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October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support

October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Prime support at $1.1473-1.1583 remains a focal point on the weekly chart, albeit absent of robust buying for now as price investigates levels not seen since July 2020.

Selling—action breaching current support—exposes a 61.8% Fibonacci retracement at $1.1281, organised above a 1.618% Fibonacci projection from $1.1228. Further downside is in line with current trend studies, showing the break of lows at $1.1612 (2020) is perhaps the early phase of a bearish trend change.

The flip side, of course, is we witness buyer interest emerge due to long-term sell-stops tripped beneath $1.1612 lows.

Daily timeframe:

Fibonacci support between $1.1420 and $1.1522, fastened to the lower side of the weekly timeframe’s prime support, is still an area of focus on the daily chart.

In terms of the relative strength index (RSI), the indicator is in the early stages of establishing what’s referred to as hidden bullish divergence, sited around oversold territory.

H4 timeframe:

Although EUR/USD overthrew resistance at $1.1563 Friday and subsequently delivered support, Monday exhibited hesitancy north of the level. Leaving channel resistance, pencilled in from the high $1.1846, and resistance at $1.1622 unchallenged, $1.1563 is being retested.

Medium-term sentiment facing southbound since June could pressure the currency pair south of support to take aim at channel support, drawn from the low $1.1770, and support at $1.1495 (early March 2020 high).

H1 timeframe:

The Fibonacci cluster formed between $1.1585 and $1.1581 has proved stubborn resistance since Friday’s US labour report. Familiar support, made up of a 1.272% projection at $1.1535 and a 1.618% Fibonacci expansion at 1.1541, is in range, closely shadowed by Quasimodo support at $1.1520 (formed from 21st July 2020).

In the event the pair climbs current resistance, $1.16 calls for attention, sharing space with Quasimodo resistance at $1.1605.

Observed Technical Levels:

Having noted space to manoeuvre lower on the daily timeframe to Fibonacci support between $1.1420 and $1.1522, together with H4 buyers reluctant to commit from support at $1.1563, this suggests follow-through selling to support on the H1, made up of a 1.272% projection at $1.1535 and a 1.618% Fibonacci expansion at 1.1541, closely shadowed by Quasimodo support at $1.1520 (formed from 21st July 2020).

Traders are urged to pencil in the possibility of buyers making a show from $1.1520, due to this level representing the upper boundary of support on the daily timeframe from $1.1522.

October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Buyers are beginning to emerge from prime support at $0.6968-0.7242. Prime resistance at $0.7849-0.7599 is a reasonable target, though failure to preserve gains opens up support at $0.6673.

Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, any decisive response from $0.6968-0.7242 might be the start of a dip-buying attempt to join the current trend.

Daily timeframe:

The Australian dollar was a clear outperformer Monday, with AUD/USD bulls clocking near-four-week tops at $0.7373. Decorating the chart with additional upside has prime resistance at $0.7506-0.7474 in sight.

Immediately above here, Quasimodo support-turned resistance is at $0.7621, which happens to join closely with the 200-day simple moving average at $0.7576, a 61.8% Fibonacci retracement at $0.7585 and a 100% Fibonacci projection at $0.7551.

Latest out of the relative strength index (RSI) reveals the value journeyed above the 50.00 centreline, informing traders that average gains exceed average losses: momentum is to the upside.

H4 timeframe:

As anticipated, resistance at $0.7317 was overturned and now represents possible support. This throws light on Quasimodo resistance at $0.7394, a level working closely with a 1.618% Fibonacci expansion at $0.7386 and a 1.272% Fibonacci projection at $0.7398.

H1 timeframe:

The $0.7379-0.7373 supply stepped into the spotlight in early US trading on Monday, consequently establishing a retracement. Support is found at $0.7339, secured north of prime support coming in from $0.7320-0.7327.

Additional areas of note are psychological levels $0.73 and $0.74.

Observed Technical Levels:

Price on the weekly timeframe rebounding from prime support at $0.6968-0.7242, coupled with an absence of resistance on the daily timeframe until $0.7506-0.7474, echoes a bullish environment. As a result, H1 support at $0.7339 could be a location buyers make an entrance from, though a whipsaw to prime support at $0.7320-0.7327 is equally possible. However, it should be noted that H4 support resides beneath the aforementioned area at $0.7317.

October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

Up 1.0 percent this week, supply at ¥113.81-112.22 is under considerable pressure, highlighting neighbouring resistance at ¥114.38. Note a break of the aforementioned supply will draw attention, given it being an area that capped downside since April 2019.

