April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00

April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00, FP Markets

Chart Source: Trading View


Monthly timeframe:

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

Following a three-month retracement, demand at 1.1857-1.1352 made an entrance and sparked a bullish revival in April, up 3.3 percent MTD.

Erasing March losses, April upside throws light on the possibility of fresh 2021 peaks, followed by a test of ascending resistance (prior support – 1.1641).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

1.2058 support welcomed another retest on Wednesday, underpinning a modest bullish tone into the close. Additional bullish fuel was derived from USD softness, on the back of the US Federal Reserve keeping short-term interest rates anchored around zero (0.0% – 0.25%), and Fed Chair Jerome Powell stating it was ‘not time’ to talk about tapering asset purchases.

Quasimodo resistance now calls for attention at 1.2169, followed by another Quasimodo formation at 1.2278.

Momentum, according to the RSI oscillator, is within a whisker of entering overbought territory. Interestingly, within this space, resistance is arranged around 80.39.

Trend studies, as aired in recent analysis, reveal EUR/USD has been trending higher since early 2020 (many analysts will refer to this as a primary trend).

H4 timeframe:

For those who read Wednesday’s technical briefing you may recall the following (italics):

As evident from the H4 timeframe, buyers and sellers are seen squaring off within the lower range of supply-turned demand at 1.2101-1.2059. With April’s trend facing northbound (see black arrow), and scope to approach Quasimodo resistance at 1.2177 (fixed above daily Quasimodo resistance at 1.2169), buyers may take the wheel.

Buyers, as you can see, did indeed take control on Wednesday, establishing fresh monthly peaks at 1.2134. With this, technicians are likely to be eyeballing Quasimodo resistance at 1.2177 today.

H1 timeframe:

Demand at 1.2049-1.2061 has proved an effective base. Early US trade on Wednesday had price pencil in a hammer candle formation from the aforesaid demand—typically viewed as a bullish signal—and subsequently dethrone 1.21 to shine light on 1.2138 resistance.

The RSI oscillator recently spiked within close proximity of overbought territory and mildly corrected to 65.00. RSI resistance is seen parked around 78.97.

Observed levels:

For those who read Wednesday’s technical report, the piece aired the following (italics):

In similar fashion to Tuesday’s technical briefing, the monthly (out of demand at 1.1857-1.1352), daily (above support at 1.2058), and H4 timeframes (finding support within demand at 1.2101-1.2059) suggest buyers are in command and a 1.21 breach is in the offing on the H1 scale.

A 1.21 break may observe short-term traders adopt breakout strategies, targeting at least H1 resistance at 1.2138, followed by Quasimodo resistance at 1.2169 on the daily scale.

With 1.21 giving way on Wednesday, a retest of the latter today could spark continuation buying, with, as noted above, the majority of price action traders taking aim at H1 resistance from 1.2138.

April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00, FP Markets


Monthly timeframe:

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

April trades higher by 2.6 percent.

With respect to trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Largely unchanged from previous analysis.

Resistance at 0.7817 remains a focal point on the daily scale, proving a stubborn ceiling since the beginning of March.

Space north of 0.7817 shines technical light on supply at 0.8045-0.7985 (parked just under monthly supply mentioned above at 0.8303-0.8082). Bearish follow-though below 0.7817, however, swings the pendulum back in the direction of February’s low at 0.7563.

In terms of the RSI oscillator, we remain navigating territory above the 50.00 centreline, with channel resistance, extended from the high 80.12, in sight (plotted below overbought). Momentum, according to this indicator, remains northbound for the time being.

H4 timeframe:

Leaving 0.7696-0.7715 demand unchallenged, AUD/USD bulls entered an offensive phase Wednesday on the back of the latest Fed interest rate decision (benchmark rate left unchanged) and Powell speech.

Quasimodo resistance at 0.7800 elbowed into the spotlight in recent hours, which for now is holding. In the event of a 0.7800 breach, demand-turned supply at 0.7848-0.7867 is on the radar.

H1 timeframe:

Following less-than-stellar Aussie CPI data early trade Wednesday, the unit nosedived into the walls of demand at 0.7725-0.7737. Despite mildly clipping the lower edge of the aforesaid demand, a recovery play emerged and eventually elevated price to 0.78, which, as you can see, holds as resistance.

Breakout buyers above 0.78, as aired in recent analysis, are likely to be wary of daily resistance at 0.7817. Overthrowing 0.78 and holding, on the other hand, underlines 0.7850 resistance.

