February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels

February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels, FP Markets

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply at 1.1857/1.1352 in August, EUR/USD, by way of two back-to-back bullish candles, welcomed 2021 in good health.

While this reasons additional upside towards ascending resistance (prior support – 1.1641) may eventually be on the horizon, an 1.1857/1.1352 retest is also on the cards in view of February’s correction.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Europe’s single currency wrapped up Wednesday modestly lower against the US dollar, as the DXY preserved a bullish stance north of 91.00.

As evident from the daily chart, movement welcomed trendline support (1.0774) and recently came within touching distance of neighbouring demand at 1.1923/1.2001.

Momentum, as measured by the RSI indicator, trades just south of 40.00 after failing to command authority above the 50.00 centreline. This implies the RSI is bordering on the possibility of visiting oversold territory.

H4 timeframe:

Partly modified from previous analysis –

Demand at 1.2040/1.2065 caving under pressure on Tuesday, served well as a supply base Wednesday.

Should sellers remain at the wheel, demand at 1.1962/1.1976 is in the spotlight. Interestingly, 1.1962/1.1976 is also housed within daily demand mentioned above at 1.1923/1.2001.

H1 timeframe:

1.2050 remains key resistance on the shorter term, with resistance at 1.2058 and supply parked at 1.2078/1.2062 overhead.

Focus to the downside remains at the 1.20 figure—a key barrier most technicians will be eyeing today. Also of note are the 127.2% and 161.8% Fib projection levels at 1.1992 and 1.1993, respectively.

Out of the RSI indicator, the value spun higher north of oversold territory on Wednesday and is now seen tackling 50.00 resistance.

Observed levels:

A dip into 1.20 bids remains on the table, though a whipsaw into H1 resistance at 1.2058 and H1 supply coming from 1.2078/1.2062 is equally possible (this area also converges closely with the H4 supply mentioned above at 1.2040/1.2065).

As underlined in Wednesday’s analysis, the 1.20 figure remains interesting due not only to the H1 Fib projections around 1.1993, but also the psychological level merging with the upper edge of daily demand at 1.1923/1.2001. As a result, 1.20 has some reasonably strong backing and could put up a fight if tested.

February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following two spirited months of gains off demand at 0.7029/0.6664 (prior supply), early 2021 pencilled in a half-hearted shooting star candle formation (a bearish signal at peaks).

This shines light on a possible correction in the first quarter of 2021. Though should buyers regain consciousness, a continuation higher to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776)—could play out.

In terms of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Buyers and sellers continue to battle for position off trendline support (0.5506), with buyers attempting to rejuvenate an AUD/USD bid. In the event buyers take over, refreshing 2021 tops could be on the cards as well as a test of supply at 0.7937/0.7890.

Should buyers throw in the towel, the technical spotlight will shine on demand at 0.7453/0.7384 (prior supply).

As recently evidenced from the RSI indicator, the value dipped a toe in waters beneath the 50.00 centreline, following a trendline support breach last week.

H4 timeframe:

For those who read recent technical writing you may recall the following (italics):

The break of demand at 0.7600/0.7625 last Thursday likely cornered many buyers in this region. This, alongside the Fib cluster at 0.7696 serving up resistance, suggests price is perhaps bound for territory south of demand. Interestingly, below demand we have the daily trendline support close by around the 0.7583 neighbourhood.

As you can see from the chart, price snapped through demand at 0.7600/0.7625, and daily price reacted from trendline support—a fakeout play here?

Although upside momentum lost traction Wednesday, the fakeout beneath demand at 0.7600/0.7625 appears underway. The question is whether the reaction from daily trendline support provides enough fuel for H4 buyers to reconnect with the Fib cluster at 0.7696.

H1 timeframe:

Recent research highlighted the following on the H1 space (italics):

Similar to the H4 chart, H1 whipsawed through 0.76 bids—likely causing pain on both sides of the market—and tested daily trendline support. Focus is now on price reclaiming 0.76+ status, a move which could provide upside impetus today.

Following the H1 AB=CD completion at 0.7564 and daily trendline support test, H1 also reclaimed 0.76+ status. Though despite breaking back above 0.76 implies a bullish scenario, volatility diminished considerably on Wednesday, changing hands between the 100-period simple moving average at 0.7632 and the 0.76 level.

