Weekly Technical Market Insight: 11th – 15th January 2021

Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets

Note – Charts provided by Trading View

US Dollar Index:

The US dollar, as measured by the US dollar index (DXY), concluded 0.2 percent higher in the first full trading week of 2021. Recovering from daily support at 89.34 (taken from March/April 2018), off fresh 33-month lows at 89.20, the DXY ended marginally north of 90.00 resistance.

Additional technical observations on the daily chart reveal the RSI indicator pierced the upper side of a declining wedge early December, delivering an early cue the price-based declining wedge (between 94.30/92.18) was likely to follow suit. RSI trendline resistance recently made an entrance, with a break unmasking the declining wedge pattern’s target (black arrows) at around 53.26.

Two weeks following the RSI pattern breach, as you can see, price action punctured the upper side of its declining wedge and arranged a pattern target of around 92.76 (green boxes). Additional resistance to take into consideration this week, however, are 91.00 and 92.26.

As indicated in previous writing, the market’s overall trend exhibits a bearish outlook on the monthly chart, entrenched within a bulky pullback since May of 2008 (major swings). Since 2016, however, resistance developed around 103.00, causing the daily timeframe to launch a series of lower lows and highs in 2020. Should price submerge the 88.25 February 16 low, this may help further validate the current bearish narrative.

Concerning the 200-day simple moving average, currently circling 94.74, daily action crossed below the dynamic value heading into June 2020.

Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets

EUR/USD:

Monthly timeframe:

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

Shortly following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply from 1.1857/1.1352 in August, buyers made an entrance heading into the close of 2020 and recorded fresh multi-month highs. This reasons additional upside towards ascending resistance (prior support – 1.1641) may be on the horizon.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Since late December, upside momentum noticeably slowed. Last Thursday delivered a solid bearish candle after confronting the descending wedge pattern’s (1.2011/1.1612) take-profit target at 1.2318 (yellow), with Friday extending losses and throwing light on 1.2095 support.

Trend on this timeframe remains decisively north, establishing a series of higher highs and higher lows since March 2020 (some will consider this a secondary trend).

In terms of the RSI indicator, following the formation of bearish divergence, the value is seen fast approaching the upper side of 50.00.

H4 timeframe:

From the March 2018 supply at 1.2385/1.2346, mid-week witnessed sellers make a show and eventually bring down trendline support (1.1602). After retesting the lower side of the aforesaid trendline (common viewing after a trendline breach), Friday slipped to a 1.2193 low.

This brings notable S/R at 1.2164 into focus this week, derived from January 2018. Traders will also note the support level joins forces with a number of Fib levels between 1.2154/1.2167.

H1 timeframe:

Heading into Friday’s US session, H1 sellers greeted the lower side of the 100-period simple moving average at 1.2283. This directed moves beneath 1.2250 support to the 1.22 level.

While an end-of-day rebound from 1.22 emerged, resistance at 1.2235 poses a potential problem for buyers, as may 1.2250 resistance. Downstream, south of 1.22, demand appears vacant until around the 1.21 vicinity.

RSI enthusiasts may acknowledge the indicator dipped a toe in oversold territory in the latter part of the week, and is in the process of chalking up a triple-bottom pattern (neckline can be found at 53.94 [black arrow]).

Observed levels:

Long term:

Monthly price is poised to reach for higher levels, though a 1.2095 support retest on the daily timeframe may unfold beforehand.

Short term:

H4 support at 1.2164 (and associated Fib levels) is likely to make an entrance early this week. Though given the daily timeframe suggesting a 1.2095 test, this implies upside attempts off 1.2164 could be fragile.

Therefore, another possible scenario to be watchful of this week is a H1 close under 1.22, which might be viewed as a bearish cue, with 1.21 ultimately targeted (set just ahead of 1.2095 daily support).

Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets

AUD/USD:

Monthly timeframe:

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

Wrapping up 2020 in positive territory, following a pivotal rebound from demand at 0.7029/0.6664 (prior supply), buyers, according to the monthly chart, appear free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In terms of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Unable to extend recent recovery gains north of support at 0.7647, AUD/USD watched price consolidate gains ahead of 2021 peaks into the latter half of last week (Friday generated an indecision doji candle).

In conjunction with the prevailing uptrend (since March 2020), and monthly price taking aim at higher pinnacles, this throws a light on supply at 0.7937/0.7890 this week. However, a retest at 0.7647 could also take shape.

Momentum, as measured by the RSI oscillator, recently produced bearish divergence within the parapets of the overbought area.

H4 timeframe:

0.7805 resistance, as you can see, withstood a mid-week attempt to renew 2021 highs, with price shortly after receiving trendline support (0.7461) and Friday producing a hammer candle pattern.

Downstream, demand is centred around 0.7665/0.7644 (prior supply); above 0.7805, nevertheless, buyers may take a run at 0.7843 resistance.

H1 timeframe:

Demand at 0.7721/0.7731, an important zone given it was likely within this area a decision formed to refresh highs and take out remaining offers around 0.7740 and 0.7742, capped downside into the second half of last week.

