EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
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 begun tunnelling its way back into the said demand last week.
Although down 1.86% on the month and in-line with the primary downtrend, which has been lower since 2008, 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, a long-term trendline resistance (1.6038) and a reasonably ‘fresh’ demand area coming in at 0.9581/1.0221. Note this area boasts history dating back as far as 2003.
Daily timeframe:
Partially altered outlook from previous analysis –
Demand at 1.0680/1.0781, an area formed April 2017 which houses a 127.2% Fibonacci ext. point within at 1.0724, elbowed its way into the spotlight late last week and remains a dominant fixture on this timeframe. Exhibiting a three-day winning streak, resistance on this timeframe becomes a factor around 1.0924, as does the demand-turned supply zone seen at 1.1001/1.0946. Also notable from a technical perspective is trendline resistance (1.1239).
The RSI indicator also recovered from channel support, and recently split the connecting channel resistance, highlighting the possibility of moves to overbought territory.
H4 timeframe:
Supply drawn from 1.0890/1.0870, also joins closely with channel support-turned resistance (1.0992), contained upside throughout Asia and most of Europe Tuesday. Having shown resilience off session lows at 1.0830, however, the pair witnessed a resurgence of bidding and overthrew the said channel resistance, driving deep into supply underscored above at 1.0890/1.0870.
Supply at 1.0924/1.0902 lies close by in the event we press higher, bolstered by a 38.2% Fibonacci retracement at 1.0898.
H1 timeframe:
Tuesday’s assessment of intraday flow on EUR/USD underlined the possibility of a move forming to 1.09, after moderately splitting H1 supply at 1.0869/1.0858. The report went on to state a correction to as far south as 1.08 may emerge though a rebound off either the 50 or 100-period SMAs was also not out of the question.
The 50-period SMA, as can be seen from the chart, provided support, guiding the H1 candles above the current H1 supply to highs at 1.0890. Also aiding upside was the following data events:
- Fifth District manufacturing activity softened in February, according to the most recent survey from the Richmond Fed. The composite index fell from 20 in January to −2 in February. All three components of the composite index — shipments, new orders, and employment — moved lower from January – The Federal Reserve Bank of Richmond.
- The Conference Board Consumer Confidence Index improved slightly in February, following an increase in January. The Index now stands at 130.7 (1985=100), up from 130.4 in January. However, do note this release came in below expectations, weighing on the buck and propping up the single currency.
Direction:
Those who managed to secure long positions off the said 50-period SMA yesterday have the option of banking partial profits and reducing risk to breakeven ahead of 1.09. The H1 supply-turned demand at 1.0869/1.0858 may also serve as an intraday floor today, shielding current long positions.
Beyond 1.09, traders must contend with H4 supply 1.0924/1.0902 – note the top edge of this supply denotes daily resistance, followed by daily supply at 1.1001/1.0946.
AUD/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Demand at 0.6358/0.6839 remains in the fight, yet price struggles 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 trendline support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.
Currently, the pair trades -1.37% on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
Hefty supply-turned demand at 0.6642/0.6520 remains in the fray on the daily timeframe, an area that fills a portion of the current monthly demand highlighted above at 0.6358/0.6839. Note price is also trading off decade lows right now and formed a doji indecision candle on Tuesday.
Should the candles kick back and advance, the 0.6662 February 7th low may delay a recovery, with moves higher targeting familiar supply coming in at 0.6778/0.6731, which happens to intersect with trendline resistance (0.7393).
The RSI recently re-entered oversold territory, and is on track to chalk up bullish divergence.
H4 timeframe:
Partially altered outlook from previous analysis –
Support, comprised of Fibonacci studies (161.8% Fibonacci ext. point and the 127.2% Fibonacci ext. point – green) between 0.6591/0.6606, remains in motion though appears to be losing grip, with buyers chalking up little to the upside. There’s a possibility the marginal moves south of the current zone triggered sell stops, weakening buyers here.
Limited supply is visible to the left of current price in the event of a move north; the next base falls in around 0.6695/0.6676, coupled with an intersecting trendline resistance (0.7031).
H1 timeframe:
Since the beginning of the week, the H1 candles entered into a consolidation phase between 0.6587/0.6620, encapsulating the round number 0.66. The 100-period SMA recently entered the top edge of the range, likely to serve as resistance if tested today. Outside of the current range, mid-RNs 0.6550 and 0.6650 represent feasible support and resistance.
Direction:
Outlook unchanged given lacklustre movement since the beginning of the week.
The monthly timeframe continues to challenge demand at 0.6358/0.6839, with daily price also recently getting to know supply-turned demand at 0.6642/0.6520. As of late, there’s been little in terms of an upside attempt from either zone. Despite this, we cannot rule out the possibility of fresh upside attempts, despite the primary trend supporting further downside.
