February 1st 2022: Technical Outlook

February 1st 2022: Technical Outlook, FP Markets

Charts: Trading View

(Italics: Previous Analysis Due to Limited Price Change)


Weekly timeframe:

Long-standing resistance at $1.1473-1.1583 (active S/R since late 2017) entertained a bearish showing early January; EUR/USD subsequently tumbled 3.0 percent, or 340 pips into the recent close. Territory below exhibits scope to fall as far south as Quasimodo support coming in at $1.0778.

Strengthening the bearish wind is the currency pair taking out 2nd November low (2020) at $1.1603 in late September (2021), indicating a downtrend on the weekly timeframe. This is reinforced by the monthly timeframe’s long-term (some would say ‘primary’) downtrend since mid-2008.

Daily timeframe:

Latest developments out of the daily chart on Monday is a pullback and testing the mettle of Quasimodo support-turned resistance at $1.1213.

Upstream, assuming clearance of $1.1213 resistance, casts light on a decision point at $1.1369-1.1309, an area sharing chart space with trendline resistance, extended from the high $1.2254. Downstream, on the other hand, calls attention to prime support at $1.0941-1.1000, price levels not seen since June 2020

Momentum studies on this timeframe show the relative strength index (RSI) spun higher ahead of oversold waters and is poised to reconnect with the 50.00 centreline.

H4 timeframe:

EUR/USD bulls entering an offensive phase—elevated amid risk-on conditions—lifted price beyond resistance at $1.1193 on Monday and, in recent hours, a steep trendline resistance, pencilled in from the high $1.1483. The near-1.0 percent pullback throws $1.1272 in the mix as possible resistance, joined by a decision point coming in from $1.1300-1.1272 and two Fibonacci ratios: a 61.8% retracement at $1.1275 and a 38.2% retracement at $1.1261.

H1 timeframe:

The euro surpassed $1.12 heading into US hours on Monday and subsequently retested the figure and established support. Follow-through upside places prime resistance at $1.1283-1.1265 on the radar, adding weight to the H4 timeframe’s decision point at $1.1300-1.1272.

A caveat to higher levels on this timeframe, of course, is the relative strength index (RSI) connecting with overbought levels (an area where upside momentum tends to level off: average losses ‘begin’ to exceed average gains).

Observed Technical Levels:

In light of $1.12 failing to deliver resistance, short-term action may witness additional gains and test prime resistance at $1.1283-1.1265 on the H1 timeframe. Having noted the area is complemented by H4 technical structure, sellers could be drawn to this zone.

February 1st 2022: Technical Outlook, FP Markets


Weekly timeframe:

Prime support at $0.6968-0.7242 remains hanging by a thread. AUD/USD erased 2.5 percent on the week and is consequently nibbling the lower boundary of the aforementioned area. Manoeuvring beneath $0.6968-0.7242 this week reveals support at $0.6673 and a 50.0% retracement at $0.6764.

Since mid-Feb tops at $0.8007 (2021), sellers have taken the wheel. This followed a bullish period since pandemic lows of $0.5506 (March 2020). It is important to note that the monthly timeframe has been entrenched within a large-scale downtrend from mid-2011.

Daily timeframe:

Support at $0.7021—a level boasting eye-watering historical significance since 1994—commanded attention on Monday and could pull the currency pair towards January tops around $0.7283, closely shadowed by trendline resistance, taken from the high $0.7891.

Quasimodo support at $0.6896 resides south of current support should sellers retake control.

RSI studies (relative strength index) show the indicator bottomed north of oversold space and is exploring 40.00. A retest of the 50.00 centreline will be interesting, having seen the trend on this scale, much like the weekly timeframe, pointing firmly to the downside.

H4 timeframe:

Quasimodo support at $0.6971 (taken from mid-July 2020) entered chart space on Friday after price whacked through the $0.6993 3rd December low (2021). Monday’s bid elbowed price above a decision point at $0.7046-0.7023, and was subsequently retested as a support area.

Resistance is seen at $0.7097 (accompanied by a 38.2% Fibonacci retracement at $0.7101), with a break exposing a resistance area at $0.7169-0.7187 (housing a 61.8% Fibonacci retracement at $0.7181).

H1 timeframe:

AUD/USD climbing more than 1.0 percent Monday, underpinned amid upbeat risk sentiment and broadly soft USD demand, established resistance-turned support from $0.7042 and tested supply from $0.7088-0.7073. Better-than-expected US data, alongside hawkish comments from various Fed members, failed to reduce USD downside.

Technically, $0.71 represents resistance north of supply (plotted closely with H4 resistance at $0.7097) while below current support re-opens the risk of a return to the key figure $0.70.

The relative strength index (RSI) has its value kissing the lower side of overbought levels, unable to puncture the 70.00 threshold as of yet.

Observed Technical Levels:

Daily support at $0.7021 is a notable level in this market.

With that being said, a lack of follow-through buying from support in December and early January (hit a ceiling around $0.7283) and price testing the lower limits of weekly prime support at $0.6968-0.7242 implies brittle support. As a result, sellers may be attracted to $0.71ish.

February 1st 2022: Technical Outlook, FP Markets


Weekly timeframe:

Despite a solid showing from sellers off the 1.272% Fibonacci projection from ¥116.09 at the beginning of the year, USD/JPY bulls reassumed control last week and added 1.4 percent.

