Weekly Technical Market Insight: 8th – 12th March 2021

Weekly Technical Market Insight: 8th – 12th March 2021, FP Markets

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

The US dollar continued to flex its financial muscle last week, adding 1.2 percent into the close.

Following the arrangement of a mid-week trough around 90.63, the second half of the week observed a breach of the 91.60 Feb 5 high and a subsequent test of particularly interesting resistance at 92.38/91.96 (made up of a 61.8% Fib level at 92.38, a 127.2% Fib projection at 92.36, a fixed resistance level at 92.26, a 100% Fib extension at 91.96 and a 50.0% retracement residing at the same level). Traders will also note the 200-day simple moving average circling just north of the aforementioned resistance zone at 92.93ish. These dynamic values regularly deliver support and resistance, therefore worth noting should we take on higher territory.

Since topping south of the 103.00 figure in March 2020, trend studies (price swings: see black arrows) reveal the greenback has echoed a downside bias. This—together with the RSI oscillator making its way to overbought—adds weight to the 92.38/91.96 resistance this week.

Submerging support at 90.00 and 89.34 will also likely add conviction to the bearish narrative, and may activate longer-term breakout selling interest.

Weekly Technical Market Insight: 8th – 12th March 2021, FP Markets

EUR/USD:

Monthly timeframe:

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

March, down by 1.3 percent at the close of trade, is now on track to revisit 1.1857/1.1352 demand.

Any notable 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:

Aided by higher US Treasury yields and a stellar US non-farm payrolls print Friday, Europe’s single currency extended its corrective slide against the US dollar last week.

The one-sided decline unearthed support at 1.1887, a level sharing space with a 61.8% Fib at 1.1885 and a 127.2% Fib projection at 1.1843. Technical elements also reveal the 200-day simple moving average hovering nearby, circling the 1.1810ish neighbourhood.

In response to recent selling, momentum, as measured by the RSI oscillator, is on the brink of shaking hands with oversold space.

H4 timeframe:

Although daily price is closing in on support from 1.1887, H4 shines light on Quasimodo support at 1.1818. Note this level is joined closely by the 200-day simple moving average around 1.1810. What’s also technically noteworthy are the Fibonacci studies seen close by: a 100% Fib extension at 1.1860, a 127.2% Fib projection at 1.1843 (daily timeframe) and a 161.8% Fib projection at 1.1835.

Before the currency pair attempts to reach for 1.1818/1.1860 (green), traders are urged to pencil in the possibility of a 1.1952 resistance retest.

H1 timeframe:

Confirmed by the RSI establishing a modest double-bottom pattern off support at 20.64, 1.19 support stepped forward in the immediate aftermath of the US non-farm payrolls release and held form into the close.

South of the psychological level, demand at 1.1864/1.1875 (taken from late November 2020) calls for attention. Higher on the curve, however, 1.1950 resistance and neighbouring supply at 1.1964/1.1951 is on the radar.

Observed levels:

Long term:

The upper side of demand at 1.1857/1.1352 is likely in the crosshairs this week, a monthly zone dovetailing closely with daily support from 1.1887 and the nearby 200-day simple moving average.

Short term:

In view of higher timeframe structure, a test of H4 support at 1.1818/1.1860 (green) this week, an area merging with the top edge of monthly demand at 1.1857 and located just under daily support at 1.1887, could invite buyers. Should the above come to fruition, this would, of course, translate to a spike through 1.19 and H1 demand at 1.1864/1.1875.

Weekly Technical Market Insight: 8th – 12th March 2021, 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. 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.

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:

With the US dollar swiftly fading the post-NFP advance, this underpinned an end-of-week AUD/USD bid.

Technical structure, however, reveals the currency pair overturned trendline support last week, taken from the low 0.5506. Therefore, there’s scope for further depreciation to February 2nd low at 0.7563, with a break unmasking demand at 0.7453/0.7384 (prior supply).

Concerning trend on this scale, price action has remained convincingly higher since March 2020.

Against the backdrop of price action, the RSI oscillator voyaged through the 50.00 centreline at the tail end of the week (a sign that sellers may remain in the driving seat this week).

H4 timeframe:

An NFP-fuelled dip saw demand at 0.7601/0.7627 (houses a 127.2% Fib projection at 0.7607 and is positioned just north of Quasimodo support at 0.7592) welcome price movement on Friday which churned out a hammer candle pattern.

Subsequent the above, supply coming in at 0.7696/0.7715 entered the fight. Further buying this week shines the technical spotlight on another layer of supply from 0.7811/0.7770, shaded under additional supply at 0.7848/0.7867 (prior demand).

H1 timeframe:

Leaving the 0.76 figure unchallenged, AUD/USD went on the offensive Friday and crossed swords with 0.77.

Territory north of 0.77 this week throws light on trendline resistance, extended from the high 0.8007, followed by an alternative trendline resistance, also taken from 0.8007. Also worth stressing is the 100-period simple moving average at 0.7766 currently shares space with the upper trendline resistance.

From the RSI indicator, we can see the value joining hands with trendline resistance, a touch south of the 50.00 centreline.

