Charts: Trading View
(Italics: Previous Analysis)
Technically, according to trend, a downside bias has been in play since topping at $1.2350 at the beginning of January (2021) on the weekly timeframe. This is reinforced by a weekly trendline support breach, drawn from the low $1.0636, together with the break of the $1.1602 November 2020 low (circled) and the retest of weekly resistance at $1.1473-1.1583. Continued interest to the downside on the weekly chart could overthrow 28th January low at $1.1121 and shine the technical spotlight as far south as Quasimodo support at $1.0778—area not seen since pandemic lows of March 2020.
Lower on the curve, the daily timeframe witnessed a trendline resistance breach (taken from the high $1.2254) in early February, movement conflicting with the weekly timeframe’s bearish environment. However, the $1.1483 14th January peak (marked Key WATCH) echoing muscular resistance between 4th and 10th February, along with a subdued bid from last week’s trendline retest and the relative strength index (RSI) weakening at 50.00, airs a bearish vibe, in line with the weekly scale. Dethroning the noted trendline pulls interest towards daily prime support from $1.1161-1.1199.
From the H4 timeframe, a harmonic bat pattern is brewing lower on the curve; the PRZ resides between $1.1164 and $1.1181, and shares a connection with daily prime support mentioned above at $1.1161-1.1199. Before reaching this far south, however, two H4 prime supports are seen at $1.1262-1.1304 and $1.1205-1.1230.
A closer assessment of price movement on the H1 timeframe shows EUR/USD faded familiar supply at $1.1407-1.1386 ($1.14 seen within) on Monday, heading into early London hours. Consequently, $1.13 is in reach, shadowed closely by prime support drawn from $1.1264-1.1294 (housed within H4 prime support underlined above at $1.1262-1.1304).
The combination of the following technical elements: daily trendline support, $1.13 on the H1 (and prime support at $1.1264-1.1294) and H4 prime support from $1.1262-1.1304, brings light to possible support. The caveat, of course, is the weekly timeframe’s test of resistance at $1.1473-1.1583, in a market trending lower, long term.
Therefore, interested buyers are likely to adopt a cautious stance and seek additional confirmation before pulling the trigger.
Longer term—the monthly timeframe—has portrayed a downtrend since August 2011, suggesting the 12.6 percent correction from mid-Feb tops at $0.8007 (2021) on the weekly timeframe might be the start of a bearish phase and not a correction from the 2021 advance from pandemic lows of $0.5506. This places a question mark on weekly prime support at $0.6968-0.7242, which has failed to ignite much bullish interest since late November 2021. If a break lower should come to pass, weekly support at $0.6673 and a 50% retracement at $0.6764 are visible.
The downside bias is supported on the daily timeframe: price remains comfortable under its 200-day simple moving average, currently flirting with $0.7344. Adding to this, Quasimodo resistance is seen at $0.7278, tracked closely by two trendline resistances, drawn from highs of $0.8007 and $0.7891. Between $0.7347 and $0.7278, therefore, is likely watched resistance. Also worth highlighting is the relative strength index (RSI) seen struggling to find grip above the 50.00 centreline, with resistance overhead at 58.43.
Out of the H4 timeframe, we can see that following the reaction (10th Feb) from the harmonic bat pattern’s PRZ between $0.7274 and $0.7241, a ‘deep’ AB=CD bullish formation may complete (black arrows) at the 61.8% Fibonacci retracement from $0.7074. Harmonic traders will note the aforementioned Fibonacci ratio serves as a second (and for many, a final) profit objective of the bat pattern (derived from legs A-D).
Monday left behind a somewhat chaotic tone, acknowledging intraday risk-off and risk-on reactions amid ongoing geopolitical tensions between Russia and the Ukraine. From a technical perspective, traders faced challenging conditions on the H1 around the $0.72 figure. Nevertheless, upstream shifts focus to H1 Quasimodo resistance at $0.7257 and trendline support-turned resistance, taken from the low $0.6968. Under $0.72, on the other hand, brings light back to Friday’s trough at $0.7165 and H1 prime support from $0.7141-0.7152.
Medium term, attention remains on daily resistance between $0.7347 and $0.7278, in line with the current downside bias.
Scope for the H4 timeframe to drop in on the 61.8% Fibonacci retracement at $0.7074 (AB=CD completion), and the H1 still failing to find acceptance north of $0.72, signals short-term flow might push through (used) prime support at $0.7141-0.7152 and attack $0.71 on the H1. Traders, nonetheless, are urged to pencil in the possibility of a $0.71 whipsaw to test $0.7074 on the H4 scale, which could present a bullish theme.
The trend in this market favours buyers at the moment. The currency pair has been stepping higher since early 2021, clearly visible on the weekly timeframe. In line with this, the overall longer-term trend has been climbing since 2012 (check monthly timeframe). The 21.5 percent correction from June 2015 to June 2016 provided a dip-buying opportunity, as did a subsequent 14.8 percent correction from December 2016 to pandemic lows formed early March 2020.
