December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal

December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal, 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 currently trading higher by 2.6 percent reasons additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Brought forward from previous analysis –

Daily activity, as you can see, squeezed through the upper perimeter of a descending wedge pattern (correction) between 1.2011 and 1.1612 (not the prettiest of structure here with some maybe interpreting this arrangement as a descending triangle pattern) heading into the final rounds of November. December also overrun resistance at 1.2095, shaping a bullish flag pattern (1.2177/1.2078).

As we head into the final weeks of what has been a tumultuous 2020, price action, despite Monday’s dip to 1.2129, is seen closing in on not only 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).

The trend on this timeframe has decisively pointed north since March (secondary trend). We can also see the RSI recently penetrated overbought space, which is common viewing during an uptrend and may not necessarily indicate a weakening market. 80.62 resistance, however, is a key level to keep an eye on, an active barrier since the beginning of 2000.

H4 timeframe:

Demand at 1.2200/1.2170 greeted downside pressure Monday. Despite whipsawing to lows ahead of trendline support (1.1602), the aforesaid support zone survived and prompted moves back to neighbouring resistance from 1.2255. A breakout north may witness buyers strive for supply at 1.2351/1.2333, conveniently set a few pips above the daily descending wedge pattern’s take-profit target at 1.2318 (yellow).

H1 timeframe:

Following nine successive H1 bullish candles, a move that dethroned 1.22 resistance and the 100-period simple moving average, 1.2250 resistance made an entrance. While potentially tempting a 1.22 retest today, rupturing 1.2250 signals fresh year-to-date highs could be on the table, with subsequent upside taking on 1.23.

RSI action journeyed above 50.00 Monday, breaking trendline resistance.

Observed levels:

Partly modified from previous analysis –

As aired in yesterday’s technical report, higher timeframes display room to rally on the monthly chart, in addition to the two bullish patterns forming on the daily timeframe. This implies buyers could attempt to refresh year-to-date highs.

A H4 close above resistance at 1.2255 helps confirm upside interest and provides traders a possible entry long. Available resistances surface around the 1.23 level on the H1, the daily descending wedge pattern’s take-profit target at 1.2318 and H4 supply at 1.2351/1.2333.

December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal, FP MarketsAUD/USD:

Monthly timeframe:

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

On track to close out 2020 in positive territory, December currently trades higher by 3.3 percent following November’s 4.5 percent rebound from demand at 0.7029/0.6664 (prior supply).

Buyers, according to the monthly chart, 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:

Bottoming within close range of demand at 0.7453/0.7384 (prior supply), Monday’s session settled by way of a dragonfly doji pattern. Although this directs light towards 0.7674 resistance, the RSI indicator is seen crowding overbought space, visiting resistance around 80.19, a level in play since 2003.

The trend on this timeframe is considered north.

H4 timeframe:

Although trendline support (0.6991) suffered a horrid whipsaw to lows at 0.7462 yesterday, buyers made a strong comeback in later hours and discovered a foothold above the aforesaid trendline.

Refreshing YTD peaks unearths supply at 0.7665/0.7644 (extended from June 2018), an area situated below daily resistance at 0.7674.

H1 timeframe:

Buyers, as you can see, regained consciousness mid-way through London on Monday, retaking control of 0.75 and toppling supply at 0.7545/0.7527, together with resistance at 0.7547. Traders will also note the RSI pushed through trendline resistance.

0.76 recently made a show, with a mild rejection guiding price under the 100-period simple moving average. While this perhaps sets the stage for a 0.7545/0.7527 retest, retaking 0.76 throws light on trendline resistance (0.7639).

Observed levels:

The daily timeframe’s dragonfly doji ahead of demand at 0.7453/0.7384, on top of monthly price calling for higher ground, shines light on H1 demand at 0.7545/0.7527 as a place dip-buyers may find interest in. Alternatively, H1 overriding 0.76 and nearby trendline resistance demonstrates interest to take on H4 supply at 0.7665/0.7644.