Observed levels:

Long term:

Sellers remain poised to take the wheel on the monthly scale.

The trendline support breach on the daily timeframe helps confirm bearish intent, suggesting February 2nd low at 0.7563 could make an entrance this week.

Short term:

In spite of Friday’s modest recovery, H4 supply at 0.7696/0.7715, together with the 0.77 figure on the H1 and neighbouring trendline resistance, could pose a problem for buyers in early trade this week.

With the above taken into account, a short-term bearish scenario may emerge between H1 trendline resistance and the 0.77 figure (green), an area reinforced by H4 supply. Should bearish bets hold the aforementioned zone, 0.76 entering the frame should not surprise.

Weekly Technical Market Insight: 8th – 12th March 2021, 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, along with further outperformance in February, and March mounting a bullish assault (up by 1.7 percent at the close of trade), descending resistance (not considered tradicionais trendline resistance) governs the spotlight to the upside, etched from the high 118.66.

To the downside, support inhabits 101.70.

Daily timeframe:

Having largely traded as a function of US Treasury yields last week, USD/JPY ended the session greeting resistance around the 108.28ish neighbourhood, fashioned by way of two Fib levels: 61.8% and 78.6% ratios.

Clawing higher this week uncovers Quasimodo resistance at 109.38 (converging with the monthly timeframe’s descending resistance and shadowed closely by a 78.6% daily Fib level at 109.75).

Last week’s sharp climb pulled the RSI oscillator into overbought waters, throwing light on resistance at 83.02 (active since 2015).

H4 timeframe:

Friday’s upside momentum backed a break of resistance at 108.09, with follow-through action testing resistance at 108.56—a previous Quasimodo support—before retreating to retest 108.09 as support.

External areas to be mindful of this week are demand at 107.81/108.01—a decision point to break 108.09—and resistance at 108.81 (another Quasimodo support-turned resistance level).

H1 timeframe:

108.50 made a show following Friday’s upbeat non-farm payrolls release, which, as you can see, proved effective resistance into the close.

Downstream, technical eyes are likely drawn to 108, particularly at the point the big figure converges with an alternative trendline support, etched from the low 105.06. Upstream north of 108.50, we appear to have a relatively clear path towards the 109 figure.

Momentum, as measured by the RSI oscillator, recently formed a double-top pattern at resistance from 86.43 with subsequent downside movement exiting overbought territory. The indicator shows familiar support nearby around 42.00/51.21 (it’s common to see support form around this zone in a trending market).

Observed levels:

Long term:

With daily Fib resistance around 108.28 failing to deliver much bearish activity Friday, additional upside may unfold this week until reaching daily Quasimodo resistance at 109.38 (merges with the monthly chart’s descending resistance).

Short term:

Demand at 107.81/108.01 and support at 108.09 deserve notice on the H4 scale this week. Interestingly, the 108 figure applied to the H1 chart forms part of the upper side of H4 demand, therefore a retracement into this psychological area could be on the menu (traders will likely be closely watching the point in which 108 intersects with H1 alternative trendline support—green).

Weekly Technical Market Insight: 8th – 12th March 2021, 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.

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.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Following Thursday’s bearish outside reversal, the week’s end witnessed GBP/USD manoeuvre to within striking distance of support at 1.3755, a level sharing chart space with trendline support, drawn from the low 1.1409.

Any sustained move south of 1.3755 this week places Quasimodo support at 1.3609 in the line of fire.

With reference to the RSI indicator, the value dipped a toe beneath the 50.00 centreline Friday and shook hands with support made up between 46.21 and 49.16. Support forming around the 40.00/50.00 range in trending environments is common.

H4 timeframe:

1.3761/1.3789 demand entered the fray Friday, greeting price action following the US non-farm payrolls release. As you can see, buyers and sellers ended the week squaring off between the aforesaid demand and 1.3852 resistance.

An interesting demand zone also resides just beneath current demand at 1.3730/1.3749. Although relatively small in range, this area is where a decision was likely made to break above 1.3757 tops. And with price leaving the demand unchallenged following the formation of the zone’s base, buyers may be drawn to this area.

H1 timeframe:

1.38 came forward on Friday—a psychological support reinforced by Quasimodo support at 1.3786 and an RSI oversold signal—and prompted a 1.3861/1.3847 retest (two previous Quasimodo support levels shadowed by a 38.2% Fib level at 1.3869).

Note that the H1 Quasimodo support at 1.3786 is housed within H4 demand at 1.3761/1.3789, while beneath the Quasimodo formation we have nearby H4 demand at 1.3730/1.3749 in sight.

In addition to the recent RSI oversold signal, the research team notes trendline resistance hovering around the 50.00 area.

Observed levels:

Long term:

On the bigger picture, as noted in previous writing, monthly suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

Short term:

With daily support from 1.3755 (and merging daily trendline support) wedged between the two H4 demand areas at 1.3730/1.3749 and 1.3761/1.3789, this is a location buyers may flock to early week. This, then, may call for a test of the 1.3750 support based on the H1 scale, a move potentially triggering a bullish theme.

Weekly Technical Market Insight: 8th – 12th March 2021, FP Markets

 


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