(Italics: Previous Analysis Due to Limited Price Change)
Since mid-November (2021), buyers and sellers have been squaring off around support at $1.1237-1.1281—made up of a 61.8% Fibonacci retracement at $1.1281 and a 1.618% Fibonacci projection from $1.1237. ‘Harmonic’ traders will acknowledge $1.1237 represents what’s known as an ‘alternate’ AB=CD formation (extended D-leg).
Any upside derived from current support will likely be capped by resistance at $1.1473-1.1583; navigating lower, on the other hand, throws light on Quasimodo support as far south as $1.0778.
Interestingly, despite current support, the pair took out 2nd November low (2020) at $1.1603 in late September (2021), suggesting the early stages of a downtrend on the weekly timeframe. This is reinforced by the monthly timeframe’s primary downtrend since mid-2008.
Quasimodo support drawn from mid-June at $1.1213 (positioned beneath the weekly timeframe’s Fibonacci structure) made an entrance on 24th November (2021) and remains committed. Trendline resistance, extended from the high $1.2254, is also seen overhead.
Analysis out of the relative strength index (RSI) reveals the value attempting to establish support from the 50.00 centreline: positive momentum. Indicator resistance resides at 63.66, tucked just under the overbought threshold of 70.00.
Trend on this scale has been lower since June 2021.
Key levels to be mindful of on the H4 scale are:
- Quasimodo support from $1.1272.
- Resistance at $1.1379, accompanied by a 38.2% Fibonacci retracement at $1.1381.
- Beyond the above, a 100% Fibonacci projection is visible at $1.1422, followed by Quasimodo support-turned resistance at $1.1438. Lower on the curve, support falls in around $1.1235.
Dipping a toe south of NFP pre-announcement levels on Monday, short-term flow whipsawed through $1.13 to touch a low of $1.1285. As you can see, two neighbouring Quasimodo supports at $1.1278 and $1.1280 were left unchallenged.
Limited technical resistance is visible to the upside. Traders, however, may be drawn to $1.1364ish, located a handful of pips below H4 resistance underlined above at $1.1379.
As for the relative strength index (RSI), a popular momentum oscillator, the indicator’s value discovered a floor around oversold territory and is, as of writing, shaking hands with the lower side of the 50.00 centreline. Climbing the latter informs short-term players that average gains exceed average losses (over the pre-determined 14-day period): positive momentum.
Observed Technical Levels:
Weekly Fibonacci support between $1.1237 and $1.1281 interacting with price may be enough to pull daily action to trendline resistance, extended from the high $1.2254. In view of the daily timeframe trending lower since June 2021, traders are urged to pencil in the possibility of a bearish attempt from the noted trendline resistance.
Shorter term, H1 Quasimodo supports between $1.1278 and $1.1280 could soon make an entrance, joined by H4 Quasimodo support priced from $1.1272. In the event of higher prices, the area between H4 resistance at $1.1379 and H1 resistance at $1.1364 might be targeted.
Prime support at $0.6968-0.7242 continues to play a crucial role on the weekly timeframe. Bulls, as you can see, welcomed a bullish phase into the close of 2021, though appetite for higher prices subsided last week. Should buyers regain footing, resistance is formed at $0.7501; manoeuvring beneath $0.6968-0.7242 reveals support at $0.6673 and a 50.0% retracement at $0.6756.
Since mid-Feb 2021, a downside bias has been seen, following higher prices since pandemic lows of $0.5506 (March 2020). However, from the monthly timeframe the unit has been entrenched within a large-scale downtrend from mid-2011.
Resistance—made up of a 61.8% Fibonacci retracement at $0.7340, a 100% Fibonacci projection at $0.7315, an ascending resistance, drawn from the low $0.7106, and trendline resistance, drawn from the high $0.7891—offers healthy (technical) confluence on this chart. Support at $0.7021 calls for attention to the downside in the event sellers track lower price levels.
The relative strength index (RSI) elbowed beneath the 50.00 centreline at the tail end of last week, movement informing traders and investors this market is beginning to produce negative momentum (average losses exceeding average gains).
Two key zones stand out on the H4 scale.
Upstream, trendline support-turned resistance, taken from the low $0.6993, and a 61.8% Fibonacci retracement at $0.7222 merging forms modest confluence to be mindful of. Additionally, if price maintains Friday’s session low at $0.7130, an AB=CD bearish formation may emerge within the aforementioned zone (black arrows).
To the downside, support is visible between $0.7097 and $0.7121 (composed of a 1.618% Fibonacci projection, a 61.8% Fibonacci retracement and horizontal price support).
