EUR/USD:
Monthly timeframe:
Brought forward from previous analysis –
Despite a healthy attempt at recovery from demand at 1.0488/1.0912 in October 2019 – a particularly noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains, and had the unit retesting its upper boundary last week.
Although down 2.30% on the month and in-line with the primary downtrend, we cannot rule out the possibility of fresh upside attempts from current demand. Additional structure worth noting on the monthly timeframe is demand-turned supply at 1.1857/1.1352 and a reasonably ‘fresh’ demand area coming in at 0.9581/1.0221.
Daily timeframe:
Partially altered outlook from previous analysis –
Since retesting supply at 1.1117/1.1078, the unit has retained a strong underlying offer, consuming a demand zone at 1.1001/1.0946 and dethroning the 1.0879 October 1st low.
Continued downside from here is a possibility, which would draw demand at 1.0680/1.0781 to surface (formed April 2017 – houses a 127.2% Fibonacci ext. point within at 1.0724).
The RSI is seen attempting to bottom off 22.50ish out of oversold territory. Note, we’re also coming from RSI channel support.
H4 timeframe:
Demand at 1.0832/1.0877 continues to echo a fragile tone, having its lower edge absorbed Friday and tested further on Monday.
Channel support-turned resistance (1.1034 – yellow) also continues to cap upside since giving way early last week. Should sellers strengthen their grip here, the next area of interest falls in reasonably close by, albeit not visible on the chart, at demand from 1.0738/1.0774.
Another area of interest is a local supply zone at 1.0890/1.0870. Though with sell stops under pressure beneath the current demand, its unlikely price will reach 1.0890/1.0870 in the next few sessions.
H1 timeframe:
Monday observed a light economic calendar, with US banks also closing in observance of Presidents’ Day. Earlier in the session, however, the Bundesbank warned German exporters were likely to suffer due to the outbreak of the coronavirus. The Bundesbank described the deadly virus, which has already claimed 1,770 lives in China alone, as a cyclical downside risk for Germany. Despite this, the comments failed to generate a market reaction, with EUR/USD trading within the confines of Friday’s range between 1.0861/1.0827.
Technical developments, on the other hand, had price gripping the underside of the 50-period SMA, forming what appears to be a descending triangle pattern from 1.0861/1.0829 – a bearish formation that usually forms during a downtrend as a continuation pattern. Support can be seen between the 1.08 handle and a 127.2% Fibonacci ext. at 1.0813.
The RSI’s current ascending channel remains in motion, with the indicator seen holding beneath the 50.0 point.
Direction:
Longer term, we could eventually see a rebound higher from monthly demand at 1.0488/1.0912, as underlined in Monday’s technical report. However, owing to daily price displaying scope to test demand at 1.0680/1.0781, a dip lower may be seen before any serious buyers step in.
Shorter-term focus has H4 demand at 1.0832/1.0877 weak, and H4 channel support-turned resistance refusing to give way. Intraday selling opportunities, therefore, could be seen should a H1 breakout below the current descending triangle form, with an initial downside target around the 1.08 handle, followed by the top edge of daily demand at 1.0781. Together, these two levels not only provide a solid take-profit target for shorts, it is also a zone worthy of a potential countertrend trade.
AUD/USD:
Monthly timeframe:
Brought forward from previous analysis –
Demand at 0.6358/0.6839 remains in the fight, yet struggling to chalk up anything meaningful to the upside. An eventual break of the said demand zone has another layer of demand close by at 0.6094/0.5866, while a recovery could lead to trend line support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.
Currently, the pair trades FLAT on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
After marginally stabbing through support at 0.6670, the pair pencilled in a three-day bullish phase. Price failed to sustain gains past last Wednesday’s high at 0.6750, leaving a trendline support-turned resistance level (0.7393) unopposed.
As of current movement, we are seeing some downside which could see the candles revisit 0.6670.
The RSI, for those who follow indicators, recently emerged from oversold territory, though has so far failed to connect with the 50.0 value.
H4 timeframe:
Since the beginning of last week, AUD/USD carved out a consolidation between supply drawn from 0.6761/0.6741 and a demand area coming in at 0.6699/0.6715. Recent selling saw the said demand’s lower edge shattered, with limited support seen until we tackle the 0.6662 February 7th low.
H1 timeframe:
Recent hours witnessed the US dollar index score fresh highs, consequently weighing on G10 peers, such as the Australian dollar. Demand at 0.6707/0.6715 (located within the H4 demand zone at 0.6699/0.6715) ceded ground, as did the round number 0.67, which is likely an early indication we’re heading for daily support highlighted above at 0.6670.
