Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Europe’s single currency pencilled in a fourth successive daily gain against its US counterpart on Thursday, up 2 percent on the week. Broad USD softness and an optimistic vibe across equities elevated EUR/USD to within striking distance of resistance on the weekly timeframe at $1.1174. This follows a spirited advance emerging from weekly channel support, extended from the low $1.1186 (arranged above Quasimodo support from $1.0778). $1.1174 is a particularly prominent level, in light of the prevailing trend. The longer-term trend has reflected bearish status since topping at $1.2350 at the beginning of January (2021). This is reinforced by a weekly trendline support breach, drawn from the low $1.0636, together with the break of the $1.1602 November 2020 low (circled) and the currency pair refreshing year-to-date lows last week at $1.0806.

Closely joining weekly resistance at $1.1174 is daily resistance marked at $1.1224. To the downside on the daily timeframe, you will note a familiar decision point at $1.0788-1.0854 (as well as an intersecting ascending support, drawn from the $1.0340 3^rd January low 2017). An additional observation is the relative strength index (RSI) shaking hands with the lower side of the 50.00 centreline. Voyaging north of the latter reveals positive momentum (average gains exceeding average losses) and suggests an approach to noted weekly and daily resistances ($1.1174-1.1224).

The $1.1139-1.1090 H4 supply welcomed price action on Thursday as a result of the recent EUR/USD bid. Upstream, a decision point resides at $1.1234-1.1195, complemented by channel resistance, taken from the high $1.1121, and an AB=CD bearish formation at $1.1225. Assuming current supply commands position, channel support, drawn from the low $1.0806, calls for attention.

A closer reading of price movement on the H1 timeframe reveals the currency pair is fading Quasimodo resistance at $1.1138, poised to regroup with $1.11 and neighbouring Quasimodo resistance-turned support from $1.1095. Below here, however, lays the foundation for a return to support coming in at $1.1019 and the widely watched $1.10 figure.

Technical Outlook:

Should $1.11 deliver support on the H1, this implies weakness within H4 supply from $1.1139-1.1090. This in turn indicates the pair is likely headed for the H4 decision point at $1.1234-1.1195, an area sharing chart space with daily and weekly resistances at $1.1224 and $1.1174, respectively.

With the above in mind, short-term dip-buyers could emerge from $1.11, targeting weekly resistance at $1.1174. Then between the upper limit of the H4 decision point at $1.1234 and $1.1174 serves as healthy resistance—likely to attract the attention of sellers.

AUD/USD:

Against the US dollar, the Australian dollar settled higher for a second consecutive session on Thursday, kickstarted via upbeat employment figures out of Australia. Adding 1.2 percent on the session, daily flow reaffirmed position above the 200-day simple moving average (currently circling $0.7302). While considered a bullish indication, buyers must confront nearby trendline resistance, drawn from the high $0.8007. Overthrowing the aforementioned line, nonetheless, may prepare the ground for an approach towards a double-bottom ($0.6994) profit objective at $0.7660. Momentum studies, according to the relative strength index (RSI), has also rebounded from the 50.00 centreline, emphasising support and positive momentum.

Further upside is reinforced according to weekly structure holding prime support at $0.6948-0.7242 since September 2020. Resistance is seen at $0.7501 (could hinder an attempt to reach the double-bottom profit objective at $0.7660 on the daily timeframe), followed by prime resistance at $0.7849-0.7599 (houses the daily pattern target). In terms of trend, however, things are not so rosy:

Longer term—the monthly timeframe—has portrayed a downtrend since August 2011, suggesting the 12.6 percent correction from mid-Feb tops at $0.8007 (2021) on the weekly timeframe might be the start of a bearish phase and not a dip-buying correction from the 2021 advance from pandemic lows of $0.5506. This highlights a possible bearish scene should $0.7051 resistance or prime resistance at $0.7849-0.7599 put in an appearance. If a $0.6968-0.7242 break should come to pass, weekly support at $0.6673 and a 50% retracement at $0.6764 are observable.

The ‘clean’ rally from the H4 timeframe’s trendline support, taken from the low $0.6968, which benefitted from a 100% Fibonacci projection at $0.7170 confluence (AB=CD bullish formation), has landed candle action at Fibonacci resistance between $0.7412 and $0.7392. Of note is the Quasimodo resistance positioned above at $0.7451. From the H1 timeframe, we can see price rotated ahead of $0.74 and appears set to retest support at $0.7367 along with Quasimodo resistance-turned support at 0.7362.

