December 11th 2020: Sterling Lower Amidst No-Deal Possibility

December 11th 2020: Sterling Lower Amidst No-Deal Possibility, 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, a modest correction surfaced. However, with buyers making an entrance in November and December trading higher by 1.8 percent, this argues additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted.

The primary downtrend, nevertheless, remains unbroken until 1.2555 is engulfed (Feb high [2018]).

Daily timeframe:

Partly modified from previous analysis –

In tandem with monthly buyers, daily activity squeezed through the upper perimeter of a descending wedge pattern (correction) between 1.2011 and 1.1612 (some may interpret this arrangement as a descending triangle pattern) heading into the final rounds of November with December also overrunning resistance at 1.2095.

Since the week kicked off, price has also been in the process of establishing a bullish flag pattern (1.2177/1.2078), off 1.2095, a level now serving as support. Yesterday, as you can see, modestly closed above the bullish flag’s upper side, suggesting not only could the EUR/USD reach for the descending wedge pattern’s take-profit target at 1.2318 (yellow), but also the bullish flag’s take-profit level at 1.2384 (purple).

H4 timeframe:

Demand at 1.2040/1.2065 commanded attention Wednesday (an area sharing space with a 127.2% Fib projection at 1.2052 and a 50.0% level at 1.2050), sparking an extension to the upside on Thursday. Supply at 1.2200/1.2170 is now the focus of attention, extended from April, 2018.

H1 timeframe:

Following a late showing out of demand at 1.2060/1.2076 on Wednesday (clipped to the upper side of H4 demand at 1.2040/1.2065), offers were relatively thin around 1.21, leading to a break higher to tackle the 100-period simple moving average and 1.2150 resistance.

Climbing 1.2150 offers brings light to the 1.22 level.

Observed levels:

Room to rally on the monthly chart, in addition to two bullish patterns forming on the daily chart, implies buyers may topple 1.2150 on the H1 and challenge any offers remaining around H4 supply at 1.2200/1.2170.

December 11th 2020: Sterling Lower Amidst No-Deal Possibility, 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 4.5 percent in November, with December also trading higher by 2.7 percent, buyers 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:

Holding on by a thread since the beginning of December, supply at 0.7453/0.7384 finally threw in the towel on Thursday. Not only did this wave RSI flow into overbought space, it handed over supply at 0.7587/0.7528.

H4 timeframe:

Following price bottoming ahead of demand at 0.7398/0.7420, established by way of a dragonfly doji candlestick pattern, shortage of obvious resistance on the H4 chart until supply at 0.7616/0.7591 (sits on top of daily supply at 0.7587/0.7528) suggests buyers could govern control today.

H1 timeframe:

AUD/USD settled Thursday at fresh year-to-date highs around 0.7539, shining light on 0.7550 resistance. 0.75 support rests to the downside if a correction takes form.

It may also interest some readers that the RSI indicator registered bearish divergence.

Observed levels:

Although monthly price calls for higher levels, daily supply recently stepping forward at 0.7587/0.7528 could spark profit taking.

H4 and H1 charts are currently working in unison with the monthly chart, showing a possible push to at least 0.7550 resistance.

December 11th 2020: Sterling Lower Amidst No-Deal Possibility, 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, worked with the lower edge of the aforesaid pattern and finished the month down by 0.3 percent – 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 –

Since November 20, price movement on the daily chart has offered a low-key stance.

Technical levels, therefore, remain unchanged.

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:

Brought forward from previous analysis –

Support at 103.70 made its presence known again last Thursday, arranged just ahead of demand from 103.04/103.58, extended from March 2020. Traders will also note resistance is seen at 104.73.

Having both support and resistance welcome at least two consecutive tests, the H4 chart is considered rangebound for the time being.

An additional feature worth considering, despite the upper side of the formation suffering a whipsaw, is the ascending wedge pattern (103.67/104.31).

H1 timeframe:

Greeting 104.50 resistance and merging trendline resistance (prior support – 103.67) heading into European flow held back buyers on Thursday, sending USD/JPY to the 100-period simple moving average at 104.18. A break beneath the aforesaid SMA shines light on the 104 level, with subsequent selling to possibly draw things to support at 103.70 (the lower side of the H4 range).

In terms of RSI action, the value elbowed beneath 50.00 and penetrated support at 44.05.

Observed levels:

Brought forward from previous analysis –

Monthly price appearing to be on the verge of breaching descending triangle support at 104.62 continues to underline a relatively weak market.

The above implies H4 sellers may attempt to overrun any defence around the lower side of the H4 ascending wedge pattern, indicating a possible breach of 104 could be in the offing.

December 11th 2020: Sterling Lower Amidst No-Deal Possibility, 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 2.9 percent and December pushing to highs at 1.3539 recently stirred trendline resistance (2.1161).

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:

Partly modified 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.

With monthly trendline resistance making an entrance and daily supply also recently joining the fight at 1.3622/1.3467, sellers appear to be taking the lead.

RSI followers will also see the line rounded ahead of overbought territory, currently navigating space ahead of support around 47.00.

H4 timeframe:

Warnings that the UK may be headed for a no-deal Brexit directed GBP/USD southbound on Thursday, testing bids around demand at 1.3240/1.3273.

Buyers do not seem too keen to get involved at the moment, unlocking a possible move to neighbouring 1.3182 support and 127.2% Fib projection at 1.3142 as well as the 88.6% Fib level at 1.3156.

H1 timeframe:

Volatility, as you can see, diminished considerably heading into US trading on Thursday, developing a bearish pennant pattern (1.3330/1.3245). A breakout lower proposes demand at 1.3249/1.3274 will give way and allow sellers to move into 1.32 bids.

RSI enthusiasts will observe the value remains surfing beneath 50.00, off oversold troughs formed during early US trading.

Observed levels:

Monthly price flirting with trendline resistance, as well as sellers showing interest from daily supply at 1.3622/1.3467, communicates a bearish vibe. Consequent to the above, H4 demand at 1.3240/1.3273 may suffer today, and the H1 bearish pennant pattern could have its lower side breached, a move that may initiate intraday selling.

December 11th 2020: Sterling Lower Amidst No-Deal Possibility, 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.




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