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March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments

March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, FP Markets

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

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

March, as you can see, remains toying with the upper side of 1.1857/1.1352 demand, with the month lower by 0.8 percent. Price action traders will have noted the demand test, likely viewing this as a bullish signal.

A decisive rebound from the aforesaid demand shifts attention back to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Support at 1.1887—a level fixed nearby a 127.2% Fib projection at 1.1843, a 100% Fib extension at 1.1855, and a 200-day simple moving average at 1.1837—remained firm on Wednesday after the Fed left policy settings unchanged.

The rotation higher has thrown the 38.2% Fib level at 1.2021 back in the mix and hauled the RSI to within touching distance of the 50.00 centreline.

It is also worth acknowledging the trend on this timeframe has faced north since 2020.

H4 timeframe:

Wednesday’s healthy EUR/USD bid underpins a possible test of resistance coming in at 1.1992, with subsequent outperformance to shine light on resistance at 1.2027 (shares space with a 127.2% Fib projection at 1.2030 and a 50.0% retracement at 1.2037).

H1 timeframe:

Recent hours made considerable headway off 1.19 (and nearby Fib cluster at 1.1893), running through the 100-period simple moving average and 1.1950 resistance. This not only elbowed RSI movement into overbought territory (nearing resistance at 78.97), it also shined the technical spotlight on the widely watched 1.20 figure, followed by 1.2015 resistance—previous Quasimodo support.

Observed levels:

While monthly price implies a bullish scene could be on the horizon, daily resistance (38.2% Fib) at 1.2021, H4 resistance from 1.1992 and the 1.20 figure on the H1 (as well as 1.2015 resistance) serves as a potentially strong ceiling (1.2021/1.1992) and, therefore, could attract bearish flow.

March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, FP Markets

AUD/USD:

Monthly timeframe:

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

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s also interesting was February’s movement came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082. Should sellers regain consciousness, demand at 0.7029/0.6664 is in view (prior supply).

March, as you can probably see, trades higher by 1.3 percent, and remains within February’s range.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Trendline support-turned resistance, taken from the low 0.5506, remains key on the daily chart.

Thanks to Wednesday’s advance, in wake of a more dovish-than-expected FOMC, a retest of the aforesaid trendline resistance could develop in the coming days.

Should sellers regain consciousness, February’s low at 0.7563 deserves attention as a logical support target, with subsequent downside taking aim at demand from 0.7453/0.7384 (previous supply).

RSI followers will note the value testing the ground above the 50.00 centreline, following 42.00 lows formed earlier last week.

H4 timeframe:

Technical studies on the H4 scale, as you can see, reveals price movement aggressively recoiled from demand coming in at 0.7696/0.7715 and shook hands with ascending resistance, extended from the low 0.7563.

Should buyers pull the currency pair through offers, demand-turned supply coming in at 0.7848/0.7867—housing a 61.8% Fib level at 0.7859 and a 127.2% Fib projection at 0.7849—is seen.

H1 timeframe:

0.77 welcomed price action heading into the early hours of US trading on Wednesday and, aided by a near-test of RSI oversold levels and FOMC action, shortly after witnessed strong buying enter the frame.

Upside engulfed the 100-period simple moving average and supply at 0.7786/0.7770, leading to 0.78 giving way and price crossing swords with offers around supply at 0.7818/0.7807 (with RSI also testing overbought). This has ‘fakeout’ written all over it as price taps into buy-stops above 0.78.

Observed levels:

Partly modified from previous analysis –

Longer term, the monthly and daily charts suggest sellers are likely to remain behind the wheel until February 2nd low at 0.7563 enters view on the daily scale. However, before sellers make a show, a retest of daily trendline resistance could be on the cards.

Shorter term, H4 movement crossed paths with trendline resistance. This—coupled with H1 testing supply at 0.7818/0.7807 and possibly tapping into buy-stops above 0.78—may deliver an intraday dip back into 0.7786/0.7770 in Asia today.

March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, FP Markets

USD/JPY:

Monthly timeframe:

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

Following January’s bullish engulfing candle and further outperformance in February, March is closing in (up by 2.2 percent) on descending resistance, etched from the high 118.66.