The H4 candles exhibit weakness around 0.6591/0.6606, though continue to hold at the area, and H1 buyers and sellers continue to square off between 0.6587/0.6620.
Right now, things are not looking too good for buyers in this market (unless you’re able to trade off the lower edge of the H1 range), weighed not only by soft demand on the higher timeframes, but also heightened concerns regarding the coronavirus. Therefore, shorts appear attractive from a fundamental perspective, preferably below the current H1 range. Do bear in mind, though, this would involve selling into higher-timeframe demand, albeit potentially weakening demand.
USD/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 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. In recent movement, price elbowed a touch outside the upper boundary of the aforementioned descending triangle to 112.22, and is now seen retreating lower.
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 +1.77% on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
The combination of a channel resistance from 108.47 and supply at 112.66/112.08 held price action lower at the tail end of the week. Follow-through selling has been seen this week, stretching to demand at 109.52/109.99 yesterday, typically labelled a ‘rally-base-rally demand’. Although an appealing area in and of itself, channel support (104.44) could make an entry in the event additional selling materialises, shadowed by the 200-day SMA.
The RSI indicator also voyaged into overbought terrain in recent trading, exiting lower earlier in the week and now hovering just above the 50.0 value.
H4 timeframe:
Supply-turned demand at 110.02/110.23, although suffering a mild breach to lows at 109.89, is holding ground. A recently violated trend line support could serve as resistance today, pressuring the candles beyond 110.02/110.23 to demand plotted at 109.30/109.53.
H1 timeframe:
Increased demand for the safe-haven Japanese yen guided USD/JPY lower from the 111 handle Tuesday amid heightened concerns regarding the coronavirus. 110.50 yielded ground, leaving the 110 handle free to the enter the fight.
Direction:
While daily demand at 109.52/109.99 could send price action higher today, the fact we have monthly price fading notable structure is likely to hamper upside from here. The H4 trend line resistance, therefore, stands a fair chance at holding, consequently underlining 110.50 as possible resistance to be aware of today.
Traders threatened by the current daily demand have the option of either passing on the trade, or seeking additional confirmation.
GBP/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This, along with trendline resistance (2.1161), 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 and breaking the 1.3380 March 2019 high.
Currently, the pair trades at -1.57% on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
Demand at 1.2823/1.2910, represents the lower edge of a multi-month range (supply at 1.3303/1.3184 caps upside), continues to contain downside.
Local trendline resistance (1.3514) could make an appearance today, thanks to moves higher yesterday, with a breach portending a move to supply mentioned above at 1.3303/1.3184. Beyond the current demand, another port of demand, a touch larger than the current, resides at 1.2649/1.2799, which happens to house the 200-day SMA.
Meanwhile, in terms of the RSI indicator, since the beginning of the year we have been compressing within a descending channel (black lines), with the value currently holding above channel support and eyeing a test of the upper limit.
H4 timeframe:
Partially altered outlook from previous analysis –
After retesting demand 1.2868/1.2894, the pair recently caught a fresh bid and entered the jaws of supply drawn from 1.3023/1.3006. What’s also appealing here from a technical perspective is a potential AB=CD approach (orange) that terminates around 1.3013.
It may also interest some traders to note that we likely have sellers attempting to fade the recent pullback from 1.2849, due to the 1.3070 double top formation recently confirming (breaking the 1.2872 low, the trough between the two peaks, marked with a blue arrow, offers double-top confirmation). The take-profit target (1.2672) for confirmed double-top patterns can be calculated by taking the distance between the highest peak and the trough and projecting this value south of the trough.
H1 timeframe:
Today’s price action saw the pound firmer against both the US dollar and the euro as the GBP/USD benefitted from some technical tailwinds, crossing 1.30 briefly at the tail-end of trade. 1.30, positioned just south of a supply zone coming in at 1.3043/1.3024, is a widely watched figure in this market. In terms of the RSI, however, we’re seeing the value fade overbought ground.
Direction:
We have H4 price trading from a highly confluent area of supply (AB=CD confluence), and H1 price jostling with the key figure 1.30. A decisive H1 close south of 1.30 could encourage selling, while there’s also a possibility daily price may invite an approach to nearby trendline resistance. As such, we could be in for a test of H1 supply at 1.3043/1.3024 (converges closely with daily trendline) before turning lower. This would likely trip additional buy-stop liquidity.
Irrespective of the entry technique, downside targets reside at H1 demand from 1.2927/1.2942, the top edge of daily demand at 1.2910, followed by the 1.29 handle on the H1.
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