Weekly Technical Market Insight: 30th November – 4th December 2020

Weekly Technical Market Insight: 30th November – 4th December 2020, FP Markets

US Dollar Index:

Shedding more than 0.6 percent, the US dollar, as measured by the US dollar index (DXY), unsurprisingly carved out a second successive losing week and renewed monthly lows.

Feeble attempts at recovery off daily support from 92.26 throughout November demonstrated a lack of co-operation from buyers, ultimately allowing sellers to dethrone support and maintain control last week. This, together with the RSI momentum oscillator depreciating within a descending channel (under 50.00 since early November) along with a defined downtrend, signals sellers could uphold a bearish setting this week and bend towards daily support at 90.99.

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 uncovered resistance off 103.00. Additionally, the daily timeframe (off 102.99) 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 heading into June of this year, currently circling 96.02.

Weekly Technical Market Insight: 30th November – 4th December 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, and subsequent break of supply from 1.1857/1.1352 in August, November has witnessed buyers make an entrance, up by 2.7 percent.

Though this argues additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted, 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:

Aligned with the monthly timeframe, last week watched the daily chart squeeze through the upper perimeter of an early descending wedge pattern (correction) between 1.2011 and 1.1612 (some may interpret this arrangement as a descending triangle pattern).

However, despite the above and the fact EUR/USD has been trading northbound since early 2020 (along with the DXY suggesting lower levels), supply recently made an entrance at 1.2012/1.1937 (active since May 2018) which may hinder buyers this week.

RSI fans will note the value remains comfortably above 50.00, and is on track to cross paths with overbought space.

H4 timeframe:

Supply at 1.1928/1.1902 (prior demand), active since mid-September, came under fire last week, with buyers aided off support at 1.1890.

The clearance of 1.1928/1.1902 throws light on supply at 1.2026/1.1992, an area fastened to the top edge of daily supply at 1.2012/1.1937.

H1 timeframe:

Following 1.19 welcoming a retest heading into Thursday’s US session (albeit delving to lows at 1.1885), intraday energy extended the recovery and had Friday topple 1.1950 resistance and give light to resistance at 1.1966.

The widely watched 1.20 level is in the crosshairs should buyers manoeuvre through 1.1966 this week.

Against the backdrop of price levels, the RSI indicator currently trades in an interesting overbought position: within close range of resistance at 81.50 by way of an ABCD pattern.

Observed levels:

Long term:

The monthly chart showing scope to climb, following the breach of supply at 1.1857/1.1352, signals there may be strength behind the daily descending wedge breach last week.

This, technically, places daily sellers within supply at 1.2012/1.1937 in a vulnerable setting.

Short term:

H4 appears free to join hands with supply at 1.2026/1.1992. H1 resistance at 1.1966, therefore, is susceptible to breaking this week, with buyers perhaps honing in on the 1.20 level.

Weekly Technical Market Insight: 30th November – 4th December 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 5 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, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Supply at 0.7345/0.7287, an area that’s remained in the frame since November 9, resigned last week, with Wednesday retesting the zone and Friday finishing the week greeting nearby supply at 0.7453/0.7384, extended from August 2018.

Trend on this timeframe has remained to the upside since March 2020, in spite of the lengthy correction since September.

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

H4 timeframe:

Partly modified from previous analysis –

The H4 chart reveals price took over the upper boundary of an ascending triangle made up between resistance at 0.7340 and trendline support from 0.7221.

This unmasks September peaks at 0.7413 and the ascending triangle take-profit target at 0.7463 (pink).

H1 timeframe:

Partly modified from previous analysis –

In a fashion similar to the H4 chart, the upper level of an ascending triangle displayed on the H1 chart between 0.7367/0.7311 was taken early Friday and retested as support heading into US trading.

The 0.74 region made its way into view, prompting a mild end-of-week correction.

With reference to the RSI oscillator, a double-top pattern recently formed off overbought levels. The neckline at 53.15 was also taken Friday, signalling momentum could continue to decline in the early stages of the week.

Observed levels:

Long term:

Monthly price flexing its muscle off demand at 0.7029/0.6664, along with daily price trending higher and retesting 0.7345/0.7287 as demand, places a question mark on daily supply at 0.7453/0.7384.

Short term:

Short-term charts have two ascending triangle patterns in the picture, both gesturing higher prices this week.

While a retest of the H1 pattern at 0.7367 is probable before buyers attempt to make another show, a retest of 0.7350 support (and the upper edge of the H4 pattern at 0.7340) is also a possibility.

Weekly Technical Market Insight: 30th November – 4th December 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 with the lower edge of the aforesaid pattern, down by 0.6 percent and on track to record a third successive monthly loss.

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 –

Supply from 106.33/105.78 and trendline resistance (111.68) are prominent areas north of price.

Light falls on demand at 100.68/101.85 (fixed to the upper base of monthly demand and drawn from September 2016) if sellers make a push.

RSI enthusiasts will note the unit has remained under 57.00 resistance since July.

H4 timeframe:

104.22 continues to serve as clear S/R on the H4 chart, retested as resistance on Friday.

Demand from 103.04/103.58, extended from March 2020, is in the spotlight this week, as is supply at 105.41/105.15 if 104.22 and 104.76 highs (November 24) relinquish position.

H1 timeframe:

Following a somewhat disorderly 104 test Friday, upside gathered traction and tested the lower side of supply at 104.21/104.32. This is considered an important zone due to it being a location a decision was made to breach November 24 low at 104.14.

104, as you can see, re-entered the frame late Friday though received a dull welcome from buyers.

Rupturing 104 singles out demand at 103.69/103.77, a robust zone fixed to support at 103.70 (and plotted nearby another support from 103.60).

Observed levels:

Long term:

Monthly price appears to be on the verge of breaching descending triangle support at 104.62, emphasising a weak market.

Short term:

Coming off H4 resistance at 104.22 indicates bid weakness from 104 on the H1. This may lead to an intraday bearish scene unfolding below 104 early in the week, with H1 demand at 103.69/103.77 targeted.

Weekly Technical Market Insight: 30th November – 4th December 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 2.8 percent seats trendline resistance (2.1161) in the line of fire on the monthly chart.

In terms of trend, 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 the 200-day simple moving average in late September, GBP/USD has displayed a gradual interest to the upside and generated an AB=CD pullback concluding at 1.3392. The pattern also forms just ahead of the 1.3483 September peak, which if a break comes to pass will confirm the current uptrend on this timeframe (since early 2020).

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

H4 timeframe:

Supply at 1.3402/1.3368 moved into position at the beginning of last week, with price eventually taking out the lower side of an early ascending wedge between 1.3105/1.3313. Fracturing its lower edge brings light to 1.3182 support.

H1 timeframe:

In conjunction with the H4 timeframe, H1 also established an ascending wedge between 1.3263/1.3380 which had its lower edge penetrated last Thursday.

Considered a reversal signal, the pattern’s take-profit target (pink) can be found beyond the 1.33 level (which was tested into the close Friday), around the 1.3243 region.

Observed levels:

Long term:

Daily price greeting AB=CD resistance at 1.3392 is interesting, perhaps enticing harmonic traders this week.

Short term:

H4 responding from supply at 1.3402/1.3368 and violating the lower ledge of the ascending wedge implies sellers may target 1.3182 support

1.33 support on the H1 appears vulnerable. Not only are daily and H4 sellers possibly changing gear this week, H1 suggests a move through 1.33 to welcome the H1 ascending wedge take-profit target at 1.3243.

Weekly Technical Market Insight: 30th November – 4th December 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: 30th November – 4th December 2020, FP Markets
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