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Technical View for 18th October

Technical View for 18th October, FP Markets

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Monday was a rough session for the greenback; the US dollar index shed more than 1.0% amid upbeat risk sentiment. Consequently, Europe’s single currency welcomed a healthy bid on the back of the dollar’s decline. Downbeat US data also added to EUR/USD strength; general business conditions in the New York index fell eight points to -9.1, its third consecutive decline (Empire State Manufacturing Index).

Despite EUR/USD upside, a technical headwind remains: the trend. Pullbacks have been few and far between since 2021 as sellers have taken control. This is evident from the daily timeframe trading comfortably under its 200-day simple moving average ($1.0569), in addition to weekly price action chalking up a series of lower lows/highs since topping at $1.2350 in early 2021. Underpinning a technical bid, nevertheless, is weekly support from $0.9606. A break of daily trendline resistance, drawn from the high $1.1495, would help confirm some bullish colour.

Across the page on the H1 scale, things are a little simpler. Monday’s run north, inspired by a rebound from a decision point at $0.9711-0.9726, yanked the unit above $0.98 and Quasimodo resistance at $0.9812. Scope to explore higher is visible until reaching a key prime resistance at $0.9984-0.9938.

Technical Expectation:

Although the longer-term trend favours bears at the moment, short-term bulls (H1) could attempt to find some grip above $0.98 and target prime resistance from $0.9984-0.9938 (a retest of the $0.98 region, for example, could attract dip-buyers). It is here, however, that chart studies suggest sellers might materialise.

Technical View for 18th October, FP MarketsAUD/USD:

The safe-haven US dollar was propelled lower on Monday as risk sentiment markedly improved. Procyclical currencies such as the Canadian dollar, the New Zealand dollar and the Australian dollar benefitted from the session’s risk-on impulse.

The bullish showing, as evident from the weekly timeframe, unfolded a touch north of long-term demand from $0.5975-0.6166, a base that houses a 1.618% Fibonacci projection ratio at $0.6024 (an ‘alternate’ AB=CD pattern). Weekly resistance is not expected to appear until $0.6673, though daily resistance can be seen from $0.6401. This, therefore, will be a test for current bulls, in a market trending southbound since February 2021.

Against the backdrop of the higher timeframes, H1 price is shaking hands with $0.63, and the area just south of Quasimodo resistance coming in from $0.6313. To the upside, another resistance is present in the shape of a Quasimodo support-turned resistance from $0.6352, with a break drawing light to $0.64.

Technical Expectation:

The $0.64 figure on the H1 timeframe might interest short-term technical traders, in view of its close connection with daily resistance at $0.6401. As such, given the room to nudge higher on the daily timeframe until the said resistance, H1 resistances, including $0.63, $0.6313 and $0.6352 are unlikely to deliver much of a ceiling. With that, short-term breakout buyers are likely to engage north of the aforementioned levels until $0.64 (a platform that sellers could favour in light of the noted daily resistance and downtrend).

Technical View for 18th October, FP MarketsUSD/JPY:

Despite Monday’s risk-on environment, one that usually guides the USD/JPY higher, the currency pair meandered between gains and losses to end the session unmoved at Friday’s session top.

Price action on the weekly timeframe is inching closer to a 100% projection at ¥149.66 (an AB=CD bearish pattern) after forcefully clearing Quasimodo resistance at ¥146.79 (now a marked support level). Trending since the early months of 2021, consisting of parabolic upside in March and April (2022), long-term price action favours further buying and a potential test of ¥149.66.

On the H1 timeframe, price action recently visited a short-term decision point at ¥148.26-148.47 and formed a temporary technical floor. Above—beyond yesterday’s session high of ¥148.89—calls for ¥149, while removing the current decision point casts light towards ¥148.

Technical Expectation:

The H1 decision point at ¥148.26-148.47 is likely to maintain its position, persuading a test of ¥149. Technically, sellers are unlikely to put up much of a defence from ¥149, as traders will likely be looking at the weekly 100% projection of ¥149.66. Therefore, a phase of breakout buying above ¥149 should not surprise.

Technical View for 18th October, FP MarketsGBP/USD:

Sterling gained across the board on Monday, adding more than 200 pips against its US counterpart, or 2.0%, and gained 0.8% against the euro. The bullish setting was bolstered on the back of a mini-budget U-turn; newly appointed chancellor Jeremy Hunt tore apart a large portion of the tax changes proposed in the largely controversial mini-budget and noted that energy bill support is to come to an end in April.

GBP/USD strength, as can be seen from the weekly scale, has lifted the currency pair back to its resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413. You will note that daily price is also on the verge of crossing swords with trendline resistance (intersecting with the weekly areas), drawn from the high $1.3639.

Note that this market is also entrenched within a 20-month downtrend since topping at $1.4241 in February 2021. Those who follow the relative strength index (RSI) on the daily timeframe will note we’re retesting indicator resistance forged from 60.00 and 50.00 (resistance between these values is common in downtrends).

For those who read recent writing on the H1 chart, you may recall the following (itallics):

1.14 will be an interesting line for sellers if tested, complemented closely by the weekly decision point at $1.1751-1.1413 and $1.1410. H1 resistance from $1.1463 is also a possible level for bears, largely due to the connection forged with weekly resistances mentioned above.

Overall, despite the recent outperformance, chart studies suggest sellers are likely to materialise between $1.1463/00.

As you can see from the H1 timeframe, price is reacting from $1.1463/00. If we continue to move lower from current price, $1.13 is seen as logical support.

Technical Expectation:

Given the overall technical position, we are at heavyweight resistance, in a market that’s been trending lower since 2021. Hence, continued interest from sellers out of $1.1463/00 on the H1 in the direction of $1.13 could take shape.

Technical View for 18th October, FP MarketsDISCLAIMER:

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Technical View for 18th October, FP Markets
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