Brought forward from previous analysis:
Long term, EUR/USD’s primary trend has faced a southerly trajectory since topping in mid-July 2008, at 1.6038. Activity on the monthly chart remains languishing south of a resistance area at 1.2048/1.1653 as well as a trendline resistance (1.6038).
Downside risk remains on this timeframe until connecting with the support area marked at 1.0742/1.0333.
The beginning of February witnessed a retest occur around the underside of a central resistance zone at 1.1109/1.1066, followed by six consecutive daily bearish candles. Monday observed a violation of a support zone at 1.0962/1.0925, with the pair clocking a session low of 1.0891 on Tuesday and printing a mild recovery. Traders are likely expecting 1.0962/1.0925 to offer some form of resistance today.
To the downside, the next area of support falls in close by around 1.0822/1.0879, boasting history as far back as March 2016.
The RSI also recently drove into oversold territory, forming hidden bullish divergence. Hidden bullish divergence occurs when the RSI Indicator forms a lower low and price produces a potential higher low.
While the daily timeframe has price testing a possible resistance area at 1.0962/1.0925, H4 reveals we may be dealing with an AB=CD bullish pattern at 1.0906, with waves A-B of similar length to C-D and sited a few points ahead of a 161.8% Fibonacci extension point at 1.0879.
Modest buying occurred from 1.0879/1.0906 Tuesday, recently forming a robust bullish candle that closed a whisker off its highs. Should H4 price brush aside the fact we have monthly price eyeing lower levels and a daily resistance area in the mix, the initial upside target out of an AB=CD bullish formation generally sits around the 38.2% Fibonacci retracement of legs A-D: 1.1000.
Shorter-term movement had the euro initially cross 109 to the downside against the greenback Tuesday, pencilling in multi-month lows for the pair and running sell stops.
Early US hours saw EUR/USD regain the key figure and breach channel resistance (1.1013), considered an intraday bullish signal. Another factor in favour of a EUR/USD revival is the H1 candles are seen retesting the recently broken channel resistance as support. Assuming the level holds, the 50-period moving average (1.0926) resides nearby, shadowed by a local resistance zone at 1.09491/1.0941.
Longer term, according to the monthly and daily timeframes, it appears we may be heading lower, at least until connecting with the daily support area at 1.0822/1.0879.
However, short-term movement reveals the pair could extend yesterday’s recovery, with an ultimate upside target at the H4 AB=CD’s 38.2% Fibonacci retracement 1.1000.
Following a retest to the underside of a resistance area drawn from 0.8409/0.8082 in early 2018, AUD/USD has been grinding lower, down nearly 1500 points since.
June 2018 witnessed a long-standing trend line support (1.4776) give way, followed by the 0.6827 January 2016 low in August 2019. This, technically speaking, suggests scope for further downside to 0.5986/0.6346, a long-term support zone.
Action on the daily timeframe has remained south of the 200-day SMA (0.6858) since mid-January, 2020.
Of late, despite a minor break beyond the 0.6670 October 2nd low, AUD/USD has retained a reasonably strong underlying bid since the beginning of the week. Upward momentum, nonetheless, may slow in the event we reconnect with a familiar resistance area at 0.6770/0.6751, which, as you can see, is located close by a trendline support-turned resistance (0.7393).
The RSI, for those who follow indicators, is seen coming off mild bullish divergence from oversold territory.
A closer look at price action on the H4 timeframe has the unit fading the underside of a trendline resistance (0.6933), formed by way of a shooting star Japanese candlestick formation. This is considered a bearish signal.
Given we recently formed a fresh lower low at 0.6662, after breaking the previous swing low 0.6679, further downside from current price could be in store on this timeframe.
Alternatively, renewed buying could see another layer of trendline resistance enter view from 0.7031, followed closely by a resistance area priced in at 0.6783/0.6769.
Early hours US Tuesday saw price action reject an interesting area of resistance at 0.6744/0.6737. Fibonacci studies brought in the 161.8% Fibonacci extension point at 0.6735 and a 61.8% Fibonacci retracement at 0.6731. In addition, the RSI collided with overbought levels, eclipsing 70.00 to a high of 73.70.