In terms of the RSI indicator, we are seeing the value hover just south of resistance at 60.18, following the break of the 50.00 centreline.

Observed levels:

Buyers holding daily trendline support, along with H4 tripping stops south of demand at 0.7600/0.7625 as well as H1 also tripping stops below 0.76, could, despite lacklustre movement Wednesday, still spark a bullish theme above 0.76 today.

A H1 close above the 100-period simple moving average at 0.7632 may add bullish conviction.

February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Over the span of four years, USD/JPY carved out a descending triangle pattern between 118.66/104.62.

Although December pursued terrain south of 104.62, consequently throwing light on support from 101.70, January chalked up a comeback, with February threatening to re-enter the descending triangle pattern’s space.

Daily timeframe:

Pencilling in a sixth successive bullish close on the daily chart echoes the possibility of reaching for the 200-day simple moving average at 105.60 and neighbouring supply at 106.33/105.78.

RSI resistance at 57.00—a level hindering upside since July 2020—gave in last week, with the value, as highlighted in Wednesday’s piece, now on the doorstep of overbought space.

H4 timeframe:

Unchanged from previous analysis –

In recent writing, the research team shined the spotlight on a harmonic Gartley pattern’s potential reversal zone (PRZ) between 105.17 and 105.00. Support is found at 104.16, with interest also likely directed at trendline support (102.59).

Price recently tested the range of the PRZ and sellers appear to be holding lower, for now.

H1 timeframe:

USD/JPY left behind a muted tone on Wednesday, as buyers and sellers squared off around the 105 figure.

105.14 resistance is also a level that remains firmly on the radar through the H1 chart, which made a show on Tuesday—a double-top pattern formed mid-November (2020).

To the downside, south of 105, bearish eyes may initially draw towards the 100-period simple moving average at 104.84, followed by demand at 104.43/104.57, which happens to hold a 104.50 support.

RSI followers may also want to acknowledge the break of the 50.00 centreline.

Observed levels:

Longer term, buyers could take aim at daily supply coming in from 106.33/105.78, while shorter-term action suggests sellers may try to withstand an upside impulse to draw the currency pair lower from the H4 timeframe’s Gartley pattern’s PRZ between 105.17 and 105.00. A decisive H1 close below 105 could help add bearish conviction.

February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

December’s 2.5 percent extension elevated GBP/USD and stirred trendline resistance (2.1161), with January refreshing multi-month highs and logging a 0.2 percent gain.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Similar outlook from previous analysis –

Aside from Tuesday churning out an indecision doji candle (given previous price action this is unlikely to be interpreted as a reversal signal) and Wednesday eking out modest losses, the technical framework has remained unchanged since January 21.

Buyers and sellers continue to square off around the lower side of resistance at 1.3755. Breaching the latter, however, brings light to supply at 1.3996/1.3918.

The RSI indicator has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region (the value stands at 52.00). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Partly modified from previous analysis –

Demand at 1.3618/1.3637 has proven an effective base in the latter part of January, withstanding numerous downside attempts. Despite this, the area currently echoes a fragile stance. A decisive close south of 1.3618/1.3637 swings the technical pendulum in favour of reaching demand at 1.3502/1.3536.

Overhead, resistance is seen at 1.3763, with a break unveiling supply at 1.3837/1.3800.

H1 timeframe:

In what was a relatively quiet session Wednesday, the unit remained south of ascending resistance (1.3609—not considered a traditional trendline). North of here, it is worth noting the 100-period simple moving average around 1.3684, and the 1.37 level (accompanied by 61.8% Fib resistance).

Lower on the curve, a bearish scene could unfold towards the 1.36 level, implying a whipsaw through H4 demand at 1.3618/1.3637.

RSI enthusiasts may also note the ascending triangle pattern forming.

Observed levels:

The monthly timeframe, as noted in previous writing, carries a bullish atmosphere and places a question mark on daily resistance at 1.3755. This helps explain the indecision around the resistance since mid-January.

Technically speaking, the monthly timeframe’s presence also helps justify the strength behind H4 demand at 1.3618/1.3637.

However, seeing H1 hold space south of ascending resistance, a dip to 1.36 could be on the cards before buyers attempt to make an appearance.

February 4th 2021: DXY Holds Above 91.00 Though Ends Session Off Best Levels, FP Markets

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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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