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January 6th 2022: Technical Outlook

January 6th 2022: Technical Outlook, FP Markets

Charts: Trading View

(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.  

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. Given the subdued bullish vibe in recent months, the latter appears the more likely scenario.

Interestingly, 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, despite a passionless attempt from bulls so far. A run higher casts light on trendline resistance, extended from the high $1.2254. Establishing a decisive close beneath $1.1213, however, exposes support on the daily timeframe at $1.0991 (not visible on the screen).

The relative strength index (RSI) remains hugging the 50.00 centreline, a level delivering resistance since mid-October (2021). Overthrowing the latter helps validate interest to the upside from current price support (shown through average gains exceeding average losses), yet defending 50.00 as resistance connotes a bearish picture, in line with the immediate downtrend (since May 2021).

H4 timeframe:

Key levels to be mindful of on the H4 scale are:

  • Quasimodo support from $1.1272.
  • Resistance at $1.1379, accompanied by a 38.2% Fibonacci retracement at $1.1381.
  • Beyond the above, a 100% Fibonacci projection is visible at $1.1422, followed by Quasimodo support-turned resistance at $1.1438. Lower on the curve, support falls in around $1.1235.

H1 timeframe:

Supply from $1.1350-1.1341 and the 1.272% Fibonacci projection at $1.1342, as you can see, offered a technical ceiling Wednesday. Bids were lifted in response to latest FOMC minutes during US hours, leading current price to within reach of the psychological figure $1.13 (accompanied by a 61.8% Fibonacci retracement).

Territory beneath $1.13 reveals Quasimodo support at $1.1280, a level positioned to take advantage of sell-stops beneath the noted big figure.

With reference to the relative strength index (RSI), the value crossed swords with overbought territory as price made its way into $1.1350-1.1341. As of writing, the indicator is bound for the 50.00 centreline.

Observed Technical Levels:

$1.13 may offer some technical relevance in the short term, having noted the level converging with a 61.8% Fibonacci retracement. An alternative scenario, of course, is a whipsaw south of $1.13 to bids at H1 Quasimodo support from $1.1280. A test of the latter and subsequent close back above $1.13 may fuel a short-term bid higher.

The recently tested H1 supply at $1.1350-1.1341 will also likely remain on the watchlists for short-term sellers.

January 6th 2022: Technical Outlook, FP Markets

AUD/USD:

Weekly timeframe:

Bulls embraced a modest offensive phase deep within prime support at $0.6968-0.7242, with resistance to target at $0.7501. Manoeuvring beneath $0.6968-0.7242 reveals support at $0.6673 and a 50.0% retracement at $0.6756.

Trend on the weekly timeframe has been higher since pandemic lows of $0.5506 (March 2020); however, the monthly timeframe has been entrenched within a large-scale downtrend since mid-2011.

Daily timeframe:

Price remains circling just ahead of resistance, made up of a 61.8% Fibonacci retracement at $0.7340, a 100% Fibonacci projection at $0.7315 and an ascending resistance, drawn from the low $0.7106. North of the aforesaid resistance area, two trendline resistances are seen (taken from highs $0.8007 and $0.7891).

The relative strength index (RSI) continues to welcome the possibility of 50.00 centreline support, emphasising positive momentum (average gains exceeding average losses).

H4 timeframe:

Quasimodo resistance-turned support at $0.7187 has proven itself worthy of chart space in recent trading. Latest, however, shows the Australian dollar navigated lower against the dollar in response to the latest round of FOMC minutes.

A broad USD bid, recovering a large portion of earlier losses, weighed on AUD/USD, movement leaving last Friday’s peak at $0.7277 and Quasimodo support-turned resistance at $0.7287 unchallenged. Are we headed for another test of $0.7187?

H1 timeframe:

Wednesday came within a whisker of Quasimodo resistance at $0.7273 before plunging lower amid US trading. Continued interest lower seats support at $0.7216 on the radar, closely shadowed by demand at $0.7195-0.7207 and the psychological figure $0.72.

The relative strength index (RSI) travelled beneath the 50.00 centreline, indicating a bearish landscape right now.

Observed Technical Levels:

H1 demand at $0.7195-0.7207 delivers modest confluence to work with, housing the $0.72 figure and set just beneath H1 support at $0.7216. Therefore, a whipsaw through the latter into demand could stir a bullish scenario.

