Weekly Technical Market Insight: 23rd – 27th November 2020

Weekly Technical Market Insight: 23rd – 27th November 2020, FP Markets

US Dollar Index:

Buyers and sellers, as you can see, spent the best part of the week squaring off around daily support at 92.26, an active level since May 2018. The feeble recovery off this level earlier in the month, braced by daily channel support (0.9247), signals a lack of commitment from buyers. Although suggesting a continuation to the downside this week, however, daily supply forged between 94.02/93.82 remains an area of focus.

As reported in recent writing, the primary trend on the monthly timeframe, since March 2008, has been entrenched within a large-scale pullback, though since 2017 has uncovered resistance off 103. Additionally, the daily timeframe (off 103.00) has moulded a series of lower highs and lower lows from March 2020. Traders will also note price crossed under the 200-day simple moving average, currently circling 96.21, heading into June of this year. Adding to this bearish narrative, the daily RSI oscillator continues to depreciate within a descending channel, with the value tentatively holding below 50.00.

As a result, technical studies argue for a bearish vibe this week – dethroning daily support at 92.26 and addressing support from 90.99 is a possible theme.

Weekly Technical Market Insight: 23rd – 27th November 2020, FP Markets

EUR/USD:

Monthly timeframe:

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

Following the break of long-term trendline resistance (1.6038) in July, buyers and sellers have since gone toe-to-toe around the upper section of supply from 1.1857/1.1352. Though this argues additional upside may be on the horizon, targeting ascending resistance (prior support – 1.1641), a dip to retest the recently penetrated trendline resistance (support) is also still on the table.

The primary downtrend (since July 2008) remains intact until 1.4940 is engulfed (May 2 high [2011]).

Daily timeframe:

Brought forward from previous analysis –

Supply at 1.2012/1.1937 remains a key zone to be mindful of on the daily chart, active since May 2018.

Trend remains to the upside, with price currently working with an early falling wedge correction (pattern) between 1.2011 and 1.1612 – some may interpret this arrangement as a descending triangle pattern.

In terms of support beyond the aforesaid pattern, 1.1553 and 1.1495 offer prominent levels.

RSI fans will also note the value recently rotated higher above 50.00, suggesting strength, though is rooted within the upper region of an ascending channel.

H4 timeframe:

EUR/USD acknowledged support at 1.1815 last week, stationed ahead of support at 1.1795. While 1.1795/1.1815 is likely on the radar this week, supply at 1.1928/1.1902 (prior demand) also commands attention. It should be noted the aforesaid supply is sited underneath daily supply parked at 1.2012/1.1937, and encases the upper line of the daily falling wedge pattern.

H1 timeframe:

Friday’s outlook specified that 1.19 stands as possible resistance, while a correction could have dip-buyers surface from demand at 1.1836/1.1846, located beneath support at 1.1851 and the 100-period simple moving average.

Heading into the US session Friday, the pair made contact with 1.1851 support but upside attempts have so far been blocked by the 100-period simple moving average around 1.1860 (realised beneath supply at 1.1874/1.1866).

Doing away with the aforesaid supports this week throws light on H4 support at 1.1815 as well as the 1.18 level (H1), which coincides with H4 support from 1.1795.

With reference to the RSI oscillator, momentum gradually declined Friday, penetrating the 50.00 line after topping ahead of overbought levels.

Observed levels:

Long term:

November trading higher by 1.8 percent around the upper side of monthly supply from 1.1857/1.1352 marks a possible break above the daily falling wedge pattern between 1.2011/1.1612. Whether buyers have enough energy to face daily supply at 1.2012/1.1937, however, remains to be seen.

Short term:

H1 demand at 1.1836/1.1846, along with current H1 support at 1.1851, may remain influential in the early stages of the week. Buyers are likely to gain confidence should price topple H1 supply at 1.1874/1.1866, with 1.19 targeted (marks the lower ledge of H4 supply).

An intraday bearish scene, on the other hand, may develop if H1 demand is taken, with focus shifting to H4 supports at 1.1795/1.1815.

Weekly Technical Market Insight: 23rd – 27th November 2020, FP Markets

AUD/USD:

Monthly timeframe:

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

Following a mild correction that addressed the upper border of demand at 0.7029/0.6664 (prior supply), buyers have so far responded well. Up by 3.9 percent in November, buyers appear to be 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, though, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Brought forward from previous analysis –

Supply at 0.7345/0.7287 (a rally-base-drop formation) has remained in the frame since November 9, yet sellers have so far displayed a non-committal tone as monthly buyers continue to flex off demand. Neighbouring supply at 0.7453/0.7384, extended from August 2018, therefore, could soon be thrown in the mix.

The RSI indicator continues to consolidate beneath overbought space, following the removal of 52.00 resistance at the beginning of November.

H4 timeframe:

The week witnessed the formation of a declining channel (0.7340/0.7272), following Tuesday’s 0.7340 resistance test. As you can see, the session finished marginally fading channel resistance by way of a shooting star candlestick pattern, generally interpreted as a bearish signal at peaks.

Lower moves this week may target channel support and support brought in at 0.7210.

