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January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck

January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, FP Markets

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 from 1.1857/1.1352 in August (2020), a modest correction surfaced. However, buyers making an entrance in November and December (registering fresh multi-month highs) reasons additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted.

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

Daily timeframe:

Brought forward from previous analysis –

EUR/USD consolidates just ahead of a descending wedge pattern’s (1.2011/1.1612) take-profit target at 1.2318 (yellow). Traders will also note there is room to advance until reaching the bullish flag’s (1.2177/1.2078) take-profit level at 1.2384 (purple).

Trend on this timeframe remains decisively north, launching a series of higher highs and higher lows since March 2020 (secondary trend). However, the RSI also merits attention, with the value producing bearish divergence around overbought territory.

H4 timeframe:

Despite a fleeting visit south of 1.2255 support, the pair settled above the level on Tuesday, boosted on the back of a decaying USD. Violating recent multi-month pinnacles (1.2310) could have buyers address supply from 1.2351/1.2333, positioned just above the daily timeframe’s descending wedge pattern take-profit target at 1.2318.

H1 timeframe:

The 1.23 level remains a central theme on the H1 chart, recently welcoming its fifth test in under a week.

1.23, according to what we’ve seen so far, is on the brink of allowing buyers to push through and perhaps reach for 1.2350 resistance. December’s reaction fell approximately 100 pips, though January’s response struggled to pass 1.2250 support. By and of itself, this implies buyers are likely controlling the majority of intraday action right now.

With reference to the RSI indicator, the market trades above 50.00, suggesting short-term momentum is headed for overbought levels.

Observed levels:

Breaking above 1.23 on the H1 will likely be a welcomed sight for breakout buyers. Although H1 shows resistance is not expected until 1.2350, it should be noted 1.2318 (daily timeframe’s descending wedge pattern take-profit target) and the lower side of H4 supply at 1.2333 could be problematic.

January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, FP Markets

AUD/USD:

Monthly timeframe:

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

December traded higher by nearly 5 percent, following November’s 4.5 percent rebound from demand at 0.7029/0.6664 (prior supply), consequently wrapping up 2020 in positive territory.

Interestingly, buyers, according to the monthly chart, appear free to explore as far north as 0.8303/0.8082 in the coming months, 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:

Support at 0.7647, as you can see, delivered a solid floor, fuelling a break of supply at 0.7756/0.7685. With the move likely enough to discourage additional selling, and the trend in this market higher since early 2020, supply at 0.7937/0.7890 is next in the firing line.

H4 timeframe:

Demand at 0.7665/0.7644 (prior supply), an area sharing space with a local trendline support (0.7461), proved too strong for sellers late Monday/early Tuesday.

Buyers went on the offensive and eventually overturned resistance at 0.7752, reaching fresh multi-month highs, with room for additional upside today towards resistance at 0.7805.

H1 timeframe:

H1, in a similar manner to the H4 timeframe, tested the mettle of 0.77 support heading into US trading on Tuesday (missing nearby demand at 0.7674/0.7684 by a hair) and toppled 0.7750 resistance. Skies above are relatively blue until the 0.78 level. As you can see, though, the pair has seen upside momentum diminish (as shown by the RSI recently striking overbought levels), with price poised to retest 0.7750.

Observed levels:

Monthly action striving for higher levels, in addition to daily price recently clipping the upper side of supply at 0.7756/0.7685, suggests that a H1 retest at 0.7750 (and a H4 retest at 0.7752) may inspire buyers to get involved. The 0.78 level on the H1 and then H4 resistance at 0.7805 represent chart-based targets to be mindful of.

January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, 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.

As you can see, though, December, down by 1 percent, pursued terrain south of 104.62.

104.62 ceding ground throws light on support from 101.70, with a break uncovering trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Support at 103.08 collapsed under the pressure of Tuesday’s push, fuelled by broad USD losses – light now falls on demand at 100.68/101.85 (holds monthly support at 101.70).

RSI enthusiasts will observe the value is now within close range of retesting oversold territory. The indicator has also had upside capped by 57.00 resistance since July.

H4 timeframe:

USD/JPY, after plunging through Monday’s low at 102.71, appears free to navigate deeper water until hitting support at 102.06.

Three supply areas are in view at 103.46/103.58 (representing a zone where a decision was made to break numerous local lows between 103.19/103.40), 103.39/103.26 and 102.95/102.82 (another important decision point to break through Monday’s low).

H1 timeframe:

Although H4 supply at 102.95/102.82 may contain upside, H1 suggests a whipsaw through the area to snatch willing sellers from 103.

Another point of interest on the H1 chart is 102.50 support, a level which may hinder sellers before H4 action attempts to attack 102.06 support.

With respect to the RSI indicator, the line recently rebounded from oversold levels and formed bullish divergence.

Observed levels:

Buyers off daily support at 103.08 loosening their grip yesterday, and both monthly and daily timeframes demonstrating some elbow room to reach the upper side of daily demand at 101.85, sellers are likely to be drawn to H4 supply from 102.95/102.82 and the 103 level on the H1.

January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, FP Markets

GBP/USD:

Monthly timeframe:

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

December ended higher by 2.5 percent, elevating GBP/USD to fresh multi-month highs and stirring trendline resistance (2.1161).

In terms of trend, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high, 2018. In fact, the aforesaid high represents the next upside target on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

Resistance at 1.3755 remains a key level to be aware of on the daily chart, stationed below supply at 1.3996/1.3918. A sell-off, on the other hand, throws light on support at 1.3176.

The RSI reveals a rangebound environment, limited by support around 47.00 and resistance at the 66.00 region.

H4 timeframe:

After brushing aside support at 1.3607, Monday crossed paths with demand at 1.3527/1.3556 and provided a platform for buyers to work with on Tuesday. As you can see, the pair settled back above 1.3607, placing

resistance at 1.3711, and the two Fib projection levels around 1.3700, back in sight.

H1 timeframe

After nudging through 1.36 resistance during US trading on Tuesday, the pair connected with a 61.8% Fib level at 1.3640 and a 127.2% Fib projection at 1.3632. So far, sellers have exhibited a non-committal tone. Attempts to pursue lower levels face the 100-period simple moving average around 1.3607 and the 1.36 level. Beyond here, 1.3550 support could be in store.

Observed levels:

Space to rally on the monthly and daily timeframes until daily resistance makes a show at 1.3755 indicates H4 may hold support at 1.3607 and approach 1.3711 resistance. This places a question mark on current H1 Fib resistance around the 1.3635 range and signifies 1.36 support could be a level buyers welcome.

January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • January 6th 2021: Risk-on Movement Weighs on Safe-Haven Buck, FP Markets
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