Sellers taking the wheel directs flow to familiar demand at ¥108.40-109.41—arranged north of descending resistance-turned support, taken from the high ¥118.61.

In terms of the immediate trend, we’ve been advancing since the beginning of this year.

Daily timeframe:

Prospects of the US Federal Reserve tapering, and rising US Treasury yields, elevated the US dollar higher against the Japanese yen on Monday.

Overwhelming supply at ¥112.66-112.07 fed price to prime resistance at ¥113.93-113.07, a large base sellers could attempt to fade upside momentum from (glued to the upper side of weekly supply).

From the relative strength index (RSI), following support emerging from 56.85 early last week, the indicator’s value is within reach of overbought space. However, with the trend facing northbound this year, overbought signals should be viewed in this context.

H4 timeframe:

Dethroning a number of key resistances on Monday has candle action on the doorstep of channel resistance, extended from the high ¥112.05, along with a 100% Fibonacci projection at ¥113.74 and a 1.618% Fibonacci expansion at ¥113.90.

Current support falls in at ¥112.63, should sellers put in an appearance.

H1 timeframe:

As evident from the H1 scale, US trading shook hands with Quasimodo resistance at ¥113.41, plotted under another Quasimodo resistance at ¥113.62.

Sellers are clearly aware of ¥113.41, action that is perhaps enough to spark a dip back to ¥113 and the decision point encasing the psychological level at ¥112.87-113.03.

Observed Technical Levels:

Technically, this market draws confluence from the H1 timeframe’s Quasimodo resistance at ¥113.62, a level associated with H4 channel resistance, extended from the high ¥112.05, along with a 100% Fibonacci projection at ¥113.74 and a 1.618% Fibonacci expansion at ¥113.90.

Note that the above resistances reside within the upper range of daily prime resistance at ¥113.93-113.07, as well as weekly supply at ¥113.81-112.22.

October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 continues to emphasise a distressed atmosphere after having its lower limits clipped at the end of September. In spite of recovery attempts last week, it’s important to note price also closed below a double-top pattern’s ($1.4241) neckline at $1.3669, signalling bears are looking to take charge.

The double-top pattern’s profit objective—measured by taking the distance between the highest peak to the neckline and extending this value lower from the neckline—sits around $1.3093. Conservative pattern sellers are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Daily timeframe:

The $1.3736-1.3659 decision point had its lower boundary tested again Monday.

Trendline resistance, taken from the high $1.4250, and the 200-day simple moving average at $1.3840 are seen above; below is the $1.3412 low (29th September), with subsequent selling highlighting a Fibonacci cluster (support) around $1.3164.

Respecting the aforementioned decision point helps confirm bearish intent within the weekly timeframe’s supply-turned demand at $1.3629-1.3456, and reinforces the idea of a successful double-top pattern.

Momentum studies, according to the relative strength index (RSI), shows momentum has been to the upside since connecting with oversold at the end of September. The 50.00 centreline is a key watch and could form resistance, aiding a bearish picture from the decision point underlined above at $1.3736-1.3659.

H4 timeframe:

Ascending resistance, projected from the low $1.3572, has withstood several upside challenges since 5th October. This throws support at $1.3570 in the line of fire.

Territory north shows resistance can be seen at $1.3750-1.3721, set just beneath a 100% Fibonacci projection at $1.3784. To the downside, trendline resistance-turned support, taken from the high $1.3913, could offer a floor once again if tested.

H1 timeframe:

Resistance at $1.3658, joined by a 50.00% retracement at $1.3662 and a 78.6% Fibonacci retracement at $1.3661, has proved persistent, welcoming sellers once again on Monday and delivering candles back to within touching distance of $1.36.

In the event of a $1.36 breach, consumed demand is seen between $1.3544 and $1.3584, informing traders a $1.36 break may lead to trendline support entering the fray, drawn from the low $1.3415.

Observed Technical Levels:                              

Noting the lower limit of the daily timeframe’s decision point at $1.3659 entering play, combined with H4 ascending resistance, as well as H1 resistance thrown in the mix at $1.3658, consuming $1.36 on the H1 is perhaps in the offing.

A reasonable downside target sub $1.36 is H1 trendline support, taken from the low $1.3415.

October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets

DISCLAIMER:

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • October 12th 2021: Dollar Index Approaching One-Year Tops; EUR/USD Eyes Daily Support, FP Markets
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