December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes

December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes, 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, buyers making an entrance in November and December trading higher by 2.2 percent 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:

Brought forward 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.

In recent movement, EUR/USD also processed a bullish flag pattern (1.2177/1.2078) off 1.2095, a level now serving as support. As you can see, the pair modestly closed above the bullish flag’s upper side earlier in the week, suggesting not only could price 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:

Partly modified from previous analysis –

Following last week’s recovery off demand at 1.2040/1.2065 (an area sharing space with a 127.2% Fib projection at 1.2052, a 50.0% level at 1.2050 and a trendline support [1.1602]), supply at 1.2200/1.2170, extended from April, 2018, relinquished position on Wednesday. This throws light on resistance at 1.2255.

Another feature worth underlining on this chart is the ascending wedge formed between 1.2147/1.2059. A breakout lower from here may draw in trendline support (1.1602).

H1 timeframe:

US trading on Wednesday watched H1 whipsaw through 1.2150 support and the 100-period simple moving average to lows at 1.2125. The bearish tide, however, was short-lived with buyers soon after confronting supply at 1.2206/1.2187, and the 1.22 level.

RSI enthusiasts will see the value has been entrenched within a range between 70.00 and the 43.50 area.

Observed levels:

Partly modified from previous analysis –

According to the higher timeframes and the prevailing uptrend, any bearish setups are likely to struggle. Therefore, H1 supply at 1.2206/1.2187 could fold today, as could the H4 ascending wedge and H4 supply from 1.2200/1.2170.

H1 closing above 1.22 may be interpreted as a bullish signal, with H4 resistance at 1.2255 targeted.

December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes, FP MarketsAUD/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 3.2 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:

Partly modified from previous analysis –

Supply at 0.7587/0.7528, as you can see, is on the verge of succumbing to upside pressure, a move that would shine light on 0.7674 resistance. With reference to the immediate trend, AUD/USD has been higher since bottoming in March.

Sellers making a show out of current supply, on the other hand, focuses attention back to 0.7453/0.7384 demand (prior supply).

The RSI indicator is seen crowding overbought space, on track to visit resistance around 80.19.

H4 timeframe:

North of price, supply is seen at 0.7616/0.7591, an area that sits on top of daily supply at 0.7587/0.7528.

Below, demand can be found at 0.7484/0.7514.

H1 timeframe:

Partly modified from previous analysis –

H1, as you can see, spent Wednesday circling the upper side of the current range between 0.7521/0.7572, recording fresh year-to-date highs off dynamic support at 0.7545 (the 100-period simple moving average).

With sellers clearly thin right now, follow-through moves to the 0.76 level could be just around the corner. On top of this, RSI fans will note the line formed a bullish flag, with the indicator trawling the upper side of the pattern, as we write.

Observed levels:

Partly modified from previous analysis –

Daily supply at 0.7587/0.7528 displaying signs of weakness, together with monthly price calling for higher levels, implies buyers could gain traction above the H1 range edge at 0.7572 towards 0.76 and the H4 supply at 0.7616/0.7591.

December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes, FP MarketsUSD/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. December, however, currently trades lower 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:

Since kicking off December, sellers have largely governed control with yesterday’s 0.2 percent decline throwing light on support at 103.08.

Trendline resistance (111.68) and supply from 106.33/105.78 are prominent areas north of price; light falls on demand at 100.68/101.85 (fixed to the upper base of monthly demand) if sellers make a push through 103.08 support.

RSI enthusiasts will note the pair has remained under 57.00 resistance since July, currently on course to visit oversold levels.

H4 timeframe:

103.70 support offered little fight on Wednesday, and was eventually retested as resistance. Pressuring buyers within demand at 103.04/103.58, this could elbow sellers towards daily support at 103.08 (located within the lower edge of H4 demand).

H1 timeframe:

A rather vigorous spike to highs at 103.91 emerged amid US trading on Wednesday, testing the lower side of a resistance area composed of the 104 level, a 78.6% Fib level and a 50.0% level at 103.95 and 103.91, respectively, and the 100-period simple moving average. As you can see, sellers welcomed the zone, confirmed by RSI resistance at 51.10.

Yesterday’s low at 103.26, together with 103.18 support offer reasonable downside targets.

Observed levels:

Monthly price on the verge of breaching descending triangle support at 104.62 continues to underline a relatively weak market. This is further confirmed on the daily chart until support at 103.08, along with the H1 chart also displaying scope to reach for support around 103.18.

The above implies buyers out of H4 demand at 103.04/103.58 are likely to find it difficult to gain traction.

December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes, FP MarketsGBP/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 currently trading higher by 1.4 percent 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:

Following Friday’s rebound from support at 1.3176, this week has buyers chewing through offers within supply at 1.3622/1.3467. Although monthly price tests meaty trendline resistance, the fact daily sellers were unable to topple 1.3176 suggests a break of the monthly trendline could be on the table.

The RSI reveals the value rebounded strongly from support around 47.00, on course to perhaps retest overbought space.

H4 timeframe:

Demand at 1.3435/1.3469 recently made an entrance as the pair faded year-to-date highs on Wednesday. The reaction from the aforesaid demand is unsurprising, due to it being within this area a decision was made to push above prior YTD peaks. Holding this area throws light on resistance at 1.3607; 1.3435/1.3469 giving way, however, leads to a possible test of demand at 1.3325/1.3281 (prior supply).

H1 timeframe:

Fastened around the upper side of H4 demand at 1.3435/1.3469, H1 demand at 1.3446/1.3470 made an entrance during US trading on Wednesday. Buying from this region has lifted GBP/USD to 1.35, with a break unmasking 1.3550 resistance.

Interestingly, RSI action also bounced just ahead of support at 51.00.

Observed levels:

H1 rebounding from demand at 1.3446/1.3470, an area associated with H4 demand at 1.3435/1.3469, together with daily supply at 1.3622/1.3467 displaying weakness, could eventually force monthly price above trendline resistance.

In light of the above, the charts suggest buyers have the upper hand right now, with a bullish scene potentially forming north of 1.35.

December 17th 2020: DXY Refreshes YTD Troughs Amid Stimulus Hopes, FP Markets

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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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