Charts: Trading View
(Italics: Previous Analysis)
EUR/USD:
Europe’s single currency maintained a bearish narrative against its US counterpart on Tuesday, falling around 0.5 per cent heading into the European close. Week to date, EUR/USD is lower by 1.2 per cent and on the brink of submerging Quasimodo support at $1.0778 and channel support on the weekly timeframe, extended from the low $1.1186. As underlined in previous research, buyers have been somewhat hindered by the visible downtrend on the weekly scale, dominant since the beginning of 2021. Adding to this, seen clearly from the monthly timeframe, the overall vibe has been to the downside since topping in April 2008. Voyaging beneath weekly supports calls on another Quasimodo formation at $1.0517, a level extended from November 2015.
In a market trading south of its 200-day simple moving average at $1.1399 since 17th June, daily price movement is on the doorstep of the pandemic low of $1.0638. This follows the recent breach of the ascending line, drawn from the $1.0340 3rd January low 2017. Out of the relative strength index (RSI), the indicator’s value continues to explore sub-50.00 after failing to find acceptance north of the centreline in March. However, with the indicator now teasing the oversold threshold, bullish divergence could be on the table should the indicator bottom from current levels (shows downside momentum to be slowing despite a lower low in price).
In terms of the H4 picture, buyers and sellers are squaring off around Quasimodo support at $1.0655. Ultimately, sellers appear to be strengthening grip, as we write. Consequently, Quasimodo support at $1.0595 is in the headlights. Meanwhile, the H1 timeframe navigated sub $1.07 whilst compressing within a descending channel, taken from a high and low of $1.0936 and $1.0790, respectively. $1.06, therefore, demands attention.
Technical Outlook:
Technical studies suggest the currency pair may touch gloves with the $1.06 region shortly (H1 level merging closely with H4 Quasimodo support at $1.0595). A H4 close under Quasimodo support at $1.0655 would help confirm a bearish bias. One caveat, of course, is the pandemic low of $1.0638, which may see buyers make a show prior to reaching $1.06.
AUD/USD:
Down 1.3 per cent, the week shows price tunnelling into prime support from $0.6948-0.7242 on the weekly timeframe. While this area has capped selling since September 2020, the trend suggests that surpassing the area could be seen in the coming weeks. The monthly timeframe has portrayed a downtrend since August 2011, indicating the pullback (February 2022 to current) on the weekly timeframe has likely been viewed as a ‘sell-on-rally’ theme and not a ‘dip-buying’ opportunity within the 2020 advance from pandemic lows of $0.5506 (march 2021).
Meanwhile on the daily timeframe, price action overthrew the 200-day simple moving average at 0.7291 last week. Alone, this is considered by many technicians as a sign of strong bearish interest: the unit is now below the average price for the previous 200 trading days. Support at $0.7165 is key, as clearing this level potentially frees downside to a familiar daily decision point at $0.6964-0.7040. Interestingly, this area is fixed within the lower limits of weekly prime support mentioned above at $0.6948-0.7242.
Fibonacci support between $0.7117 and $0.7153 is featured on the H4 chart, welcoming buyers in recent trading. Note this area is sharing chart space closely with H4 Quasimodo support at $0.7109. Quasimodo support-turned resistance at $0.7246 is seen overhead. From the H1 timeframe, you will acknowledge price whipsawed above $0.72 and addressed a demand-turned supply zone at $0.7216-0.7236. Going forward, limited support is evident on the H1 until around the $0.71 region, assuming the pair can clear yesterday’s low at $0.7145.
Technical Outlook:
If daily price decisively overthrows support at $0.7165, this will likely be regarded as a strong technical signal that further softness is on the menu towards the daily decision point at $0.6964-0.7040. This is despite weekly price engaging with prime support at $0.6948-0.7242.
This places $0.71 as a reasonable short-term downside objective on the H1 and questions current H4 supports.
USD/JPY:
Upside has clearly taken a breather in recent days, down 0.6 per cent on the week. Technically, price action is seen levelling off ahead of the daily timeframe’s supply zone at ¥130.65-129.57. Should sellers strengthen their position, weekly support can be found at ¥125.54, followed closely by H4 support located at ¥125.11. In terms of the current trend, we’ve been clearly higher since 2021.
Adding to the daily timeframe’s technical picture, we can see the relative strength index (RSI) peaked around 87.52 resistance on two occasions (a level boasting historical significance as far back as 2014). Note that this is technically the early stages of a double-top within the RSI with the neckline stationed around the 66.78 31st March low. Exiting overbought space is considered a bearish indication by many technicians. Still, in upward facing markets, such as the one we’re clearly in now, false bearish signals are common. If the RSI value does eventually tunnel lower, the 40.00-50.00 area of support may be targeted (served as a ‘temporary oversold’ base since May 2021).
Lower on the curve, the H1 timeframe reveals short-term flow came within a whisker of clipping ¥127 before rotating higher. You will note the currency pair actually responded to a 100% Fibonacci projection at ¥127.19 (AB=CD support). Upstream has ¥128 in view, along with trendline support-turned resistance, taken from the low ¥121.28, and a 38.2% Fibonacci retracement at ¥127.94.
Technical Outlook:
The weekly, daily and H4 timeframes demonstrate scope to explore lower levels until weekly support at ¥125.54. However, prior to sellers taking more control, the H1 price rebounding from the 100% Fibonacci projection at ¥127.19 could see the unit take aim at ¥128 before sellers step in.
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