A retest at 0.67, or at the underside of demand, may occur before heading lower. Note the RSI also tested oversold waters.
Direction:
The monthly timeframe is seen testing demand at 0.6358/0.6839, with daily price hovering north of support at 0.6670. So, despite the primary trend facing south and recent movement pivoting lower, medium-term recovery could still be in store.
While the bigger picture portends a recovery, short-term flows indicate a pop lower to daily support. The fact we’re trading south of 0.67, with limited support seen on H1 and H4 timeframes, suggests intraday bearish scenarios could be worth considering today.
USD/JPY:
Monthly timeframe:
Brought forward from previous analysis –
Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern. The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable.
Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.
Currently, the pair trades +1.28% on the month.
Daily timeframe:
Brought forward from previous analysis –
Despite a reasonably healthy recovery since August 2019, involving the upper edge of a supply area being absorbed, long-term trendline resistance (114.54) has capped upside.
Should we eventually overthrow the said trendline, 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 the 108.31 January 31st low to contend with, as well as nearby channel support (106.48) and demand at 107.82/108.04.
H4 timeframe:
Brought forward from previous analysis –
Since early February, price action has stamped out a consolidation between a supply zone coming in at 110.23/110.04 and a supply-turned demand area at 109.65/109.49.
It’s important to take into account the upper edge of this range is bolstered by daily trendline resistance, which may lead to a breakout south to H4 demand at 109.30/109.42.
H1 timeframe:
Despite US banks closing in observance of Presidents’ Day and the absence of tier-1 data, USD/JPY managed to eke out marginal gains Monday. However, recent movement witnessed renewed demand for the Japanese yen, forcing price action lower a few points shy of the 110 handle.
Note also the unit jumped through the 100/50-period SMAs (109.82/109.85), perhaps exposing 109.50 on this timeframe, followed by supply-turned demand at 109.32/109.17.
Direction:
The daily trendline resistance, coupled with daily supply at 110.73/110.31, although it had its upper edge engulfed, could weigh on price action this week.
With the 100/50-period SMAs giving way in recent trade on the lower timeframes, intraday movement also exhibits scope to explore lower levels, targeting the mid RN 109.50. However, traders are urged to also pencil in the possibility of buyers stepping in from the top edge of H4 supply-turned demand at 109.65.
GBP/USD:
Monthly timeframe:
Brought forward from previous analysis –
Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This remains a well-rounded resistance area to keep an eye on long term.
In recent months, we’ve seen a recovery form off 1.1904/1.2235, clocking highs of 1.3514 in December 2019. Breaking the 1.3380 March 2019 high could see a retest of 1.4520/1.3893 in the coming weeks.
Currently, the pair trades at -1.56% on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
Despite Monday snapping a five-day winning streak, price remains within close proximity of a local trendline resistance (1.3514), with a break of here revealing a supply area at 1.3303/1.3184.
Continued downside from current price will likely pull familiar demand at 1.2823/1.2910 back to surface, an area that capped downside early last week. Beyond the current demand, we have another port of demand, a touch larger than the current, at 1.2649/1.2799, which happens to house the 200-day SMA (1.2688).
H4 timeframe:
Partially altered outlook from previous analysis –
The February 5th high 1.3070, a potential double-top formation (red arrows) that converges closely with a 61.8% Fibonacci retracement at 1.3079, was challenged last Thursday and remains central resistance on this timeframe.
An upward lift would likely tip price in favour of an advance to an engulfed supply area pencilled in from 1.3175/1.3142. Continued selling off 1.3070, nonetheless, has demand at 1.2916/1.2942 to target.
H1 timeframe:
Mid-way through London’s morning session Monday, sterling dipped lower against the buck, tunnelling through the 50-period SMA and testing the 1.30 handle and the 100-period SMA. While a widely watched number, 1.30 appears frail, with price recently clocking lows of 1.2992, using the underside of the 100-period SMA as resistance.
Areas south of 1.30 fall in at demand drawn from 1.2965/1.2987, closely shadowed by another layer of demand at 1.2916/1.2938.
Direction:
Monthly price exhibits scope for a move higher to 1.4520/1.3893, while daily price could perhaps hinder upside at trendline resistance and a supply area noted at 1.3303/1.3184.
Intraday breakout sellers below 1.30 are urged to tread cautiously. Clear H1 demand resides close by at 1.2965/1.2987. In fact, this may be an area we see sell-stop liquidity bought into from the said demand – round numbers, particularly large round numbers, are prone to whipsaws. Therefore, a test of demand that’s followed up with a H1 close back above 1.30 is indication buyers could take things higher from here.
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