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Weekly Technical Market Insight: 26th – 30th April 2021

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets

Chart Source: Trading View

US Dollar Index (Daily Timeframe):

Shedding 0.9 percent, and delivering a third successive weekly loss, the US dollar, according to the US dollar index (ticker: DXY), continues to reflect a bearish climate.

91.00 support, as you can see, made an entrance early week, though came under fire after price failed to find acceptance north of resistance at 91.36, a prior Quasimodo support base. The absence of bullish intent from 91.00 unchains the possibility of additional selling, perhaps taking aim at support drawn from 90.00.

Chartists will note the DXY nudged beneath the 200-day simple moving average in early April, currently circling 92.08. As many traders will acknowledge, price action crossing below a moving average is generally interpreted as a bearish signal.

As aired in previous writing, trend studies have exhibited a downside bias since levelling off in March 2020, shaped by way of lower lows and lower highs (black arrows). Interestingly, the 93.43 31st March peak echoes the early stages of a bearish wave within the downtrend (dashed black arrow).

The RSI oscillator voyaged through 41.24 support in recent trading (now potential resistance), movement unearthing the chance of further downside momentum this week. Consequently, entering oversold space could be in store, targeting support at 21.36.

  • In view of the clear downtrend, as well as price crossing under the 200-day simple moving average early April, and the unit elbowing beneath 91.00 support Friday, this emphasises increased selling interest may materialise over the coming week, with traders eyeing 90.00 support.

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement slide, demand at 1.1857-1.1352 made an entrance and has sparked a bullish revival in April, up 3.1 percent MTD.

Erasing March losses, recent upside throws light on the possibility of fresh 2021 peaks, followed by a test of ascending resistance (prior support – 1.1641).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

A soft US dollar (DXY < 91.00) underpinned a healthy EUR/USD bid Friday. This, together with technical buying out of monthly demand from 1.1857-1.1352, elevated the currency pair above resistance at 1.2058 and shined the technical spotlight on Quasimodo resistance at 1.2169 this week, followed by another Quasimodo formation at 1.2278.

Measured by the RSI oscillator, momentum remains to the upside. Overbought status, however, could be tested this week, in particular resistance at 80.39.

Trend studies reveal EUR/USD has been trending higher since early 2020 (many analysts will refer to this as a primary trend).

H4 timeframe:

Leaving support at 1.1990 unchallenged, EUR/USD bulls wrapped up the week testing the resolve of sellers within supply at 1.2101-1.2059.

With the said supply zone failing to generate enough bearish interest to test 1.1990, this indicates buyers could dethrone supply this week and attempt an approach to Quasimodo resistance at 1.2177 (fixed above daily Quasimodo resistance at 1.2169).

H1 timeframe:

Traders entered the US session strongly on Friday, confronting Quasimodo resistance at 1.2070 (now labelled support) which established demand at 1.2049-1.2061.

Analysis also reveals psychological resistance at 1.21 was subsequently tested, which happens to represent the upper limit of H4 supply mentioned above at 1.2101-1.2059. North of 1.21 on the H1 scale, resistance stands at 1.2138.

As evident from the RSI oscillator, upside momentum could slow as we enter overbought space and target resistance from 78.97 (active since mid-January).

Observed levels:

Long term:

Monthly demand at 1.1857-1.1352 supports buying, with daily price confirming a bullish tone on Friday after crossing resistance parked at 1.2058.

Short term:

A breakout scenario above 1.21 (targeting H1 resistance at 1.2138) could emerge early week, action likely to interest buyers due to higher timeframe structure.

Another possible scenario, of course, is a retest of support at 1.2070/demand at 1.2049-1.2061. Dip-buyers may welcome the aforementioned areas, having seen H4 supply at 1.2101-1.2059 offering a weak vibe right now.

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, AUD/USD has witnessed buyers and sellers square off south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082.

Should a bearish move unfold over the coming months, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

With respect to trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Since mid-April, bids/offers have been even beneath resistance parked at 0.7817. Upstream, the technical radar focuses on supply at 0.8045-0.7985.

Interest to the downside elbows February’s low at 0.7563 into the spotlight, with subsequent selling underscoring demand at 0.7453-0.7384 (prior supply) and the 200-day simple moving average at 0.7439.

The technical view from the RSI oscillator reveals momentum maintained position north of the 50.00 centreline last week, underlining a possible continuation higher to test channel resistance, extended from the high 80.12.

H4 timeframe:

Upbeat risk sentiment, movement weighing on the USD, lifted AUD/USD higher on Friday despite technical action clipping the lower boundary of 0.7696-0.7715 demand late Thursday.

Continued upside this week throws Quasimodo resistance at 0.7800 in the mix, though should bids thin out, this places a whipsaw through 0.7696-0.7715 into a Fib cluster formed between 0.7667 and 0.7679 on the table (dovetails with trendline support, taken from the low 0.7531).

H1 timeframe:

For those who read Friday’s technical briefing, you may recall the following (italics):

The technical landscape on the H1 scale shows price action carved out a dragonfly doji candlestick (typically viewed as a bullish candle at lows), a formation which pierced through 0.77 (likely tripping stops beneath the round number) and tapped the upper side of demand at 0.7679-0.7695. Note the said demand area represents the decision point to break above 0.77 in mid-April.

Any upside flow from 0.77 could take aim at the 100-period simple moving average at 0.7745, closely shadowed by supply at 0.7783-0.7760. In conjunction with H1 price action, the RSI shows signs of bullish divergence ahead of oversold territory.

As evident from the chart, Friday’s bullish narrative pulled the currency pair north of 0.77 and, despite bearish interest forming around the underside of the 100-period simple moving average, overthrew the SMA to test supply at 0.7783-0.7760. Note the supply test followed up with a retest of the SMA into the close.

