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Technical View for 27th October: ECB Rate Decision Eyed

Technical View for 27th October: ECB Rate Decision Eyed, FP Markets

Charts: Trading View

EUR/USD:

Up 2.2% on the week, Europe’s single currency has been powering higher against its US counterpart, adding more than 1.0% on Wednesday and reclaiming territory north of parity ($1.00). As we can see from the H1 chart, price engulfed parity to the upside and subsequently retested the level as support heading into US trading hours. Overhead, prime resistance is now being tested at $1.0099-1.0070, sheltered just south of $1.01.

Across the page on the bigger picture, scope for further buying is visible according to the weekly chart, eyeing resistance coming in at $1.0298. However, this bout of buying may only be a pullback within the wider downtrend, which has been in play since early 2021. From the daily timeframe, on the other hand, resistance is within striking distance at $1.0090, a Quasimodo formation. This follows Tuesday’s break of trendline resistance, extended from the high of $1.1495.

Technical Expectation:

Considering daily Quasimodo resistance is calling for attention at $1.0090, sellers are perhaps gearing up to put in an appearance from within the upper boundary of H1 prime resistance from $1.0099-1.0070. We may even witness a test of $1.01.

Technical View for 27th October: ECB Rate Decision Eyed, FP MarketsAUD/USD:

It was another solid day of trading for the Australian dollar on Wednesday, climbing 1.6% into the close of European trading. According to the weekly timeframe, further outperformance could materialise as far north as resistance coming in at $0.6673 after the AUD/USD currency pair bottomed just ahead of weekly demand at $0.5975-0.6166. Though do bear in mind that we’re still working within a decisive downtrend, active since February 2021. Therefore, like the EUR/USD, this may be another pullback when you take context into account.

Supporting the idea of further buying, daily price recently overthrew resistance from $0.6401 which, as you can see, is now a support base. The next area of resistance on the daily scale can be seen at $0.6678, a few pips north of the weekly resistance mentioned above at $0.6673. You will also notice that the relative strength index (RSI) formed bullish divergence and recently crossed above the 50.00 centreline: positive momentum.

From the H1 timeframe, we also have a Quasimodo support seen at $0.6465 with Quasimodo resistance seen above at $0.6526 which is joined by a 1.272% Fibonacci projection at $0.6532 (an ‘alternate’ AB=CD bearish formation).

Technical Expectation:

From the bigger picture, given we crossed above daily resistance at $0.6401 and have room to approach weekly and daily resistances at $0.6673 and $0.6678, respectively, buyers have the upper hand for the time being. This implies a test of H1 Quasimodo support from $0.6465 could be a platform buyers welcome, targeting a test (and potential engulf) of H1 Quasimodo resistance at $0.6526.

Technical View for 27th October: ECB Rate Decision Eyed, FP MarketsUSD/JPY:

Broad USD softness observed a second successive day of losses for USD/JPY on Wednesday. This follows a near-to-the-pip test of weekly Quasimodo resistance at ¥151.90. Based on the weekly scale, support is not expected until around ¥137.23, though the daily chart reveals possible support at ¥144.95. A break south of here would then likely see the currency pair drop in on daily Quasimodo support from ¥141.60.

In terms of trend direction, price has been higher since 2021, meaning the latest fall could merely be another correction within the uptrend. And as for the daily chart’s relative strength index (RSI), you will see that the indicator’s value dropped below a double-top pattern’s (79.94) neckline at 56.73, suggesting a possible test of the 50.00 centreline.

Short-term technical action from the H1 timeframe shows price action dropped through ¥147 and is now poised to shake hands with ¥146 and neighbouring support at ¥145.90.

Technical Expectation:

Although the trend remains resolutely north, ¥146 bids are likely to be thin, in light of weak technical confluence supporting the level. As a result, a test of ¥146 could be short-lived. A breakout lower, therefore, may entice follow-through selling towards the ¥145 region which aligns closely with daily support mentioned above at ¥144.95.

Technical View for 27th October: ECB Rate Decision 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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