April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC.

April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., FP Markets

Charts: Trading View

EUR/USD:

Monthly timeframe:

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

Following the three-month retracement slide, demand at 1.1857-1.1352 sparked a bullish revival in April, up 2.6 percent MTD. The possibility of fresh 2021 peaks is on the table, followed by a test of ascending resistance (prior support – 1.1641).

Spinning lower, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Partly modified from previous analysis.

Buyers and sellers continue to square off around the lower side of resistance from 1.2058. This is in spite of Tuesday’s shooting star, a candlestick pattern that can stir bearish activity.

The 200-day simple moving average, around the 1.1913ish neighbourhood, is next in the firing range should sellers navigate lower terrain. In the event buyers make an entrance, the next layer of resistance beyond 1.2058 is found at 1.2169: a Quasimodo formation.

Trend studies, despite the recent test of resistance at 1.2058, reveals EUR/USD has been trending higher since early 2020 (many analysts will refer to this as a primary trend).

RSI flow remains closing in on overbought territory. Should we test this region, bearish hidden divergence is likely to present itself.

H4 timeframe:

Partly modified from previous analysis.

The US dollar index (ticker: DXY) responding from daily resistance at 91.36 on Wednesday put the brakes on EUR/USD downside momentum from supply at 1.2101-1.2059. Technicians will note the aforesaid supply is stationed a pip north of daily resistance underlined above at 1.2058.

Despite the above, technical forces also throw light on support nearby at 1.1990, with a break pointing to Quasimodo resistance-turned support at 1.1937.

H1 timeframe:

For those who read Wednesday’s technical briefing you may recall the following points (italics):

Should the unit reach 1.20 (a level fused with Fib confluence as well as the 100-period simple moving average) and the aforesaid H4 support, buyers could attempt to make a comeback.

Although Wednesday left H4 support untapped at 1.1990, the 1.20 figure made an entrance and, alongside the Fib cluster (1.618% Fib expansion at 1.2068 as well as a 100% projection at 1.2066) and 100-period simple moving average at 1.2004, fuelled upside.

The 1.20 recovery, as you can see, was impressive and shines the technical spotlight back on Quasimodo resistance at 1.2070 and the associated Fib cluster around 1.2067.

In conjunction with H1 action bouncing from 1.20, RSI also rebounded from support at 35.45 and ended the session marginally above the 50.00 centreline, a signal that short-term action could be headed higher.

Observed levels:

The lack of downside pressure from H4 supply at 1.2101-1.2059, coupled with monthly action rebounding from demand at 1.1857-1.1352 and H1 taking on the 1.20 round number as support, places a question mark on daily Quasimodo resistance at 1.2058. As such, increased interest to the upside could be on the cards today.

April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., FP Markets

AUD/USD:

Monthly timeframe:

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

Since the beginning of 2021, AUD/USD has been consolidating just south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082.

Should a bearish move unfold over the coming months, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

With respect to 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.

Although establishing a shooting star candle (a bearish signal) on Tuesday, a few pips south of resistance at 0.7817, AUD/USD struggled to ignite much bearish movement on Wednesday amid improved market sentiment and DXY action tagging resistance at 91.36.

According to the RSI oscillator, upside momentum remains, with the value holding north of the 50.00 centreline. Increased interest to the upside could have the value cross swords with channel resistance, drawn from the high 80.12.

H4 timeframe:

0.7696-0.7715 demand continues to serve buyers on the H4 scale, an area withstanding numerous downside attempts since mid-April. Technicians will note that trendline support, extended from the low 0.7531, inhabits territory to the downside.

Quasimodo resistance at 0.7800 also remains in the crosshairs, with a break unmasking demand-turned supply at 0.7848-0.7867.

H1 timeframe:

As traders digest Wednesday’s 0.77 recovery, a level fastened just north of demand at 0.7679-0.7695 (represents the decision point to break above 0.77 in mid-April), the currency pair recently overthrew the 100-period simple moving average and shook hands with supply at 0.7783-0.7760 (notable on this scale seeing as how it was within this area a decision was made to push below the 100-period simple moving average on Tuesday).

In response to recent optimism, RSI activity crossed above the 50.00 centreline and is seen levelling off ahead of 60.00.