The weekly timeframe’s 1.272% Fibonacci projection at ¥116.09, as you can see, has remained a headwind since the beginning of this year. The potential for a double-top pattern to form is present, thanks to an additional test of the Fibonacci base early February. Weekly channel support, extended from the low ¥102.59, could be an area we see enter the frame going forward, should sellers strengthen their grip over the coming weeks.
The meaningful rejection from the daily timeframe’s Quasimodo resistance at ¥116.33 (technically) aided the weekly timeframe’s Fibonacci projection test (¥116.09). Aside from lows at ¥114.15 (2nd Feb) and ¥113.47 (24th Jan), supply-turned demand from ¥112.66-112.07 is seen. Not only is the area in the company of a 78.6% Fibonacci retracement at ¥112.00 and a 50% retracement from ¥112.55, technicians will acknowledge the widely watched 200-day simple moving average housed within the lower limit of the zone at ¥112.11. Note the relative strength index (RSI) is also testing support between 40.00 and 50.00 (a ‘temporary’ oversold range since 10th May—common view in trending markets).
The landscape from the H4 timeframe has candles on the verge of greeting a 61.8% Fibonacci retracement at ¥114.57. Coupled with Friday’s successful retest of the breached trendline (drawn from the low ¥113.47) to shape resistance—communicates the potential for a test of the 61.8% Fibonacci retracement (considered by many to be a second profit objective from the H4 AB=CD bearish pattern’s A-D legs). Interestingly, this echoes the possibility of an AB=CD bullish formation (black arrows to the downside) that completes at the 61.8% Fibonacci ratio.
Coming from the H1 timeframe, Monday watched price respect the lower side of ¥115 and slip beneath support at ¥114.82 (now possible resistance). Subsequent downside manoeuvres support at ¥114.42 in view, arranged a handful of pips south of the H4 timeframe’s 61.8% Fibonacci retracement at ¥114.57.
From the H4 chart, following a retest of trendline support-turned resistance, this indicates space to move in for the 61.8% Fibonacci retracement at ¥114.57 and the intersecting AB=CD bullish formation. This bearish picture is strengthened by the ¥115 figure and support at ¥114.82 giving way on the H1 timeframe.
Area between H1 support at ¥114.42 and the H4 Fibonacci level at ¥114.57 represents a logical downside target, technically speaking.
Longer-term trend direction has been southbound since late 2007 tops at $2.1161. As a result, the move from pandemic lows in March 2020 may be viewed as a pullback within the larger downtrend. This places the 7.5 percent ‘correction’ from February 2021 to December 2021 in questionable territory and may in fact be the beginning of a longer-term push to the downside rather than a dip-buying scenario.
Technical structure visible on the weekly timeframe consists of resistance at $1.4371-1.4156 (potential compressed supply appears between $1.3983 and $1.3834 [blue arc]) and a double-top pattern’s ($1.4241) profit objective at $1.3090 (red boxes).
Daily resistance remains in the spotlight at $1.3602, organised under the 200-day simple moving average, circling $1.3683. Weakness from here shines light on support at $1.3355, with follow-through downside perhaps throwing Quasimodo support into the mix at $1.3119. Of note, the aforementioned support shares chart space with the weekly timeframe’s double-top pattern’s profit objective at $1.3090. In terms of momentum, the relative strength index (RSI) continues to operate above its 50.00 centreline, informing traders average gains are exceeding average losses at the moment: positive momentum.
Lower timeframes shine light on a H4 consolidation between resistance at $1.3622-1.3646 (arranged beneath Quasimodo resistance at $1.3650) and Quasimodo resistance-turned support at $1.3498. Of particular importance is also H4 prime support located at $1.3428-1.3444. This is a fresh zone that’s in good shape, placed to take advantage of ‘sell-stop momentum’ beneath $1.3498.
The H1 timeframe is concentrated between Quasimodo resistance at $1.3637 (set just below H4 Quasimodo resistance at $1.3650) and $1.36. If we fall below the latter, this unlocks the door back to prime support at $1.3477-1.3514 (surrounds H4 Quasimodo support-turned resistance at $1.3498). However, as this prime zone has been tested, it could be brittle. Consequently, this throws the H1 decision point at $1.3441-1.3459 in the mix (sharing space with the H4 prime support at $1.3428-1.3444).
Daily resistance remaining active at $1.3602 indicates a bearish setting.
Chart studies imply a move under $1.36 could take shape until reaching H4 prime support at $1.3428-1.3444 and the H1 decision point at $1.3441-1.3459. This is due to daily resistance maintaining position at $1.3602 and H4 Quasimodo resistance-turned support at $1.3498 (and H1 prime support at $1.3477-1.3514) already being tested.
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