Observed levels:

Long term:

The daily timeframe highlights resistance at 0.7817 as a key base this week. Technical elements also shine light on a possible bearish phase, targeting February’s low at 0.7563.

Short term:

H1 crossing above the 100-period simple moving average at 0.7742 echoes a short-term bullish cue.

H1 supply at 0.7783-0.7760, however, could attract further selling, though given Thursday’s decline from the area, offers could be thin here. As such, technical studies point to the 0.78 figure this week as possible resistance. Not only does this base represent a H4 Quasimodo formation, daily resistance is also plotted just above it at 0.7817.

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, currently down 2.5 percent, is seen attempting to climb back through the breached descending resistance.

Daily timeframe:

Over the course of the week, the technical research team called attention to demand at 107.58-106.85 (prior supply), an area sharing chart space with trendline support, etched from the low 102.59, and a 38.2% Fib level at 107.73. As you can see, Friday spiked into the aforesaid technical confluence and formed an end-of-week recovery tail.

In addition to the above, RSI action is seen hovering around 36.00, threatening to test oversold space—in particular support at 28.19.

Trend studies show the unit has been trending higher since the beginning of 2021.

H4 timeframe:

For those who read Friday’s technical briefing you will note the following (italics):

Should the pair explore lower levels and test H4 support at 107.44, this barrier packs more of a bullish punch, having seen the base align with daily demand at 107.58-106.85 (and associated technical confluence on the daily scale).

As seen from the chart, price whipsawed through demand at 107.81-108.01—clearing out any buyers from the area—and came within a handful of pips of testing support at 107.44 (and the 1.272% Fib projection at 107.41), before recoiling higher into the close.

H1 timeframe:

Aided by an RSI oversold signal—just north of RSI support at 18.76—Friday had price action rebound from demand at 107.52-107.65 (despite a modest breach) and crossed swords with 108 resistance. Chartists will note the psychological resistance is accompanied by trendline resistance, etched from the high 110.55, and the 100-period simple moving average (circling around 108.06).

Should early week push north of 108, supply areas at 108.57-108.46 and 108.60-108.71 are in sight.

Assessing the RSI shows traders that momentum attempted to find grip above the 50.00 centreline, though after price action tested the 108 neighbourhood, momentum levelled off and guided the RSI marginally south of 50.00.

Observed levels:

Long term:

The technical confluence displayed on the daily timeframe around demand at 107.58-106.85 has interested buyers, which may encourage further upside this week.

The above is bolstered by the fact the USD/JPY has explored higher terrain since the beginning of the year.

Short term:

Short-term traders will likely hone in on the 108 figure early week. While 108 (and associated confluence) could trigger bearish sentiment, the reaction from daily demand may squeeze sellers out of the market here.

A 108 break, therefore, would likely be interpreted as a healthy breakout signal, targeting at least the H1 supply zones at 108.57-108.46 and 108.60-108.71.

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower would generally be viewed as a bearish signal.

April trades higher by 0.7 percent.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Partly modified from previous analysis.

The British pound staged a modest comeback against the US dollar Friday, aided by upbeat British retail sales in March (5.4 percent versus 1.5 percent consensus) and USD weakness.

Technical structure to be mindful of this week is trendline support-turned resistance, taken from the low 1.1409, positioned ahead of Quasimodo resistance at 1.4250. Lower on the curve, 1.3670 bottoms are visible, arranged north of Quasimodo support at 1.3609 and associated Fibonacci confluence (commonly referred to as a Fib cluster).

As for trend, GBP/USD has been trending higher since early 2020.

Upside momentum slowed at the beginning of last week, with the RSI dipping south of overbought space and testing the 50.00ish range.

H4 timeframe:

1.3809-1.3832 demand made a show in the latter part of last week, an area boasting strong upside momentum from its base.

1.3919 is seen calling for attention to the upside as resistance this week, while snapping under 1.3809-1.3832 throws a Quasimodo formation at 1.3570 in the pot as possible support.

H1 timeframe:

Friday, as you can see, recoiled from descending support, drawn from the peak 1.4001, and tested resistance between 1.3901 and 1.3892 (made up of a round number at 1.39 and 61.8%/38.2% Fib levels). Note that we also have supply resting at 1.3919-1.3904, an area uniting with a 100-period simple moving average.

Below descending support, the 1.38 figure is on the radar. This level deserves notice due to its connection with a 61.8% Fib level at 1.3797 and a 1.618% Fib expansion at 1.3806, along with a trendline support, etched from the low 1.3668.

RSI resistance remains a key level at 54.88 to be aware of early week, delivering key support/resistance since mid-April.

Observed levels:

Long term:

Despite recent hesitation within February’s range, the monthly timeframe shows a trendline resistance breach occurred late 2020. Should the 1.4376 top be engulfed, longer-term buying may become a key theme in this market.

Daily areas to watch this week are Quasimodo support at 1.3609 and trendline support-turned resistance, drawn from the low 1.1409.

Short term:

1.3901-1.3892 resistance on the H1 is clearly of interest, yet traders are urged to pencil in the possibility of a whipsaw through this area (clearing a portion of 1.39 sellers out) into nearby supply at 1.3919-1.3904.

Similarly, while H1 descending support garnered the attention of buyers late last week, a whipsaw through this base could be in store to test 1.38. Not only is 1.38 joined with interesting Fib studies (1.618 is known as the Golden Ratio; the inverse to this figure is 0.618), trendline support is also seen circling the area. Another consideration is that a whipsaw through the H1 descending support to 1.38 may trip stops below H4 demand at 1.3809-1.3832, therefore perhaps providing 1.38 bids with fuel.

Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets


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  • Weekly Technical Market Insight: 26th – 30th April 2021, FP Markets
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