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 noteworthy area given the momentum derived from its base – EUR/USD failed to sustain gains and is currently seen revisiting the upper boundary of the said demand.
Although down 1.00% 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, targeting demand-turned supply at 1.1857/1.1352 and long-term trendline resistance (1.6038).
To the downside, however, traders looking beyond the current demand zone likely have crosshairs fixed on a reasonably ‘fresh’ demand base at 0.9581/1.0221. Note this zone boasts history dating back as far as 2003.
Daily timeframe:
Demand at 1.0680/1.0781, an area formed April 2017 which houses a long-term 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.
Thursday’s 100-point gain lifted EUR/USD to an interesting area of resistance on the daily timeframe, comprised of trendline resistance from 1.1239, a trendline support-turned resistance from 1.0981 and a 50.0% retracement value at 1.1003. Also prominent is supply drawn from 1.1117/1.1078, currently mingling with the 200-day SMA.
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:
Thursday had the EUR/USD power into a small base of demand-turned supply at 1.1015/1.1002, following a break of two supply zones at 1.0958/1.0941 and 1.0924/1.0902, both now representing demand areas. Although current supply is void of local confluence, the daily resistances noted above dovetail with one another beautifully.
H1 timeframe:
Europe’s single currency rallied strongly against the buck Thursday, adding 0.98%. The US dollar index continued to explore lower ground, extending losses south of multi-year highs, pressured on the back of soft US Treasury yields. Note longer-term action on the dollar index also has price testing a daily supply-turned demand base at 98.65/98.19.
Technical headlines saw the EUR/USD welcome a test at 1.10, a key figure widely watched in the market, surrounded by a H1 supply area coming in at 1.1007/1.0994. Demand at 1.0933/1.0948 rests close by in the event we dip lower, seated north of the 1.09 handle.
The RSI indicator also recently journeyed into overbought waters, with the 50/100-period SMAs drifting higher since crossing at the beginning of the week.
Direction:
From the monthly timeframe, further recovery could be on the cards.
Technical levels on the daily timeframe, however, highlights appealing resistance, potentially drawing interest. Similarly, we have demand-turned supply at 1.1015/1.1002 recently making an appearance on the H4 timeframe and the round number 1.10 and supply on the H1 timeframe at 1.1007/1.0994.
The odds a correction materialises today is reasonably high, according to the noted chart studies. As such, bearish themes off 1.10 might be of interest today, using the H4 zone at 1.1015/1.1002 as a base for positioning stop-loss orders.
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 -1.86% on the month.
Daily timeframe:
Outlook brought forward 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 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 28.00.
H4 timeframe:
Supply at 0.6607/0.6588 made its debut in recent hours, capping recovery gains off multi-year lows at 0.6542. Candlestick action pencilled in a strong bearish rotation off the said supply area, closing a touch off lows, consequently displaying intent to tunnel lower today. Aside from 0.6542, the 127.2% Fibonacci ext. at 0.6516 serves as the next layer of support to keep an eye on.
H1 timeframe:
Dollar weakness and softening US Treasury yields prompted a short-term recovery Thursday. Technical buying off channel support (0.6584) and 0.6550 also likely played a role. Gains, however, were recently contained at the 100-period SMA, bolstered by a familiar range between 0.6587/0.6620, located a few points south of 0.66 and channel resistance (0.6638).
Direction:
Aired in Thursday’s analysis, we see higher-timeframe demand areas echoing a weakening vibe right now. Adding to this, short-term technical research reveals the H4 and H1 timeframes fade local structures, poised for lower levels.
Selling the rejection off H4 supply could be a route traders explore today, though H1 traders may wish to see a retest at channel resistance form before considering short trades.
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 +1.04% 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, and marginally engulfing, demand at 109.52/109.99. 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 through the 50.0 value yesterday, down from last week’s peak at 76.63.
H4 timeframe:
Thursday’s analysis highlighted the possibility of trendline support-turned resistance (108.31) holding firm and pressuring price action through supply-turned demand at 110.02/110.23 to demand plotted at 109.30/109.53. As evident from the chart this morning, price is seen testing demand at 109.30/109.53, with further downside revealing demand at 108.41/108.70.
H1 timeframe:
Broad-based USD selling, weighed by soft US Treasury yields, sent USD/JPY through 110 to a session low at 109.32 Thursday, erasing more than 80 points, or 0.76%.
Technically, the H1 candles trade at an area of potential support, comprised of an AB=CD correction (orange) at 109.43, 109.50 support, channel support (109.89), RSI oversold and a 161.8% Fibonacci ext. point at 109.19. Beyond here, limited support exists until reaching 109.
Direction:
While daily demand at 109.52/109.99 recently had its lower edge ruptured, and monthly price is fading structure, H4 price trades from demand at 109.30/109.53, bolstering the H1 support area between 109.19/109.50. With that being the case, a intraday recovery from H1 support could transpire today, targeting at least 110, maybe even channel resistance from 111.04.
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 2.37%.
Daily timeframe:
Outlook brought forward 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 overall 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 entered the jaws of an attractive supply drawn from 1.3023/1.3006, with an approach formed by way of an AB=CD pattern (orange) that terminated around 1.3013, further selling could be on the cards.
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 at 1.2868/1.2894. Yesterday’s action whipsawed the lower edge of the said demand and is, at the time of writing, modestly recovering.
H1 timeframe:
Sterling traded fairly resilient Thursday amidst broad-based USD selling. It was noted in Thursday’s analysis that the combination of daily demand at 1.2823/1.2910, along with H4 demand at 1.2868/1.2894 and the 1.29 handle on the H1 could encourage a recovery move, targeting 1.2957/1.2944 as an initial base.
As can be seen from the chart this morning, price did rebound from 1.29 and tested nearby demand-turned supply at 1.2957/1.2944, which aligned beautifully with the 100-period SMA and proved a supply of note. 1.29 gave way in early London, settling a few points north of 1.2850 before retesting the underside of 1.29 into closing trade.
Direction:
Shorter term, 1.29 could be a weak resistance due to the retest as resistance breaking to 1.2916 – enough to rupture buy stops above here and clear the pathway back to H1 demand-turned supply at 1.2957/1.2944. We’re unlikely to see this level break during Asia, though, it’ll likely be early London if it is to give way. In the event a move north of 1.29 materialises, intraday long positions could be considered.
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