Longer term, technical structure points to resistance on the daily chart between $0.7340 and $0.7315.

 January 6th 2022: Technical Outlook, FP Markets

USD/JPY:

Weekly timeframe:

USD/JPY kicked off the year touching gloves with a 1.272% Fibonacci projection from ¥116.09, following a one-sided break of resistance from ¥114.38, a level capping upside since early 2017 which now represents support. Also of technical note is the currency pair recently refreshing multi-year pinnacles.

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

Daily timeframe:

Quasimodo resistance at ¥114.97 was overthrown on Tuesday, allowing a test of Quasimodo resistance at ¥116.33. Wednesday has held south of the level, though current action shows price trading considerably off worst levels.

RSI (relative strength index) analysis shows the value entered overbought space. In light of recent strength, traders are urged to pencil in the possibility of false signals emerging from the overbought area. Indicator support remains around 40.00-50.00.

Regarding trend, the unit has been higher since 2021.

H4 timeframe:

Ahead of an alternative trendline support (drawn from the low ¥113.14) and support at ¥115.38, Wednesday pencilled in a bottom around ¥115.62. Daily Quasimodo resistance at ¥116.33 is also a key level on the H4 scale for the time being.

$117.76-117.07 supply is fixed above the daily level (not visible on the screen); therefore, a break of the latter shows room to press higher.

H1 timeframe:

Fibonacci support coming in between ¥115.59 and ¥115.71 welcomed price action during London’s morning session, an area composed of a 1.618% Fibonacci projection, a 38.2% Fibonacci retracement as well as a 50.0% retracement.

Handing the baton to buyers from ¥115.59-115.71 led the currency pair above the ¥116 barrier to a high of ¥116.19, a touch ahead of daily Quasimodo resistance from ¥116.33.

Supporting the short-term bullish wave, the relative strength index (RSI) climbed above the 50.00 centreline. Current price has the indicator within a stone’s throw from overbought territory.

Observed Technical Levels:

In similar fashion to Wednesday’s technical report, despite the clear uptrend, weekly resistance at ¥116.09 (the 1.272% Fibonacci projection) and daily Quasimodo resistance at ¥116.33 remains a concern for bullish setups.

Nevertheless, should H1 price establish support above ¥116, this could serve as an early signal we’re headed for higher terrain in this market.

January 6th 2022: Technical Outlook, FP Markets

GBP/USD:

Weekly timeframe:

Resistance at $1.3629-1.3456 made a show in recent weeks, following a mild pullback from December lows of $1.3160.

Sellers responding to current resistance has a double-top pattern’s ($1.4241) profit objective—measured by taking the distance between the highest peak to the neckline and extending this value lower from the breakout point—to target around $1.3093.

While the trend on the weekly timeframe demonstrates an upside bias, the monthly timeframe’s primary setting has been lower since late 2007.

Daily timeframe:

Trendline resistance, taken from the high $1.4250, put in an appearance on Wednesday, with price coming within touching distance of resistance from $1.3602. The 200-day simple moving average is also circling above current resistance at $1.3739.

The relative strength index (RSI) is hovering nearby overbought levels. In addition to this, hidden bearish divergence is a possibility.

H4 timeframe:

Quasimodo resistance at $1.3580 greeted price in recent hours, which happens to be positioned just beneath daily resistance at $1.3602 and H4 supply at $1.3665-1.3625. Downside action could have the unit visit Quasimodo resistance-turned support at $1.3523, with a break of here shining the spotlight on demand at $1.3428-1.3444.

H1 timeframe:

In the shape of a shooting star candlestick formation, Wednesday rotated south just ahead of $1.36, confirmed by the relative strength index (RSI) recording overbought conditions. As of writing, the indicator is bound for the 50.00 centreline. Crossing below here suggests follow-through selling, threatening a possible price test of $1.35, should support at $1.3522 put up little fight.

Observed Technical Levels:                     

The combination of weekly resistance at $1.3629-1.3456, daily resistance at $1.3602 (and daily trendline resistance) and H4 Quasimodo resistance at $1.3580 shows an area between $1.3629 and $1.3580 sellers will likely be watching.

Short-term downside targets rest at H4 Quasimodo resistance-turned support at $1.3523 and H1 support from $1.3522, followed by $1.35.

January 6th 2022: Technical Outlook, 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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