Your weekly outlook of technical patterns and structure.

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

Forex: Dollar Index Targeting Support

Daily Timeframe –

Following yesterday’s FOMC event—rates were left unchanged at 5.25%-5.50%, and the Fed’s dot plot showed officials still project three rate cuts this year—price action on the daily timeframe of the US Dollar Index ended Wednesday in the shape of a bearish engulfing candle off resistance at 104.15. Interestingly, the move also observed price close under neighbouring support at 103.62 (now marked resistance), as well as the 200-day and 50-day simple moving averages (SMA) at 103.70 and 103.64, respectively.

What does this mean from a technical standpoint?

Although the longer-term trend continues to face north, the daily chart is in the early stages of a downtrend (lower lows/highs). This, together with price consuming support at 103.62 (and retesting the level as resistance in recent trading), implies further underperformance could be seen for the USD towards support at 102.92. Further to this, any meaningful break of this base unearths support between 101.44/77.

Commodities: Dip-Buying from Previous All-Time High on XAU/USD

You may recall from the previous Pattern Pulse that the Research Team directed the technical spotlight on the previous all-time high of $2,147.50 on XAU/USD as a possible barrier of support.

In fact, the Team noted the following (italics):

Following the price of spot gold (XAU/USD) clocking an all-time high of $2,195 last week, the yellow metal has chalked up a moderate correction. Not only has the correction begun forming the shape of an AB=CD bullish pattern, terminating at $2,135 (denoted by a 100% projection ratio), but it has also thrown light back on the previous all-time high of $2,147.50 as a possible barrier of support.

As can be seen from the gold charts, price action, in the form of an AB=CD bullish pattern, did indeed retest $2,147.50 as support (seen clearly on the daily chart) and rallied to the upside on the back of the dovish FOMC release yesterday. Follow-through buying is also being seen today, refreshing record highs of $2,223. So, with buyers still clearly at the wheel, a retest of the previous all-time high at $2,195 could be on the table (see daily chart), a move that might pull in dip-buyers once again.

Equities: S&P 500 Upside Momentum to Fade According to the RSI

As reported in a recent analysis, there is no denying that S&P 500 buyers remain in the driving seat (recently clocking an all-time high of 5,226), though for how long?

The Relative Strength Index (RSI) is a popular momentum indicator used by traders and investors to gauge the rate of change in price movement. Current analysis shows upside momentum is softening.

From the monthly chart’s RSI, we can see the indicator edging closer to its overbought territory and signalling the potential for longer-term negative divergence. On the weekly chart, the RSI is fast approaching indicator resistance at 79.04, a level not seen since early 2020. Finally, on the daily timeframe’s RSI, we also have a clear negative divergence in play.

While all three timeframes signal a possible price correction, we must take into account that the RSI indicator can remain in overbought terrain for prolonged periods in trending markets.

Cryptocurrency: BTC/USD Dip-Buying?

Daily Timeframe –

As illustrated from the daily chart of BTC/USD, we’re working with a somewhat straightforward market at present.

Following the major crypto pairing’s all-time high of $73,845 last week, a correction has unfolded and appears to have discovered support off $64,000 (nestled just north of the 38.2% Fibonacci retracement ratio at $60,393). The rebound from this area, coupled with the clear-cut uptrend, may be enough to attract dip-buyers to refresh all-time highs.

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