Observed levels:

Short-term flow shows buyers and sellers battling for position around H1 supply at 0.7783-0.7760, though having seen H4 displaying scope to approach Quasimodo resistance at 0.7800, puncturing the aforesaid H1 supply is an option today to reach the 0.78 figure. 0.78 also coincides closely with daily resistance posted at 0.7817.

April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., 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 February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, currently down 2.4 percent, is seen attempting to climb back through the breached descending resistance.

Daily timeframe:

Partly modified from previous analysis.

US equity benchmarks recorded a relatively healthy session Wednesday, movement which can trigger JPY selling. Though with the DXY exploring negative territory, action that can weigh on USD/JPY, this ultimately emphasised an indecisive session for the currency pair.

The lack of volatility, therefore, continues to throw light on trendline support, etched from the low 102.59, as well as demand plotted at 107.58-106.85 (prior supply) and a 38.2% Fib level at 107.73. Voyaging into the aforesaid areas underlines the possibility of a bullish revival.

In terms of trend on the daily scale, despite decisive selling in April, we have been trending higher since early 2021.

RSI action recently journeyed beneath support at 57.00, and dipped a toe under 40.00. This implies momentum remains to the downside for the time being, threatening moves into oversold space.

H4 timeframe:

Demand at 107.81-108.01—benefits from a Fib cluster around 108ish—continues to underpin price movement on the H4 scale. 108.50 resistance, as you can see, is arranged to the upside.

Should the aforesaid demand move aside, welcoming support at 107.44 could be on the cards.

H1 timeframe:

The 108 psychological support extended its presence on Wednesday, though buying pressure from the level appears somewhat deflated. Upside structure consists of trendline resistance, taken from the high 110.55, a 100-period simple moving average, together with supply areas at 108.57-108.46 and 108.60-108.71.

Territory south of 108 shines light on demand coming in at 107.52-107.65.

As for the RSI, the value is seen pursuing terrain just below 50.00.

Observed levels:

Unchanged outlook.

108 could still spark buying, given the level’s connection with H4 demand at 107.81-108.01 and Fib confluence.

However, should the pair explore lower levels and test H4 support at 107.44, this barrier packs more of a bullish punch, having seen the base align with daily demand at 107.58-106.85 (and associated technical confluence on the daily scale).

April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., 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 swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower would generally be viewed as a bearish signal.

April, however, trades higher by 1.1 percent.

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:

Unchanged from previous analysis.

Sterling reversed earlier losses against the US dollar on Wednesday, concluding the session considerably off session lows.

The technical framework on the daily scale remains unchanged.

Trendline support-turned resistance, taken from the low 1.1409, is arranged to the upside, while 1.3670 bottoms reside to the downside, set just north of Quasimodo support at 1.3609 (aligning with interesting Fibonacci confluence).

As for trend, GBP/USD has been trending higher since early 2020.

RSI activity remains within touching distance of overbought waters (in particular resistance at 76.14) after recently cementing position above the 50.00 centreline.

H4 timeframe:

Support at 1.3919 has so far done a good job of holding back sellers, following Tuesday’s one-sided decline from Quasimodo resistance at 1.4007.

Beyond 1.3919, another layer of support rests around 1.3852.

H1 timeframe:

Heading into the early hours of the US session on Wednesday, short-term flow, in the shape of a hammer candle, whipsawed through bids around 1.39 (aligns with a 38.2% Fib at 1.3897) to greet the 100-period simple moving average at 1.3886.

Follow-through buying was observed, though failed to find acceptance north of 1.3943. Breaching the said high today unlocks the possibility of additional bullish sentiment towards the 1.40 vicinity.

RSI resistance is stationed around 54.88, with the value currently hovering just north of oversold space. Cracking above 54.88 today suggests healthy upside momentum in the short term, targeting overbought levels.

Observed levels:

H1 rebounding from 1.39 confluence on Wednesday, coupled with H4 support delivering a floor at 1.3919, stirs the possibility of follow-through upside today, with bullish bets likely to take aim at 1.40ish.

April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., FP Markets

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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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • April 22nd 2021: Dollar Rebound Interrupted Following Hawkish BoC., FP Markets
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