Recent bidding is in keeping with the underlying trend on this timeframe (advancing since the beginning of 2021). Further buying on this scale, movement overtaking ¥116.09, may eventually underpin a move to channel resistance, extended from the high ¥110.97.

Against this backdrop, of course, channel support, taken from the low ¥102.59, might re-enter the frame should selling materialise.

Daily timeframe:

Leaving demand at ¥112.66-112.07 unchallenged last week, a base sharing space with a 78.6% Fibonacci retracement at ¥112.00 and a 50.0% retracement from ¥112.55, USD/JPY upside has thrown Quasimodo resistance at ¥116.33 in the firing range.

Also of technical note is the double-bottom formation at ¥113.48; price busted through the neckline last week at ¥115.06 and retested the latter on Monday, perhaps adding fuel to reach ¥116.33.

The trend on this timeframe, like the weekly timeframe, faces northbound. This is reinforced by the relative strength index (RSI) recoiling from support between 40.00 and 50.00 (a ‘temporary’ oversold range since 10th May—common view in trending markets).

H4 timeframe:

Support coming in at ¥115.01(shadowed by a ¥114.48-114.78 decision point [an area established prior to the upside break of ¥115.01]) welcomed price action on Monday, extending Friday’s retracement slide. Technicians will note ¥115.01 support dovetails closely with the daily timeframe’s double-top pattern’s neckline at ¥115.06.

Overpowering Friday’s high at ¥115.69, nevertheless, paves the way to daily Quasimodo resistance noted above at ¥116.33, given potentially ‘consumed supply’ between ¥115.68 and the daily level (blue arc).

H1 timeframe:

USD/JPY rolled over going into US trading on Monday, weighed by a broadly weak USD.

Immediately obvious from the H1 chart is the bullish AB=CD formation (black arrows) converging with the ¥115 psychological figure. Territory south of here shifts focus to prime support arranged just north of a 50.0% retracement (¥114.58) at ¥114.61-114.69.

The relative strength index (RSI) journeyed below the 50.00 centreline on Monday (showing average losses exceed average gains [negative momentum]). As you can see, though, oversold territory has yet to be challenged.

Observed Technical Levels:

Complemented by H4 support at ¥115.01, the daily timeframe’s pattern neckline at ¥115.06 and a H1 AB=CD bullish configuration, the ¥115 psychological figure on the H1 offers buyers a possible floor to work with.

Ultimately, those long from ¥115 are likely to take aim at ¥116 given its connection with weekly resistance (1.272% Fibonacci projection from ¥116.09).

February 1st 2022: Technical Outlook, FP Markets


Weekly timeframe:

Since reaching a top at $1.3749 in early January, GBP/USD bears assumed control. This re-opens the door to the double-top pattern’s ($1.4241) profit objective around $1.3093 (red boxes).

Against this background, of course, is the possibility of upside. ‘Consumed supply’ (blue area) remains nearby between $1.4001 and $1.3830. Considering this, candle action might still be guided as far north as resistance from $1.4371-1.4156 in the event price climbs above $1.3830.

Trend studies, despite the 7.5 percent dip from ‘double-top’ peaks at 1.4250ish, show the weekly timeframe has been higher since early 2020. However, it’s important to recognise that while the trend on the weekly timeframe demonstrates a moderate upside bias, the monthly timeframe’s long-term trend has been lower since late 2007.

Daily timeframe:

Reinforced by a waning USD and the Bank of England (BoE) expected to hike rates on Thursday, GBP/USD bulls snapped higher on Monday ahead of support at $1.3355. Continued interest to the upside draws resistance back into the fold at $1.3602, followed by the 200-day simple moving average (currently circling $1.3715).

A break of noted support exposes Quasimodo support at $1.3119, a base situated just under December bottoms around $1.3172.

Trend on this timeframe remains biased to the downside; the relative strength index (RSI) also nudging beneath the 50.00 centreline places a question mark on price support at $1.3355.

H4 timeframe:

Connecting with a decision point at $1.3340-1.3364 (formed closely with a 1.618% Fibonacci projection at $1.3376 and a 61.8% Fibonacci retracement at $1.3385 [green line], as well as the daily support mentioned above at 1.3355) in the second half of last week witnessed the resistance zone from $1.3428-1.3444 come under attack on Monday.

Quasimodo resistance is seen at $1.3498 should $1.3428-1.3444 step aside.

H1 timeframe:

H1 price action meanwhile touched resistance between $1.3476 and $1.3457, made up of a Quasimodo support-turned resistance, a 61.8% Fibonacci retracement and a 1.618% Fibonacci projection. Bear made a show from the aforesaid region in recent hours, suggesting a return back to the $1.34 psychological region. Failure to command additional selling, the H4 timeframe’s Quasimodo resistance at $1.3498 is likely to be challenged, as well as the $1.35 figure.

From the relative strength index (RSI), we remain in positive territory (above 50.00) and have yet to venture into overbought space. However, signs of decreased upside momentum is evident following the recent rebound from 50.00.

Observed Technical Levels: 

H1 resistance between $1.3476 and $1.3457 is likely to interest short-term traders, supported by ‘slowing’ upside momentum (H1 RSI) and H4 resistance at $1.3428-1.3444 (albeit having seen its upper edge taken in recent trading). Downside targets fall in around $1.34 (H1) and the H4 decision point at $1.3340-1.3364.

February 1st 2022: Technical Outlook, FP Markets


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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