Charts: Trading View
(Italics: Previous Analysis)
As US banks remain closed in observance of Juneteenth National Independence Day, Europe’s shared currency welcomed a modest bid against its US counterpart on Monday. European Central Bank President Christine Lagarde, however, was on the microphone restating that the European Central Bank (ECB) intends to increase rates by 25 basis points in July, followed by a subsequent hike in September. Despite this, it barely moved the needle on EUR/USD.
The US Dollar Index remains at multi-decade pinnacles and demonstrates a healthy primary bull trend. This may weigh on any upside efforts for EUR/USD (also entrenched in a primary bear trend) in the medium term. Yet, for now, the currency pair has buyers and sellers squaring off from weekly support between $1.0298 and $1.0445 (Quasimodo resistance-turned support, 2nd January low , and a 100% Fibonacci projection [AB=CD harmonic bullish formation]). As noted in recent analysis, should weekly flow remain beneath Quasimodo support-turned resistance from $1.0778, and eventually dismantle current support (as the trend suggests), a 1.272% weekly Fibonacci projection could be targeted beneath parity at $0.9925.
Given the somewhat lacklustre performance on Monday, the daily timeframe’s (much like the weekly timeframe) technical framework remains unchanged. As a result, here’s a reminder of where we left the charts on Sunday:
Fusing with current weekly support is Quasimodo support on the daily timeframe from $1.0377, a base welcoming buyers in May and also last week. Shoring up current support is also the relative strength index (RSI) rebounding from trendline support, taken from the low 23.08. If the momentum gauge grips higher levels and ruptures the 50.00 centreline, this would be regarded as a positive sign for bulls (average gains exceeding average losses). Interestingly, upstream on the daily price chart singles out prime resistance at $1.0954-1.0864 and an ascending support-turned resistance, drawn from the low $1.0340.
For those who read the ‘Technical Expectation’ in Monday’s briefing, you may recall that short-term movement on the H1 echoed the possibility of a whipsaw north of $1.05 to test the area between H1 prime resistance at $1.0586-1.0551 and H1 resistance from $1.0533. As you can see, the run above $1.05 did indeed play out and $1.0533 greeted price action.
Aside from a possible pop higher to draw in additional sellers from H1 prime resistance at $1.0586-1.0551, current sellers are likely to take the wheel from here. Should sellers indeed emerge, and nudge things back under $1.05, H1 prime support at $1.0451-1.0475 is vulnerable, given its recent breach (17th June); therefore, $1.04 is likely to call for attention.
It was a rather muted session on Monday, presenting little to write home about. AUD bulls, nonetheless, did finish the session modestly on the front foot versus the US dollar, though remained within the lower limits of Friday’s range ($0.7051/0.6897). In terms of the higher timeframe technical picture, we remain unchanged for the time being. Focus is directed to weekly support between $0.6632 and $0.6764, strengthened by not only the long-term bearish trend, but also the daily timeframe’s lack of buying from Quasimodo support at $0.6901. Add this to the daily relative strength index (RSI) registering minus 50.00 values since early June, and the pendulum is swinging in favour of further losses.
In the latest weekly technical briefing, the research team underlined the following in their ‘Technical Expectation’:
Having noted the bearish primary trend, and the weekly timeframe pointing to lower levels, daily Quasimodo support from $0.6901 is in a vulnerable position. Prior to longer-term sellers taking command (assuming long-term sellers do make a push), H1 prime resistances between $0.7029-0.6984 and $0.6991-0.6958 may be tested which could function as a platform for short-term sellers to work with this week, targeting at least $0.69.
As evident from the H1 scale, price action chalked up a minor reversal out of the aforesaid prime resistances on Monday. Whether this is sufficient to encourage selling back to $0.69 remains to be seen, as we have to keep in mind that there is still a possibility of running stops above $0.70 which would haul price into the higher of the two prime resistances (yellow). In the event we do touch gloves with $0.69, however, H1 prime support at $0.6863-0.6892 is an area of interest, strategically positioned beneath $0.69 to welcome a stop-run underneath the psychological figure.
With sellers beginning to show some enthusiasm out of the H1 prime resistances ($0.7029-0.6984 and $0.6991-0.6958), the odds of navigating back to $0.69 has certainly increased.