Technical Outlook:

Recognising both weekly and daily timeframes hint at the prospect of additional buying (until at least daily trendline resistance), H1 price retesting $0.7362-0.7367 may be enough to inspire a dip-buying theme.

USD/JPY:

Volatility slowed considerably on Thursday on USD/JPY, delivering chartists an ‘inside day’ formation (high is lower than previous high and low is higher than previous low—not to be confused with a bearish ‘harami’) alongside the relative strength index (RSI) recording overbought conditions. In spite of an inside day suggesting a turn lower, additional studies on the daily timeframe demonstrate scope to reach as far north as ¥120.11. The past few days has seen our research team highlight that price ruptured the upper limit of an ascending triangle formation (Quasimodo resistance at ¥116.33). Toppling ¥116.33 allows analysts to chart a pattern profit objective by extending the ‘base’ distance (blue vertical box) from the breakout point to ¥120.11.

For those who read Thursday’s technical briefing you may recall the following on the weekly timeframe:

Latest technical developments reveal price shook hands with weekly resistance from ¥118.64, shadowed closely by a 1.618% Fibonacci projection at $119.77 and a channel resistance, pencilled in from the high ¥110.97. Despite testing the noted resistances, it’s important to remain cognisant of where we are regarding trend studies. The overall longer-term trend has been climbing since 2012 (check monthly timeframe). The 21.5 percent correction from June 2015 to June 2016 provided a dip-buying opportunity, as did a subsequent 14.8 percent correction from December 2016 to pandemic lows formed early March 2020. Overall, the primary trend is higher, with the secondary trend promoting additional advances.

H4 prime resistance from ¥119.29-118.80 on the H4 timeframe continues to be a talking point, rejecting price action in recent trading. A decisive rotation lower on this timeframe, one that clears the ¥117.70 low, could trigger a run as far south as daily support mentioned above at ¥116.33. Housed within the H4 timeframe’s prime resistance is the ¥119 figure on the H1 timeframe. In the event of a ¥118.50 break on the H1, this shines the technical spotlight on ¥118 and channel resistance-turned support, extended from the high ¥115.79.

Technical Outlook:

Weekly resistance emerging at ¥118.64 might discourage further upside and lead H1 price under ¥118.50 towards ¥118. Overall, though, considering the current uptrend and the daily timeframe demonstrating scope to reach the ascending triangle’s profit objective at ¥120.11, buyers are likely to maintain control, despite a short-term dip. With that, ¥118 could be viewed as dip-buying support.

GBP/USD:

Sterling plunged versus the US dollar in the immediate aftermath of the Bank of England (BoE) hiking rates to 0.75 percent on Thursday, the central bank’s third successive rate increase which brought rates to pre-Covid levels. The currency pair was unable to retest pre-announcement levels, consequently establishing a doji candle a handful of pips north of support from $1.3082 on the daily timeframe. North of here, resistance is at $1.3355. Technicians may also note the currency pair continues to operate south of the 200-day simple moving average at $1.3601, though the relative strength index (RSI) is showing signs of recovery from oversold territory.

Trend direction has been southbound since late 2007 tops at $2.1161. As a result, the 25 percent move from pandemic lows in March 2020 to February 2021 may be viewed as a pullback within the larger downtrend. This, of course, places a question mark on the 8.5 percent ‘correction’ from February 2021 to March 2022 (weekly timeframe); it could in fact be the beginning of a longer-term push to the downside and not a dip-buying scenario.

For those who read Thursday’s technical briefing you might recall the following points:

The lower side of weekly prime resistance at $1.3203 and the psychological base $1.32 on the H1 timeframe warrants attention as a possible upside objective on GBP/USD. The trend facing lower highlights a potential ceiling around the $1.32 neighbourhood, if tested.

As evident from the H1 timeframe, $1.32 and the underside of weekly prime resistance ($1.3203) served well, with help from H4 resistance stationed at $1.3173. Going forward, we can see H1 price manoeuvring between $1.32 and $1.31. Interestingly, beyond the psychological levels are Quasimodo formations at $1.3222 and $1.3075.

Technical Outlook:

Knowing weekly prime resistance is in play at $1.3473-1.3203, a whipsaw north of $1.32 on the H1 timeframe into Quasimodo resistance at $1.3222 could be seen and might be viewed as a bearish setup.

Despite going against weekly resistance, an alternative scenario to be aware of is a whipsaw below $1.31 on the H1 chart into Quasimodo support from $1.3075.

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