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The Pattern Pulse—21 December 2023

The Pattern Pulse—21 December 2023, FP Markets

Your weekly outlook of technical patterns and structure.

The Research Team scans the financial markets for you, highlighting clear and actionable technical structures.

Forex: Dollar Index Chalking up a Potential Pennant Formation

Daily Timeframe –

Since early October, price movement on the US Dollar Index (a geometric-average weighted value of the USD against six major international currencies) has demonstrated a clear-cut downside bias. The downward trend is shown through a series of lower lows and lower highs and, of course, price action trading south of its 50-day and 200-day SMAs (104.57 and 103.47, respectively).

Having seen recent action echo a lacklustre tone (liquidity generally thins leading up to the festive period), you will note that price has been pencilling in a potential bearish pennant formation between 101.77 and 102.63. With price now approaching the apex of the pattern, a breakout could soon unfold. A breakout to the downside, as many will expect given it is a bearish continuation pattern, may open the door for the greenback to challenge support between 101.44 and 101.77.

The Pattern Pulse—21 December 2023, FP MarketsCommodities: WTI Oil Testing the Mettle of Channel Resistance

Daily Timeframe –

Price movement on the daily timeframe of WTI oil established what many technicians would recognise as a shooting star bearish candlestick formation yesterday at the underside of channel resistance taken from the high of $94.99. However, while this combination is considered a potential bearish cue, alongside the unit trending southbound since late September, price action failed to test the lower channel support (extended from the low of $81.56) prior to pulling back, indicating buyers are growing in strength and could lead to a break higher materialising in the direction of resistance coming in at $79.19.

The Pattern Pulse—21 December 2023, FP MarketsEquities: S&P 500 Delivering Bearish Candlestick Patterns!

Major US equity indices remain in a bullish phase, underpinned by a potential Fed pivot, with the S&P 500 coming within a stone’s throw of the all-time high at 4,818 yesterday.

Nevertheless, while many believed the index would likely make contact with said high this week, risk sentiment turned sour during US trading on Wednesday and delivered a large bearish outside reversal pattern on the daily scale that pushed the unit back under resistance at 4,725, and the weekly timeframe is gearing up to end the week in the shape of a bearish shooting star candlestick pattern off resistance at 4,743.

Ultimately, US equity indices are likely to remain bid in the medium term, though a correction back to the combination of weekly and daily support between 4,595 and 4,653, respectively, could be on the table. Connecting with the aforesaid area, therefore, may pull in dip buyers.

The Pattern Pulse—21 December 2023, FP MarketsCryptocurrency: BTC/USD Higher Levels Targeted

Against the US dollar, the price of Bitcoin remains on the front foot and is likely to remain so, as per chart studies.

According to the BTC/USD weekly and daily charts, an uptrend remains in play.

The daily chart also shows price action recently recoiled from support at $41,500 and is now testing the grip of neighbouring resistance from $43,828. Having seen price action on the weekly timeframe exhibits scope to approach weekly resistance between $48,565 and $46,112, overthrowing current resistance on the daily timeframe to challenge year-to-date tops of $45,000 and daily resistance at $45,525 could be seen (the latter resides just south of weekly resistance).

The Pattern Pulse—21 December 2023, FP MarketsCharts: Trading View

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