To the downside, support inhabits 101.70.

Daily timeframe:

Partly modified from previous analysis –

In the shape of a bearish outside reversal, price action continued to explore terrain south of Quasimodo resistance from 109.38. Of particular note is the Quasimodo formation joins hands with the monthly timeframe’s descending resistance.

Price action traders are likely to be watching the aforementioned Quasimodo. However, recognising supply resides at 110.94/110.29, stops above the Quasimodo head (blue arrow—109.85) could be taken.

Areas of note to the downside are support at 107.64—a previous Quasimodo resistance—and supply-turned demand at 107.58/106.85.

With respect to trend, 2021 has firmly pointed to the upside.

Based on the RSI oscillator, the value remains within overbought space, hovering beneath resistance at 83.02.

H4 timeframe:

Largely unchanged from previous analysis –

Quasimodo resistance at 109.16 continues to serve as a technical ceiling on the H4, a horizontal level placed below supply drawn from 109.59/109.37 (holds daily Quasimodo resistance at 109.38).

Further selling from the aforesaid Quasimodo could have sellers address demand coming in at 108.31/108.50, followed by support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

FOMC-induced selling took over the H1 chart in recent hours, delivering moves through trendline support, extended from the low 104.92, as well as the 109 figure and neighbouring 100-period SMA. Subsequently, traders observed price action welcome demand at 108.67/108.78 (considered an important zone given it was here a decision was made to initially break through 109 offers), with a break possibly unmasking support at 108.36.

Also of technical interest is the RSI oscillator hovering north of oversold territory.

Observed levels:

Partly modified from previous analysis –

Longer term, with daily Quasimodo resistance at 109.38 and the monthly timeframe’s descending resistance joining hands, this area may welcome selling if tested. However, before sellers put in an appearance, a whipsaw to daily supply at 110.94/110.29 could take shape.

Shorter term, H1 trendline support giving way, together with H4 showing room to decline to demand at 108.31/108.50, signals a possible H1 demand breach at 108.67/108.78 to test H1 support at 108.36 (fixed within the aforesaid H4 demand).

March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, FP Markets

GBP/USD:

Monthly timeframe:

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

The pendulum, as you can see, swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. March, on the other hand, has so far been lacklustre, up by 0.3 percent as of current price.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Daily timeframe:

Partly modified from previous analysis –

Trendline support, drawn from the low 1.1409, closely shadowed by support coming in at 1.3755, made an entrance on Tuesday and pencilled in a dragonfly doji candlestick pattern. Follow-through upside came about on Wednesday, aided by a dovish FOMC reaction.

Quasimodo resistance drawn from 1.4250 is worth a shout, should buyers maintain a bullish theme, while territory beneath 1.3755 elbows Quasimodo support at 1.3609 in the line of fire.

The trend, clearly visible on this scale, has faced higher since early 2020.

The RSI indicator remains buoyed by support between 46.21 and 49.16, with the value seen holding above 50.00.

H4 timeframe:

Chart studies from the H4 timeframe, as you can see, shows a pip-perfect test of support at 1.3852, following Tuesday’s whipsaw that touched a low just north of demand at 1.3761/1.3789.

Continued interest to the upside throws light back on Quasimodo resistance at 1.4007 (aligns with a 50.00% retracement).

H1 timeframe:

Wednesday’s push above 1.39 and the 100-period simple moving average unearthed the 1.40 figure, a resistance that merges with a 161.8% Fib projection and has capped upside since late February. North of the level, another layer of resistance is parked at 1.4059.

In terms of where the RSI stands, the value ended Wednesday within close proximity of overbought territory.

Observed levels:

Monthly price holding above trendline resistance, and daily price extending recovery gains from trendline support yesterday, emphasises a bullish vibe.

While the higher timeframes tend to take precedence over lower timeframes, 1.40 resistance on the H1, joined by a 161.8% Fib projection, as well as a H4 Quasimodo resistance from 1.4007, informs traders that the 1.40 region may see active sellers try to come into the market.

March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • March 18th 2021: US Dollar Index Snaps Recent Upside Following Fed Comments, FP Markets
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