As noted above, a $0.69 test is open to a whipsaw to H1 prime support from $0.6863-0.6892. Although the area is closely sharing space with daily Quasimodo support at $0.6901, any reaction from here could be limited largely due to the following:
- Lack of buying seen from $0.6901 in recent days and the mid-May reaction from the level failing to pull price above its 200-day simple moving average at $0.7238.
- The trend on the weekly, daily, H4 and recently the H1 favours sellers.
Unsurprisingly, USD/JPY entered a subdued phase on Monday, influenced by a thin economic calendar and, of course, US banks remaining shut due to a national bank holiday. With this being the case, today’s analysis echoes similar thoughts to Monday’s weekly technical briefing.
Price action on the weekly timeframe remains trading around 28th January high (2002) from ¥135.16, in a market recently touching a high of ¥135.59 (levels not visited since 1998) amidst a heavy-handed uptrend since 2021 (primary bull market). Also of relevance on the weekly chart is resistance at ¥136.04; support, for those watching lower, remains obvious at ¥125.54 (tucked under the ¥126.36 swing low [24th May]).
Supply-turned demand at ¥131.93-131.10 on the daily chart, as you can see, delivered a platform for dip-buyers to operate with at the tail end of last week. From this zone, price reclaimed a large portion of earlier losses. Weekly resistances also remain key on this timeframe this week between ¥136.04 and ¥135.16.
Moving across to the H4, apart from coming within a whisker of shaking hands with Quasimodo resistance-turned support at ¥131.25 last week, the current weekly resistances are also the main focus. Looking at the H1 chart, it’s clear the unit is still failing to find grip above ¥135. Limited support is seen south of ¥135, promoting a drop to ¥134. Below ¥134, prime support is at ¥132.96-133.31; above ¥135 the ¥136 figure demands attention in the event the ¥135.59 peak (14th June) gives way.
While the trend is healthy, weekly resistances between ¥136.04 and ¥135.16 are a concern for buyers and should not be overlooked. However, with that being said, the H1 continuing to fight back bearish forces south of ¥135 certainly increases the odds of a ¥135 upside breach. This, therefore, may entice buyers in the week, targeting ¥136, which happens to be positioned just under weekly resistance mentioned above at ¥136.04.
Although market movement was timid on Monday, sterling did manage to eke out a modest gain following comments from Catherine Mann—hawkish policymaker—stating that the BoE should raise rates faster than it has as GBP declines risked aggravating high UK inflation.
Technically speaking, the weekly, daily, and H4 timeframes are unchanged. The following text is taken from Monday’s weekly technical briefing:
In a market demonstrating a downside bias (primary bear trend) from February 2021 tops ($1.4241), as well as a long-term downtrend since late 2007 tops at $2.1161 (check monthly timeframe), an impressive lower shadow took shape on the weekly timeframe last week from Quasimodo support at $1.1958. This is not a hammer candlestick formation, though, of course, does invite bullish undertones given the size of the lower shadow. Overhead on the weekly timeframe casts light on resistance at $1.2719. A little closer to home, however, is daily trendline resistance, taken from the high $1.3639, with a break here pointing to daily Quasimodo support-turned resistance at $1.2762 (placed just above the weekly resistance at $1.2719). Finally on the bigger picture, the daily timeframe’s relative strength index (RSI) is testing resistance around the 50.00 centreline, following positive divergence.
Assessing the H4 chart shows sellers assumed command in the latter part of last week, decisively fading prime resistance at $1.2411-1.2359 (arranged below two Quasimodo support-turned resistance levels at $1.2478 and $1.2458). Support is now within reach at $1.2166, and a breach re-opens the risk of a return to prime support from $1.2027-1.2051.
Based on the H1 chart, $1.22 is in sight, as is $1.23 to the upside. $1.22 is bolstered by a 100% Fibonacci projection at $1.2192 and a trendline support, extended from the low $1.1933.
The reaction from weekly Quasimodo support at $1.1958 may encourage buying to draw price towards daily trendline resistance this week. It is here that sellers may decide to put on a show, in keeping with the overall downtrend.
The technical combination of structure (confluence) visible around $1.22 is likely to interest short-term buyers. A successful test of this area throws light on a run to $1.23. A break of $1.22, nevertheless, together with H1 trendline support, informs intraday players that a test of $1.21 could be seen. This also implies a test of daily trendline resistance is unlikely to occur.
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