Charts: Trading View

(Italics: Previous Analysis)

EUR/USD:

Overall, it was a muted session for EUR/USD on Wednesday, despite hotter-than-anticipated US PPI data and Minutes from September’s FOMC meeting hitting the wires.

Things have been vague for the EUR/USD on the H1 timeframe since Monday, punishing short-term traders around the $0.97 figure (swarming the psychological level with bull and bear traps). Sub $0.97 uncovers Quasimodo support from $0.9655, and clearing this base could unlock the door for an approach towards $0.96 (and neighbouring Quasimodo support at $0.9584). Decisively reclaiming space above $0.97—unlikely, technically speaking—shifts attention to short-term peaks at $0.9745, followed by $0.98 and nearby Quasimodo resistance from $0.9812.

Higher up on the curve, not much has changed. Therefore, the following analysis on weekly and daily timeframes will echo thoughts drawn from Wednesday’s technical briefing (italics):

EUR/USD continues to reflect a bearish story in the medium term. Sellers, aside from a handful of paltry medium-term pullbacks, possess a secure grip on things at the moment. In addition to the daily timeframe’s price action sitting comfortable south of its 200-day simple moving average, currently fluctuating around $1.0593, the trend has been southbound since 2021 topped at $1.2350 (visible from the weekly timeframe). This, coupled with the daily relative strength index (RSI) rejecting the lower side of resistance at 60.00-50.00, highlights weakness at current higher timeframe supports: weekly support from $0.9606 and daily Quasimodo resistance-turned support at $0.9573.

Technical Expectation:

$0.97 is technically in a vulnerable position. Breakout sellers under the level, nonetheless, are unlikely to commit in view of the number of bear traps seen. For sellers to pull the trigger beneath the round number, a H1 close beneath $0.97 and a subsequent retest of the level as resistance is likely to be required, with bears then expected to try for at least H1 Quasimodo support from $0.9655.

AUD/USD:

Following the Minutes from September’s FOMC meeting, a modest AUD/USD bid emerged on Wednesday, conveniently aligning with support on the daily timeframe at $0.6263: Quasimodo formation.

In spite of the moderate outperformance, it remains an unfavourable environment for buyers. I communicated the following in Wednesday’s technical report in terms of the bigger picture (weekly and daily timeframes), which remains valid as we step into Thursday’s session (italics):

The weekly timeframe, clearly demonstrating a downside bias since mid-February (2021), appears poised to cross swords with a demand area from $0.5975-0.6166. For any harmonic traders reading, you may also acknowledge the ‘Alternate’ AB=CD pattern housed within the lower boundary of the demand, displayed by way of a 1.618% Fibonacci projection at $0.6024 (Golden Ratio [Phi]). For that reason, the weekly timeframe expresses a strong bearish vibe at the moment. However, before connecting with the aforesaid areas, Quasimodo support on the daily timeframe at $0.6263 could have something to say. With the daily chart’s relative strength index (RSI) roaming around oversold territory and threatening to form positive (regular) divergence, a recovery attempt from the daily level may continue to unfold (a combination of profit taking and [some might say] courageous counter-trend longs).

A closer inspection of price action on the H1 scale has price threatening to test the lower boundary of $0.63. What’s interesting from a technical perspective is the Quasimodo resistance sheltering the psychological level at $0.6314. Snapping north of $0.63, therefore, could provoke a stop-run, price movement that may witness sellers make a show from $0.6314. Clearance of the aforementioned level, nevertheless, calls for a run to Quasimodo support-turned resistance at $0.6352. Though if sellers, once again, assume control, as suggested by the weekly timeframe, tunnelling lower to attack $0.6240ish lows is likely to inspire further selling to the $0.62 region and place the currency pair within striking distance of weekly demand mentioned above at $0.5975-0.6166.

Technical Expectation:

Yes, daily Quasimodo support is in play at $0.6263. But is it enough for bulls?

