
In terms of the relative strength index (RSI), support between 40.00 and 50.00 (a ‘temporary’ oversold range since 10th May) remains active.
Much like the weekly timeframe, trend on the daily scale points to the upside.
Quasimodo support-turned resistance at ¥114.71 elbowed into the frame Tuesday and, held a bearish vibe on Wednesday and Thursday. Pursuing lower prices highlights a familiar decision point at ¥113.54-113.78, set a few pips above Quasimodo support at ¥113.22.
¥114 emerged and put forward modest intraday supportive structure in US hours on Thursday. Albeit a move that may rejuvenate buyer interest, the overall technical landscape is tipped for further underperformance.
The ¥114 figure, therefore, also advertises itself as a weak level, exhibiting little confluence to write about. Beyond the round number, Quasimodo support sits at ¥113.64, closely shadowed by two support levels at ¥113.34 and ¥113.56. Also worth noting is the relative strength index (RSI) exploring waters under the 50.00 centreline, yet to test oversold space.
Observed Technical Levels:
In similar fashion to Thursday’s technical briefing, chart studies indicate a ¥114 breach on the H1 timeframe. Short-term players are likely to take aim at H1 Quasimodo support at ¥113.64, and perhaps support at ¥113.34 and ¥113.56.
The current 4-week bid—initiated ahead of the double-top pattern’s ($1.4241) profit objective around $1.3093 (red boxes)—is echoing a mildly weaker tone this week, down 0.5 percent. ‘Consumed supply’ (blue area) is nearby between $1.4001 and $1.3830. Considering this, candle action may still be guided as far north as resistance from $1.4371-1.4156 in the coming weeks.
In regards to trend, the weekly timeframe’s position shows higher prices since early 2020. However, 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.
Support coming in from $1.3602 is ‘up against the ropes’, unable to entice a healthy bid since dropping from the 200-day simple moving average at $1.3730. Below $1.3602 re-opens the door for a return to neighbouring trendline resistance-turned support, taken from the high $1.4250.
Momentum studies taken from the relative strength index (RSI) continue to pursue 60.00 after dipping from overbought territory. Rupturing 60.00 casts light on the 50.00 centreline.
A picture-perfect shooting star graced the H4 chart in recent hours, spiking the upper boundary of a resistance area at $1.3622-1.3646 and missing resistance at $1.3668 by a whisker. If sellers take control, aside from a number of ‘local’ lows, demand is visible at $1.3428-1.3444.
Further selling, of course, entails going up against willing daily bids from support at $1.3602, albeit appearing a somewhat fragile base at the moment.
Technical studies out of the H1 chart reveals the unit testing $1.36 after peaking at $1.3662 in early US on Thursday. Quasimodo support calls for attention beneath the psychological number at $1.3580, with subsequent bearish pressure opening up support from $1.3533 and $1.35.
As you would expect, the relative strength index (RSI) voyaged under the 50.00 centreline and is now within reach of oversold waters.
Observed Technical Levels:
The daily timeframe’s support at $1.3602 shows buyers are struggling to find grip. This, together with H4 flow coming from resistance at $1.3622-1.3646, unshackles the prospect of a $1.36 breach on the H1 as well as a break of H1 Quasimodo support at $1.3580.
As for downside targets, the technical radar is directed to H1 support at $1.3533 and $1.35 (aligns closely with the daily timeframe’s trendline resistance-turned support, taken from the high $1.4250).
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.