With respect to the RSI oscillator on the H1 scale, we shook hands with overbought space as price challenged 0.78. RSI resistance at 80.85, therefore, is perhaps worth noting.

Observed levels:

While a bullish breakout theme above 0.78 on the H1 is clouded by daily resistance at 0.7817, the lack of bearish interest seen around the aforesaid daily base could motivate a bullish push. Therefore, a H1 close above 0.78 today, followed up with a decisive retest in the form of support, could be enough to encourage buying to at least 0.7850 resistance on the H1.

April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00, FP Markets


Monthly timeframe:

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

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, currently down 1.9 percent, is seen attempting to climb back through the breached descending resistance.

Daily timeframe:

Shaped by way of what’s known as a shooting star candle—bearish formation—USD/JPY concluded Wednesday considerably off best levels just south of supply pinned at 109.97-109.18.

Pressured lower following the recent Fed meeting, this could guide price action back to trendline support, etched from the low 102.59, closely shadowed by demand at 107.58-106.85 (prior supply) and a 38.2% Fib level at 107.73.

Trend studies show the unit has been trending higher since the beginning of 2021.

RSI movement is seen engaging the underside of the 50.00 centreline, stationed beneath resistance at 57.00.

H4 timeframe:

108.99 resistance made an entrance on Wednesday and, as you can see, motivated a bearish presence. This shifts focus back to support pinned at 108.50 and neighbouring demand plotted at 108.20-108.43—effectively the decision point prior to climb 108.50.

Additional areas of consideration on the H4 scale are supply at 109.97-109.72 and support formed at 107.44.

H1 timeframe:

Supply-turned demand at 108.57-108.46 commanded position in recent movement, following a one-sided decline from the 109 figure. What’s technically interesting is the current demand houses H4 support at 108.50.

Note we also have the 100-period simple moving average circling around 108.25, should sellers engulf the aforementioned demand (the SMA is seen within H4 demand mentioned above at 108.20-108.43).

According to the RSI indicator, the value voyaged south of the 50.00 centreline on Wednesday and is now within touching distance of oversold space and RSI support at 18.76.

Observed levels:

H4 support at 108.50 and H1 demand at 108.57-108.46 is an area we may see bullish flow drawn to today.

However, traders are urged to pencil in the possibility of a dip into H4 demand at 108.20-108.43, joined by not only the 100-period simple moving average on the H1, but also daily trendline support.

April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00, FP Markets


Monthly timeframe:

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

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower would generally be viewed as a bearish signal.

April trades higher by 1.1 percent.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Unchanged from previous analysis.

GBP/USD chalked up a fourth successive bullish close on Wednesday, eking out a 0.2 percent gain on the session.

Technical structure to be mindful of can be seen at resistance around 1.4003, closely shadowed by trendline support-turned resistance, taken from the low 1.1409. Lower on the curve, 1.3670 bottoms are visible, arranged north of Quasimodo support at 1.3609 and associated Fibonacci confluence (commonly referred to as a Fib cluster).

As for trend, GBP/USD has been trending higher since early 2020.

Momentum studies, according to the RSI indicator, defended space north of the 50.00 centreline in recent movement. Continued interest to the upside points to overbought levels, in particular resistance at 76.14.

H4 timeframe:

Technical studies from the H4 scale reveal price action travelled through resistance at 1.3919, likely removing a large portion of any offers around this region. Quasimodo resistance at 1.4007 is seen overhead, should buyers maintain position.

To the downside, 1.3809-1.3832 demand remains in view, an area which made a show in the latter part of last week.

H1 timeframe:

Latest developments out of the H1 chart show short-term flow climbed above 1.39 early US and subsequently retested the psychological level as support. This triggered an additional wave of buying, movement which marginally spiked above supply at 1.3946-1.3925. Deprived of resistance above current supply could have the currency pair take aim at the key figure 1.40.

RSI structure has the value above the 50.00 centreline, currently inching towards overbought waters. Note that within this area, resistance is arranged at 84.66.

Observed levels:

Having seen the range of H1 supply at 1.3946-1.3925 tested yesterday—in addition to daily price displaying scope to approach resistance at 1.4003 and H4 recently taking on resistance from 1.3919—follow-through buying could materialise to target the key figure 1.40 on the H1. A 1.39 retest, therefore, may attract bullish flow, particularly if the 100-period simple moving average aligns with the psychological base.

April 29th 2021: Fed Taper Hopes Dampened; DXY Holds South of 91.00, FP Markets


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.

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