Having noted scope to navigate south on the weekly timeframe to at least the decision point at $0.5975-0.6166, whipsawing above $0.63 into H1 Quasimodo resistance at $0.6314 could be enough to motivate a bearish scenario.

USD/JPY:

The USD/JPY regained consciousness on Wednesday, climbing to a fresh 24-year top, movement boosted by an increase in US producer prices; PPI data jumped 0.4% MoM versus the 0.2% forecasted print.

Weekly Quasimodo resistance at ¥146.79 put in an appearance, a level which if surrenders, favours an approach to a weekly 100% projection at ¥149.66 (an AB=CD bearish pattern). Policy divergence between the US Federal Reserve and the Bank of Japan is likely to continue to pressure the safe-haven Japanese yen, consequently reinforcing a USD/JPY bid. In the event of a retracement, nonetheless, higher timeframe support is located around a daily Quasimodo formation at ¥141.60, marked a touch under daily support from ¥139.55.

Across the page on the H1 timeframe, The European morning session (and early US) witnessed decent numbers, rallying for six consecutive hours. This followed a to-the-pip retest of ¥146 amid Asia, a psychological base accompanied closely by support from ¥145.90 and trendline support, extended from the low ¥143.53. As evident from the H1 scale, ¥147 now warrants attention.

Technical Expectation:

¥147 is likely to get messy.

While the trend favours buyers and supports a break north, weekly Quasimodo resistance at ¥146.79 should not be disregarded (drawn from as far back as June 1998). Thus, breakout buyers above ¥147 are likely to seek additional confirmation before pulling that trigger. A common method of filtering false breakout signals, of course, is to simply wait for a (in this case) H1 close above the big figure that’s followed up with a retest that holds, preferably in the shape of a bullish (Japanese) candlestick pattern.

GBP/USD:

It was a good day for sterling on Wednesday, snapping a five-day losing streak. GBP/USD added 1.2% on the day, but this in no way does anything to the current technical bearish view for the pound (not to mention many desks forecasting parity by November amidst the current market turmoil we’re seeing at the moment).

I wrote about the weekly and daily timeframes in Wednesday’s technical briefing (italics):

Last week’s spike into resistance at $1.1410 and neighbouring decision point at $1.1751-1.1413 on the weekly timeframe, together with the 20-month downtrend since topping at $1.4241 in February 2021, continues to favour sellers.

A closer reading of price action on the daily timeframe displays a similar bearish picture, with price action sheltered by two trendline resistances (drawn from highs of $1.2277 and $1.3639). In addition to this, the currency pair has been working under the 200-day simple moving average, fluctuating around $1.2498, since August 2021, as well as the relative strength index (RSI) rejecting indicator resistance forged from 60.00 and 50.00 (a common sight in downtrends).

With respect to support on the higher timeframes, I remain focussed on the February 1985 low at $1.0520 (and the record low of $1.0357).

Against the backdrop of the bigger picture, short-term price action rebounded from the $1.0920-50ish neighbourhood early yesterday—a combination of a 100% Fibonacci projection, a 1.618% Fibonacci projection and a nearby 50.0% retracement value as well as a 78.6% Fibonacci retracement. Subsequent action overthrew sellers around $1.10 to touch gloves with $1.11 into the closing bell. The earlier test of the big figure during the London session, and the test seen amid US hours that spiked to $1.1134, delivers sufficient (technical) evidence to suggest seller weakness here. As such, a break of $1.11 should not surprise, which could have buyers pull things as far north as Quasimodo resistance at $1.1191 and $1.12.

Technical Expectation:

According to chart studies, a break above $1.11 is potentially on the table today. This may appeal to short-term breakout players, targeting the $1.12ish region. The caveat, of course, is the higher timeframes pointing to lower levels in the medium term. For that reason, strict trade management on any long positions executed above $1.11 will likely be seen, reducing risk to breakeven as soon as logically possible.

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