The pair weakened from the said zone and is currently testing the 100-period SMA (0.6710), closely trailed by the 0.67 handle and the 50-period SMA (0.6698).
Shorter-term candlestick action on H4 indicates lower prices, though traders are urged to consider waiting for a H1 close beneath of the 0.67 handle before looking to get involved in any bearish scenarios.
The monthly timeframe also exhibits scope to press lower, but the daily timeframe displays room to push higher and retest 0.6770/0.6751.
Since kicking off 2017, USD/JPY has been bust carving out a descending triangle pattern. The breakout for this pattern is more common to the downside, but an upward breakout is considered more reliable and profitable.
Outside of the current configuration, a resistance area is visible at 121.36/124.23, while lower on the curve we have a support area at 98.83/101.42.
Despite a reasonably healthy recovery since August 2019, the resistance area at 110.73/110.31, along with a long-term trend line resistance (114.54), has capped upside.
Should we eventually overthrow the said zones, however, immediate resistance resides close by in the form of a channel resistance (109.48) and a 78.6% Fibonacci retracement at 110.71 (red level).
A rejection, on the other hand, has a support area at 108.21/108.51 to target, along with the 200-day SMA (108.38) and channel support (106.48).
Leaving resistance at 110.09 unchallenged, H4 price recently revisited familiar support at 109.68 and held firm. Failure to explore higher ground from here could lead to price retaking 109.68 and navigating lower ground to a support area coming in at 109.16/109.29. Note the 50.0% retracement aligns with the underside of the said support zone (green).
USD/JPY movement wrapped up Tuesday unmoved, confined south of the 110 handle since the beginning of the week.
Interestingly, though, we’re coming off two trend line supports (108.32/109.53) and price is seen interacting with both the 50/100 period SMAs at 109.79 and 109.83, respectively. 110 remains key resistance on this scale, though a break beneath the current trend line support could bring the 109.50 region into view.
In terms of the RSI, momentum recently crawled above its 50.0 value point and trades at 53.67.
The daily resistance area at 110.73/110.31 appears to be hampering upside off H4 support at 109.68. This may support a selloff from 110 on the H1 timeframe, in the event of a retest occurring today. A break of the current H1 trend line supports would help confirm a downside bias to at least the 109.50 neighbourhood.
Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement area (red).
In recent months, the market witnessed longer-term flows retest the underside of a resistance area at 1.3699/1.3503. continued selling is a possibility on this timeframe, targeting a support area at 1.1899/1.2217
In conjunction with the monthly timeframe, we can see price action on the daily timeframe chalked up a bearish pennant pattern and had its lower edge engulfed last week.
As of current price, a retest at the recently broken pennant edge may came about, which if it holds, could guide the pair to as far south as a support area coming in at 1.2816/1.2719
Leaving the 127.2% Fibonacci extension at 1.2867 unchallenged, GBP/USD dipped a toe in waters within a resistance zone at 1.2970/1.2940. With highs of 1.2968 reached yesterday, its likely the current resistance zone may surrender ground and unlock the door to the 38.2% Fibonacci retracement at 1.3001. Note this level also coincides closely with a trend line support-turned resistance level (1.2904).
The story on the H1 timeframe has price retesting a support area coming in at 1.2940/1.2949, reinforced by the 100-period SMA (1.2933). Upside objectives from this angle fall in at the key figure 1.30, as well as the 61.8% Fibonacci retracement value at 1.2994. Interestingly, we also have a 38.2% Fibonacci retracement converging with the 1.30 handle.
A retest at the key figure 1.30 is a potential scenario worthy of the watchlist today. Not only is it a widely watched figure, its aligning Fibonacci studies offer a strong base for an intraday reaction. It’s also worth remembering where we’re positioned on the bigger picture. H4 has price is contained within a resistance area, daily price threatens a retest at the recently broken pennant pattern while the monthly timeframe rejected a major resistance area.
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