1. Home
  2. »
  3. Technical Analysis
  4. »
  5. Technical View for 19th...

Technical View for 19th October: UK, Eurozone and Canada Inflation Eyed

Technical View for 19th October: UK, Eurozone and Canada Inflation Eyed, FP Markets

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

EUR/USD buyers failed to extend Monday’s enthusiasm on Tuesday, ending European trading considerably off best levels. Tuesday’s action, evident from the H1 timeframe, is consequently enclosed with what’s referred to as a broadening pattern (low: $0.9835 high: $0.9852). This is not a particularly common pattern; risk and reward can also be somewhat skewed given the diverging ascending and descending lines and a breakout direction is often unclear. However, there’s always the possibility for a diamond top pattern here, forged from a combination of a broadening formation and a symmetrical triangle (sometimes referred to as a ‘coil’ pattern). Nearby the noted pattern structure is H1 prime resistance at $0.9884-0.9938 as well as a Quasimodo resistance-turned support from $0.9812 and the $0.98 figure.

Meanwhile, on the bigger picture, things remain unchanged in terms of my current technical drawings. Here’s a reminder of where I left the charts heading into Tuesday’s sessions (italics):

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 ($1.0562), 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, and a break of daily trendline resistance, drawn from the high $1.1495, would help confirm some bullish colour.

Technical Expectation:

A diamond top pattern formed on the H1 around the lower side of H1 prime resistance at $0.9884-0.9938 is likely enough to invite the attention of most technical-based traders. A bearish reaction from the prime resistance is bolstered on the back of the long-term downtrend and RSI daily resistance.

Though traders are also urged to pencil in the possibility of a push higher, which is largely due to the lack of resistance on the daily scale until trendline resistance around $0.9950ish (pinned just above the H1 prime resistance).

Technical View for 19th October: UK, Eurozone and Canada Inflation Eyed, FP MarketsAUD/USD:

The latest (somewhat dovish) RBA minutes were welcomed by the markets in early trading on Tuesday, which led to a pressured AUD against its US counterpart, drawing short-term price action back under the $0.63 psychological level to a low of $0.6277. Overall, though, similar to the EUR/USD, the AUD/USD concluded unmoved and is also offering up a H1 broadening formation (low: $0.6281 high: $0.6312). Intersecting with this infrequent pattern is the $0.63 psychological level, together with a surrounding H1 Quasimodo support-turned resistance at $0.6352 and $0.62.

I noted the following in recent writing on the weekly and daily timeframes (italics):

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.

Nearer to home, nonetheless, trendline resistance on the daily chart’s relative strength index (RSI), taken from the high 64.39, is currently being tested after rebounding from oversold territory and opening the door to possible bullish (positive) divergence. If the indicator’s value punctures trendline resistance, the 50.00 centreline is likely to be the next level of interest. But as of now, according to the RSI, this market is recording negative momentum.

Technical Expectation:

$0.64 on the H1 timeframe may remain a level of interest for traders considering its connection with daily resistance priced in at $0.6401. So, like Tuesday’s technical briefing, given the room to nudge higher on the daily timeframe until $0.6401, H1 resistances, including $0.63 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 19th October: UK, Eurozone and Canada Inflation Eyed, FP MarketsUSD/JPY:

Forging a tenth consecutive daily bullish candle on Tuesday, it’s fair to say that USD/JPY bulls remain on the offensive with ¥150 now on the radar. The H1 shorter-term timeframe shows price movement recently retested the breached ¥149 barrier as support and held into the closing bell. This followed an earlier spike lower to just beyond the H1 decision point at ¥148.26-148.47 to within a whisker of ¥148. Although momentum to the upside has noticeably slowed on the H1 scale since first shaking hands with the decision point, the absence of technical resistance overhead until the ¥150 neighbourhood places a favourable light on buyers at this time.

Over on the higher timeframes, the weekly timeframe continues to inch 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), the long-term trend favours further buying and a potential test of ¥149.66. Of technical note on the daily timeframe is also the relative strength index (RSI) on the doorstep of 8th September high at 79.94, closely shadowed by 87.52 resistance.

Technical Expectation:

The technical picture out of the USD/JPY is relatively straightforward and is decisively in favour of further buying. The retest of ¥149 on the H1 timeframe is likely to encourage additional upside, targeting weekly resistance pinned at ¥149.66 and the ¥150 round number on the H1 scale.

Technical View for 19th October: UK, Eurozone and Canada Inflation Eyed, FP MarketsGBP/USD:

Tuesday ended with the pound taking a moderate leg lower versus the US dollar, which, technically speaking, should not surprise.

I noted the following in Tuesday’s technical briefing (italics):

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.

As we can see, space between $1.1463/00 (marked yellow) served well as resistance in recent trading and, as anticipated, the currency pair dipped lower to cross swords with the $1.13 boundary on the H1 (the unit actually found a floor off the 61.8% Fibonacci retracement at $1.1263 [and the 1.272% Fibonacci projection at $1.1279]). The move, of course, was supported by the weekly timeframe’s decision point at $1.1751-1.1413 and resistance from $1.1410, together with neighbouring daily trendline resistance, extended from the high $1.3639, and the daily chart’s relative strength index (RSI) resistance zone at 60.00-50.00. Below $1.1263 on the H1 calls for a move into $1.12 to fill the weekend opening gap.

Technical Expectation:

The weekly timeframe’s technical resistances, the 19-month downtrend and the daily RSI resistance suggests any upside efforts drawn from $1.13 on the H1 scale could be short-lived, despite Fibonacci confluence nearby. As a result, a decisive H1 close fashioned beneath $1.13 might be enough to greet short-term breakout selling in the direction of at least $1.12.

Technical View for 19th October: UK, Eurozone and Canada Inflation Eyed, 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 19th October: UK, Eurozone and Canada Inflation Eyed, FP Markets
    • Articles
    • Views
    AUTHOR

    FP Markets

    FP Markets is an Australian regulated broker established in 2005 offering access to Derivatives across Forex, Indices, Commodities, Stocks & Cryptocurrencies on consistently tighter spreads in unparalleled trading conditions. FP Markets combines state-of-the-art technology with a huge selection of financial instruments to create a genuine broker destination for all types of traders.

    PROFILE