H1 timeframe:

Despite a brief episode of consolidation beneath 0.73 and the 100-period simple moving average Friday, buyers eventually gathered enough steam to overturn the aforesaid resistances amidst European trade.

This observed a peak at 0.7324, accompanied by a mild correction that nudged action to within close range of 0.73 and the 100-period simple moving average by the close.

RSI fans may note the value recently pencilled in a rising wedge pattern, with late trade Friday ever so slightly testing waters beneath its lower border.

Observed levels:

Long term:

Healthy buying off monthly demand at 0.7029/0.6664, in conjunction with what appears to be fragile daily supply from 0.7345/0.7287, emphasises a bullish impression this week.

Short term:

H1 is on course to reconnect with 0.73 support (and 100-period simple moving average). Buyers from this point, nonetheless, despite higher timeframes indicating strength to the upside, must confront possible selling off H4 channel resistance (0.7340).

Weekly Technical Market Insight: 23rd – 27th November 2020, FP Markets

USD/JPY:

Monthly timeframe:

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

Since kicking off 2017, USD/JPY has been carving out a descending triangle pattern between 118.66/104.62.

November, as you can see, is working through the lower edge of the aforesaid pattern, down by 0.8 percent.

104.62 ceding ground shines light on demand from 96.41/100.81, followed by trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Brought forward from previous analysis –

Leaving behind supply from 106.33/105.78 and trendline resistance (111.68), as well as RSI resistance at 57.00, sellers have since made a strong show in the shape of six successive daily bear candles.

Downside risk remains, with light on the 103.17 low (November 6), the demand at 100.68/101.85, drawn from September 2016, as well as RSI oversold space.

H4 timeframe:

Brought forward from previous analysis –

104.11 resistance stood firm in the second half of last week, hindering efforts to navigate higher.

This perhaps unlocks the door for a test of rather large demand from 103.04/103.58 this week, extended from March 2020 (holds the 103.17 lows on the daily timeframe).

H1 timeframe:

Following a failed attempt to secure ground above 104 Thursday, Friday’s volatility diminished considerably resulting in price generating a local falling wedge pattern (103.91/103.71) a few pips above 103.60/103.70 support (and 161.8% Fib projection level at 103.55 [blue]).

Friday’s lethargic movement also caused RSI action to consolidate below 50.00, following a 37.20 low Thursday.

Observed levels:

Long term:

Monthly price beginning to tunnel through descending triangle support at 104.62 signals sellers are gathering strength. This is somewhat validated on the daily timeframe, with space seen for sellers to approach the 103.17 low and demand at 100.68/101.85 (fastened to the upper side of monthly demand at 96.41/100.81).

Short term:

H4 sellers may test the mettle of H4 demand from 103.04/103.58, meaning a test of H1 support at 103.60 and the 161.8% Fib projection level at 103.55 could arise this week. However, should H1 buyers oust falling wedge resistance (109.91), intraday action could retest the 104 region and 100-period simple moving average.

Weekly Technical Market Insight: 23rd – 27th November 2020, FP Markets

GBP/USD:

Monthly timeframe:

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

November trading higher by 2.6 percent places trendline resistance (2.1161) in the line of fire on the monthly chart.

In terms of trend, nevertheless, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high 2018.

Daily timeframe:

Brought forward from previous analysis –

Since crossing paths with demand at 1.2645/1.2773 and 200-day simple moving average in late September, GBP/USD has displayed a gradual interest to the upside.

Taking on higher levels this week targets the 1.3483 September peak, with a break to confirm the current uptrend on this timeframe (since early 2020).

RSI followers will see the line has produced a series of higher highs and lows since late September, on course to perhaps welcome overbought conditions.

H4 timeframe:

Partly modified from previous analysis –

Supply at 1.3320/1.3281, an area joined by channel resistance (1.3176) and a collection of Fib studies around 1.3307, held back buyers last week, declining to lows just ahead of support at 1.3182.

With strength emerging into the second half of the week, clearing the above said supply this week could have supply at 1.3402/1.3368 move into position.

H1 timeframe:

Thursday’s US session kicked off by way of a hammer candlestick configuration off 1.32 (bullish signal), encouraging fresh buyers on to the scene. Friday, albeit unhurriedly, extended Thursday’s rebound, crawling along the underside of trendline resistance (prior support – 1.2853) towards 1.33 (with a subsequent push to welcome supply at 1.3339/1.3322 [from September]).

In regards to the RSI indicator, Friday forced the value into consolidation, balanced off 50.00 support. This suggests upside momentum may be slowing.

Observed levels:

Long term:

Monthly and daily timeframes display scope to probe higher this week, with the 1.3483 September peak eyed (joined by monthly trendline resistance).

Short term:

With higher timeframes demonstrating some leeway to the upside, H4 supply at 1.3320/1.3281 exhibits weakness. Another point also worth taking on board is the fact sellers failed to test H4 support at 1.3182, indicating a lack of commitment.

Consequent to the above, a retreat to the 100-period simple moving average on the H1 could interest dip-buying strategies, aiming for a break of 1.33 and ultimately H1 supply from 1.3339/1.3322 (located above H4 supply at 1.3320/1.3281).

Weekly Technical Market Insight: 23rd – 27th November 2020, 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: 23rd – 27th November 2020, FP Markets
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