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 is seen retesting the upper boundary of the said demand, as we write.
Although down 1.77% on the month and in-line with the primary downtrend, 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 four-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 prominent, from a technical perspective, is trendline resistance (1.1239).
The RSI indicator recovered from channel support and, in recent trade, rose through the connecting channel resistance, highlighting the possibility of moves to overbought territory.
H4 timeframe:
Supply at 1.0924/1.0902 made its debut Wednesday, bolstered by a 38.2% Fibonacci retracement at 1.0898 and local channel resistance (1.0863).
Upside over the past week, formed over gradual higher highs/higher lows, appears to have consumed demand along the way. A decline from the current supply, therefore, could be energetic.
A 50.0% retracement at 1.0936 resides above current supply, representing potential resistance in the event of a move north today.
H1 timeframe:
EUR/USD bulls latched onto a modest bid Wednesday, breaching 1.09 to highs at 1.0908. The 1.0869/1.0858 supply-turned demand zone contained downside, aided by the 50-period SMA, a preferred support so far this week. Buy stops above 1.09 are likely filled, perhaps clearing the river north to resistance at 1.0925 and 1.0950.
ECB’s president Lagarde spoke in Germany, stating a level of trust in the euro is critically important.
New Home Sales out of the US came in better-than-expected, but was largely ignored on the charts. The Census Bureau noted:
Sales of new single‐family houses in January 2020 were at a seasonally adjusted annual rate of 764,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.9 percent (±17.8 percent) above the revised December rate of 708,000 and is 18.6 percent (±19.2 percent)* above the January 2019 estimate of 644,000.
Direction:
From the monthly timeframe, further recovery could be on the cards, with daily price exhibiting scope to resistance at 1.0924. Shorter-term flow, on the other hand, has the H4 candles rejecting a confluent area of supply at 1.0924/1.0902 and H1, albeit appearing weak, remains south of 1.09.
According to chart studies, a break of 1.09 is likely, though follow-through buying may not be anything to write home about, likely capping gains at daily resistance mentioned above at 1.0924.
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 -2.16% on the month.
Daily timeframe:
Partially altered outlook from previous analysis –
Hefty supply-turned demand at 0.6642/0.6520 remains on the daily timeframe, albeit holding on by a thread around decade lows. Traders will also note this area fills a portion of the current monthly demand highlighted above at 0.6358/0.6839.
Should the candles kick back and advance – an unlikely scenario – 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).
Further loss could draw the spotlight towards 0.6330/0.6245, a clear area of support.
The RSI recently re-entered oversold territory, trading at 22.30.
H4 timeframe:
The pair retained a reasonably strong underlying offer yesterday, consequently pencilling in a rather appealing area of supply at 0.6607/0.6588. With respect to support on this timeframe, the 161.8% Fibonacci extension at 0.6509 is eyed, closely tied together with channel support (0.6585).
H1 timeframe:
Ongoing Chinese coronavirus concerns, and dismal Q4 construction work completed, directed the H1 candles south of a familiar consolidation phase between 0.6587/0.6620 Wednesday, which encapsulated the round number 0.66.
With the RSI tunnelling into oversold terrain, H1 action recently formed a supply zone a touch north of 0.6550 at 0.6661/0.6652. Traders may also find use in the nearby channel support-turned resistance (0.6584).
Direction:
Higher-timeframe demand areas currently in motion echo a weakening vibe. Adding to this, technical research reveals the H4 and H1 timeframes show room to explore lower ground. As such, traders likely have their crosshairs fixed on H1 supply at 0.6661/0.6652 for possible shorting opportunities today, with downside targets set at the 0.65 handle, set just ahead of the 161.8% Fibonacci extension on the H4 timeframe at 0.6509.
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 +1.89% on the month.
Daily timeframe:
Outlook brought forward 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 in recent trade, 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, remains in view. A recently violated trend line support serves as resistance, which could pressure the unit beyond 110.02/110.23 to demand plotted at 109.30/109.53. A turn higher, nonetheless, has demand-turned supply on offer at 111.38/111.10.
H1 timeframe:
The US dollar was quoted higher against the Japanese yen Wednesday, modestly climbing to highs at 110.70 and snapping a three-day bearish phase. The upward lift came from a modest rebound in the US dollar, fuelled by a bid in US Treasury yields. According to Bloomberg, volatility traders bet stock turmoil will get worse as the coronavirus virus spreads, which could benefit the safe-haven Japanese yen.
110 remains a dominant fixture on this timeframe, while 110.50 proves a troublesome resistance to dethrone. To the upside, supply at 110.88/110.77 is stationed close by, positioned a few points south of the round number 111 and the 100-period SMA.
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.
Therefore, H4 trend line resistance may continue to cap upside, highlighting 110.50 and the H1 supply at 110.88/110.77 for potential selling opportunities.
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. So far this month, however, we’ve seen little but red, down 2.27%.
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, while a local trendline resistance (1.3514) hovers north of price. Supply mentioned above at 1.3303/1.3184 will likely enter the mix should we push above the said trendline, whereas 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.
H4 timeframe:
Partially altered outlook from previous analysis –
Wednesday’s analysis noted that after price retested demand 1.2868/1.2894, the pair caught a fresh bid and entered the jaws of an attractive supply drawn from 1.3023/1.3006. What was appealing was the approach formed an AB=CD pattern (orange) that terminated around 1.3013.
The analysis went on to further highlight:
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.
As can be seen from this morning’s chart, as expected, the H4 supply held ground, forcing a test at the demand area mentioned above at 1.2868/1.2894.
H1 timeframe:
Heightened hard Brexit risk remains a persistent weight for sterling as the UK and EU show faint sign of relaxing divergent trade terms. Technically, we nudged through demand at 1.2957/1.2944, and the 100-period SMA, leaving the 1.29 free, which, as you can see, is holding right now. A run lower from here could draw the market to familiar support at 1.2850, though a move north has demand-turned supply mentioned above at 1.2957/1.2944 in sight.
Direction:
The combination of daily demand at 1.2823/1.2910, along with H4 demand at 1.2868/1.2894 and the 1.29 handle entering view yesterday, could encourage a recovery move today. So, any intraday long positions off 1.29 may target 1.2957/1.2944 as an initial base, with a break maybe drawing the candles back to 1.30ish.
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