Charts: Trading View
(Italics: Previous Analysis)
Europe’s single currency echoed a somewhat lacklustre vibe against its US counterpart on Tuesday, consolidating around Monday’s low of $1.0154.
The weekly timeframe shows price action rejecting resistance at $1.0298, in a market decisively trending south since 2021. Many chartists will label this movement a primary bear trend, with pullbacks few and far between. Combine this with daily flow topping a whisker south of resistance at $1.0377 (and intersecting trendline resistance, drawn from the high $1.1495), and scope to explore as far south as the weekly timeframe’s 1.272% Fibonacci projection at $0.9925 and daily support from $0.9919, EUR/USD remains a bearish market on the bigger picture. In terms of where I stand on the daily chart’s relative strength index (RSI), we are comfortably south of the 50.00 centreline (negative momentum), further supporting softening demand for the euro.
The H4 timeframe, in support of the downside bias, shows price tunnelled through trendline support, drawn from the low $0.9952, and shook hands with support at $1.0125. While the latter has stood its ground, a breach shines the technical spotlight on Quasimodo support from $0.9998. A closer reading of price action on the H1 chart demonstrates the currency pair recently connected with trendline resistance (extended from the high $1.0364), missing $1.02 by a hair. Downside support falls in at $1.0108 (Quasimodo formation) and $1.01.
The clear downtrend, the weekly resistance at $1.0298, the daily resistance at $1.0377, the daily trendline resistance, the break of H4 trendline support, and the H1 currently testing trendline resistance indicates sellers have the upper hand.
As a result, sellers rupturing H4 support at $1.0125 could be in offing, targeting at least the H1 Quasimodo support at $1.0108 and the $1.01 figure.
The Australian dollar lost ground versus the US dollar for a second consecutive session on Tuesday, comfortably cementing its position beneath the 200-day simple moving average at $0.7145 on the daily timeframe (blending with a 50% retracement at $0.7167 and a deep 78.6% Fibonacci retracement at $0.7156). While I do see room for the currency pair to extend losses to daily support at $0.6901, in a market trending lower since early 2021, the weekly timeframe’s price action is testing support from $0.6996 following last week’s break.
Across the page, H4 has buyers and sellers squaring off around the underside of a resistance area at $0.7062-0.7031. If we continue to defend the noted area, the technical pendulum swings in favour of reaching supply-turned demand at $0.6901-0.6862. Nevertheless, in order to achieve lower prices on the H4, this involves the H1 dropping under $0.70, a move possibly aided by neighbouring H1 resistance at $0.7032. 10th August low from $0.6947 calls for attention beneath $0.70, and a break re-opens the risk of a return to $0.69.
Weekly support from $0.6996 will be a concern for sellers in this market, as will the $0.70 figure delivering possible support on the H1.
Consequently, sellers—backed by room to move lower on the daily and H4 timeframes—will likely want to see a H1 close under $0.70 before committing, with many perhaps taking aim at the $0.6947 10th August low.
USD/JPY bulls came out swinging on Tuesday, underpinned amid healthy US Treasury yields.
According to the weekly and daily timeframes, technical evidence suggests further buying. The daily timeframe responded well to supply-turned demand at ¥131.93-131.10, with a decisive push likely to throw light on Quasimodo support-turned resistance at ¥139.55. Note that ¥131.93-131.10 is an area that is glued to the upper boundary of a weekly decision point coming in at ¥126.40-131.30 with weekly resistance plotted at ¥137.23, set below the noted daily resistance.
As I said in previous writing, until the weekly decision point at ¥126.40-131.30 is overthrown, I do not expect to see much call for USD/JPY shorts. A break of the daily timeframe’s supply-turned demand at ¥131.93-131.10, however, would likely be a talking point for technical analysts as limited support is observed until reaching support at ¥125.54 (a weekly support level positioned just south of the current weekly decision point). Therefore, ¥131.93-131.10 is likely to be monitored closely.
But for now, buyers remain in the driving seat.
As for the H4 timeframe, the 50% retracement ratio at ¥134.90 is overhead; a break places an AB=CD bearish pattern in view at ¥136.95 (a 100% Fibonacci projection), accompanied by a 78.6% Fibonacci retracement at ¥137.48 and an ascending support-turned resistance, taken from the low ¥134.27. Nonetheless, on the H1 timeframe, after running above ¥134, we see the unit testing prime resistance at ¥134.88-134.33—in particular a Quasimodo support-turned resistance at ¥134.61.
H1 prime resistance from ¥134.88-134.33 is likely to interest sellers, particularly if the currency pair moves back under ¥134.
With that being said, the higher timeframes (weekly and daily charts) show room to move higher, therefore sellers in this market will likely adopt strict trade-management rules should they pull the trigger.
Ahead of today’s UK inflation data, sterling ended Tuesday modestly higher versus the US dollar.
Technically, I see limited change on the bigger picture (weekly and daily charts), therefore, here’s where I left things in recent writing (italics):
Price remains testing long-term weekly support at $1.1958. This is a level that has had a question mark on it as its positioned in a market trending lower since 2021. Interest to the upside casts light on weekly resistance at $1.2719.
The weekly support level is reinforced on the daily timeframe after daily price retested (and held) trendline resistance-turned support, taken from the high $1.3639, with the chart also demonstrating space to rally until reaching a decision point at $1.2605-1.2465.
Right now, therefore, higher timeframe structure is in favour of buyers.
The H4 timeframe’s price action has the currency pair rebounding from the H4 inverted head and shoulder’s pattern ($1.1876; $1.1760; $1.1890) neckline (from the high $1.2056). This locates the pattern’s take-profit level from $1.2335 back in the frame.
From the H1 timeframe, we can see the currency pair came within the range of $1.20 (and a trendline resistance-turned support, taken from the high $1.2293). Venturing above $1.21 is likely to see the pair attempt to target $1.22.
According to the four charts analysed, buyers are likely to remain in command.
A decisive H1 close above $1.21 is likely enough to tempt breakout buying towards $1.22, in light of the space seen to move north on the weekly, daily, and H4 timeframes.
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