December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal, 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.

December, currently down by 1.0 percent, is seen pursuing terrain beneath 104.62.

104.62 ceding ground throws light on support from 101.70, with a break uncovering trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Brought forward from previous analysis –

Support at 103.08 emerged in the latter half of last week. While efforts to hold the level were evident Friday, the session, much like Monday’s session, finished considerably off best levels.

With USD/JPY trending lower since March, and buyers failing to accomplish much off 103.08, the RSI indicator’s bullish divergence signal is on soft ground. RSI enthusiasts will also note momentum has remained under 57.00 resistance since July (common in a downtrend).

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 if sellers make a push through 103.08 support.

H4 timeframe:

Following an AB=CD pullback to resistance at 103.70, sellers stepped forward Monday and took on bids ahead of daily support at 103.08.

Below, H4 demand resides at 101.98/102.63, located just ahead of daily demand at 100.68/101.85.

H1 timeframe:

Leaving 104 resistance unopposed on Monday, intraday price action dropped through the 100-period simple moving average and has mildly paused ahead of local support around 103.25. Continued bearish interest beyond the latter throws light on 103 and a 127.2% Fib projection at 103.01.

Also notable is the RSI indicator breaching trendline support and overrunning the 50.00 level. This implies additional downside momentum could be seen.

Observed levels:

Partly modified from previous analysis –

Monthly price pursuing a bearish theme below descending triangle support at 104.62 places a question mark on daily support at 103.08. A daily close below the aforementioned level unlocks the possibility of monthly support surfacing around 101.70 (located within daily demand at 100.68/101.85).

Shorter-term price action suggests 103 support on the H1 is likely to make an entrance, having seen limited confluence supporting H1 support at 103.25. Given 103 is positioned around daily support at 103.08 and boasts H1 Fib confluence, buyers are unlikely to give up 103 without a fight, regardless of monthly price suggesting lower levels.

December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal, 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 1.0 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:

Brought forward from previous analysis –

Supply at 1.3622/1.3467 has represented an area of importance since June 2018 on the daily chart. However, having seen September’s reaction fail to deliver a concrete lower low, together with December’s response unable to capsize support at 1.3176, buyers appear to be gaining the upper hand.

Resistance at 1.3755 stands out above the aforesaid supply, with follow-through buying emphasising supply at 1.3996/1.3918.

The RSI reveals the value rebounded strongly from support around 47.00 in recent days, though has since corrected ahead of overbought space.

H4 timeframe:

Sterling elbowed sharply higher during US trading Monday, fuelled on UK Prime Minster Boris Johnson’s ‘last ditch’ attempt to secure a Brexit deal. This, following an earlier test ahead of 1.3182 support, led GBP/USD to supply at 1.3532/1.3471.

Above the aforesaid supply, bullish eyes are likely to take aim at 1.3607 resistance.

H1 timeframe:

Following a wild start to what is normally a quiet week heading into Christmas, GBP/USD settled 0.5 percent higher.

Current action, as you can see, is establishing a possible bullish flag pattern (1.3499/1.3430) after modestly penetrating trendline resistance (1.3624). This could lead to a run through 1.35 offers to at least test 1.3550 resistance.

Interestingly, RSI resistance at 51.00 surrendered position, telling traders additional upside momentum is perhaps in the offing.

Observed levels:

Monthly trendline resistance remains in the fight, though daily supply at 1.3622/1.3467 currently on shaky ground suggests price may visit daily resistance at 1.3755.

H1 buyers watching the current bullish flag are likely to tread cautiously, having noted H4 supply making a show at 1.3532/1.3471. Price consuming 1.35 might add conviction to an intraday push higher, with 1.3550 in view as a potential primary target.

December 22nd 2020: Sterling Higher on UK PM Johnson’s ‘Last Ditch’ Attempt to Secure a Brexit Deal, 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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