Friday, as you can see, watched AUD/USD climb 0.7750 resistance and the 100-period simple moving average, hinting at a move back to 0.78.

As far as the RSI indicator goes, the value closed the week out just ahead of 50.00. Breaking this figure is likely to see momentum increase to the upper side of channel resistance around 62.64.

Observed levels:

Long term:

Monthly price appears itching to reach supply at 0.8303/0.8082, with daily price also exhibiting scope to rally to at least supply at 0.7937/0.7890.

However, a 0.7647 support retest could arise on the daily chart before buyers come forward (if at all).

Short term:

H4 testing trendline support and forming a hammer candle, with room to pursue 0.7805 resistance, suggests H1 candles may remain above 0.7750 in early trading in favour of reaching 0.78. Consequently, a 0.7750 retest could be interesting today.

Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets

USD/JPY:

Monthly timeframe:

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

Over the span of four years, USD/JPY carved out a descending triangle pattern between 118.66/104.62.

Although December pursued terrain south of 104.62, January recently arranged a modest comeback and is on course to retest the lower side of 104.62.

104.62 ceding ground throws light on support from 101.70, with a break uncovering trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Partly modified from previous analysis –

Support at 103.08, despite a relatively intense whipsaw to ten-month lows early in the week, reclaimed position following Thursday’s spirited recovery and Friday’s subsequent extension.

This has likely shifted focus back to trendline resistance (111.71), with a break unmasking supply at 106.33/105.78 and the 200-day simple moving average.

H4 timeframe:

Momentum diminished considerably Friday after price joined hands with an area of resistance composed of Fib levels around 104.00, sheltered just under a resistance barrier at 104.16.

Downstream, sellers have demand at 103.46/103.58 (prior supply) to contend with; higher up on the curve, however, resistance is seen around 104.76, spotted just above the 104.57 December 10 peak.

H1 timeframe:

Short-term action on Friday watched USD/JPY spike through 104 on three occasions, each time testing supply at 104.13/104.06.

Apart from Friday’s NFP-induced low at 103.60, 103.50 support is in the light if sellers continue defending the 104 neighbourhood.

Above supply at 104.13/104.06, H4 resistance at 104.16 is seen.

The picture coming out of the RSI indicator right now shows 44.40 support welcomed the value Friday, lifting above 50.00 by the close.

Observed levels:

Long term:

Higher timeframe action proposes a move to the lower side of the monthly descending triangle pattern at 104.62 this week, aligning with daily trendline resistance.

Short term:

H4 resistance between 104.16/104.00 delivers reasonably appealing confluence to work with. However, the fact sellers were unable to maintain a bearish stance Friday, and with the higher timeframes eyeballing 104.62 resistance, this could stir a breakout higher. A short-term bullish scene may arise as a result, with buyers also likely watching for a 104 (support) retest to form.

As for resistance, the H4 level at 104.76 may generate interest should the market breakout higher. This level shares space with the monthly 104.62 level and daily trendline resistance.

Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets

GBP/USD:

Monthly timeframe:

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

December ending higher by 2.5 percent elevated GBP/USD to fresh multi-month highs and stirred trendline resistance (2.1161) into the year end.

In terms of trend, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high, 2018. In fact, the aforesaid high represents the next upside target on the monthly chart.

Daily timeframe:

Brought forward from previous analysis –

Resistance at 1.3755 remains a key level to be aware of on the daily chart this week, stationed below supply at 1.3996/1.3918. A sell-off, on the other hand, projects light on support at 1.3176.

The RSI has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region.

H4 timeframe:

Brought forward from previous analysis –

As you can see, demand at 1.3527/1.3556 remains in force.

Yet, through the simple lens of a technical trader, buyers appear to be losing grip. The initial reaction (black arrow) achieved modest highs at 1.3671, though subsequent reactions failed to challenge said peaks, implying sellers possibly have the upper hand here.

Drifting through the aforesaid demand gestures a possible continuation to demand at 1.3401/1.3446 (aligns with a 161.8% Fib projection at 1.3441 and a 50% level at 1.3447).

H1 timeframe:

Brought forward from previous analysis –

1.3550 support has proven an effective base, though like the H4 demand underlined above at 1.3527/1.3556, appears to be hanging by a thread. This is particularly evident having seen buyers failed to topple 1.36 resistance and neighbouring 100-period simple moving average on numerous occasions.

Jabbing through 1.3550 this week unlocks 1.35 support, encased within demand at 1.3490/1.3509.

Observed levels:

Long term:

The break of long-term trendline resistance on the monthly timeframe has likely caught the eye of long-term buyers. From the daily chart, upside hurdles stand out at 1.3755 resistance and supply from 1.3996/1.3918.

Short term:

Shorter term technical levels hint at possible weakness, with moves below 1.3550 support a likelihood on the H1 this week. By extension, this could see a breach of H4 demand at 1.3527/1.3556 and at least a follow-through move to 1.35 support on the H1.

Weekly Technical Market Insight: 11th – 15th January 2021, 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. 

  • Weekly Technical Market Insight: 11th – 15th January 2021, FP Markets
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