Supply at $0.7195-0.7207, sharing chart space with the $0.72 psychological figure and a 50.0% retracement at $0.7202, proved an effective ceiling Monday, guiding the currency pair to within striking distance of demand from $0.7126-0.7141 (held during Friday’s NFP release).
Above noted supply, the technical radar points to Quasimodo support-turned resistance at $0.7229, dovetailing closely with the H4 61.8% Fibonacci retracement at $0.7222.
The relative strength index (RSI) currently explores territory beneath the 50.00 centreline, telling short-term traders that we’re seeing negative momentum in this market. Oversold space, therefore, may be in the line of fire.
Observed Technical Levels:
Technically, we are in a prime support zone on the weekly timeframe at $0.6968-0.7242, unlocking the possibility of a run higher on the daily chart until crossing swords with resistance around the $0.7340ish point (see above). It is here, in light of the downtrend seen on the daily scale and the long-term downtrend on the monthly timeframe, long-term sellers could emerge.
With H1 supply at $0.7195-0.7207 perhaps weakened on Monday’s test, short-term traders might be watching H1 Quasimodo support-turned resistance at $0.7229 overhead, which, as noted above, overlaps closely with H4 resistance around $0.7222 (red area).
After touching gloves with a 1.272% Fibonacci projection from ¥116.09, bearish flow is on the verge of reconnecting with resistance-turned support from ¥114.38, a level capping upside since early 2017.
Also of technical note is the currency pair recently refreshing multi-year pinnacles, reaching levels not seen since January 2017.
In terms of trend, the unit has been advancing since the beginning of 2021, welcoming a descending resistance breach, drawn from the high ¥118.61.
Quasimodo resistance at ¥116.33 made a show early last week, powering four back-to-back daily bearish closes. Taking the market’s current trend into account, the ¥116.33 reaction may prompt a dip-buying phase from ¥114.97, a Quasimodo resistance-turned support.
Together with the above price analysis, the relative strength (RSI) is fast approaching support between 40.00 and 50.00 (a ‘temporary’ oversold range since 10th May offering an oversold region on this timeframe).
Support at ¥115.38 was taken on Monday which could serve as resistance going forward. According to the H4 scale, further underperformance is possible to as far south as support from ¥114.50, closely shadowed by trendline support, taken from the low ¥112.56. Consequently, ¥114.50 will likely be closely watched as a downside objective going forward and may trigger dip-buying activity, in line with the underlying trend.
Monday’s bearish narrative pulled short-term price action through ¥115.48 and came within a handful of pips of retesting the lower side of the (now) resistance level, before further selling unfolded.
The ¥115 figure deserves notice, working closely with a 1.618% Fibonacci projection and a Quasimodo support (left shoulder [black arrow]). Also of importance is ¥115 benefitting from the daily Quasimodo resistance-turned support at ¥114.97.
Note also that just south of the psychological number, Quasimodo support is stationed nearby at ¥114.83.
Observed Technical Levels:
Technically, support is seen between daily Quasimodo resistance-turned support at ¥114.97 and ¥115 on the H1 (and associated H1 confluence). Traders are urged to pencil in the possibility of price whipsawing through ¥115 to H1 Quasimodo support at ¥114.83, before a bullish attempt takes shape.
Resistance at $1.3629-1.3456 made a show in recent weeks, following a pullback from December lows of $1.3160 just ahead of the double-top pattern’s ($1.4241) profit objective around $1.3093 (red boxes).
Could the recent bid be the beginning of a dip-buying phase, in line with the weekly timeframe’s current uptrend? Still, it’s important to recognise that while the trend on the weekly timeframe demonstrates an upside bias, the monthly timeframe’s long-term trend has been lower since late 2007.
If resistance at $1.3629-1.3456 fails to deliver, ‘consumed supply’ (blue area) is visible between $1.4001 and $1.3830. Considering this, a resistance breach might guide the currency pair as far north as resistance from $1.4371-1.4156.
Sandwiched between trendline resistance-turned support, taken from the high $1.4250, and neighbouring resistance from $1.3602, this is a critical juncture for the pair.
A breakout above resistance not only shows scope to approach the 200-day simple moving average at $1.3734, a breach also informs chartists that weekly resistance highlighted above from $1.3629-1.3456 is on the brink of giving way. Conversely, navigating lower from current daily resistance (and taking out trendline support) helps confirm bearish intent from the said weekly resistance.
The relative strength index (RSI) is hovering nearby overbought levels and is in the early stages of hidden bearish divergence.
Little change visible on the H4 chart.
Supply coming in at $1.3665-1.3625 is recognised as a viable upside objective, with subsequent buying perhaps reaching resistance at $1.3710.
Demand is equally important to note at $1.3428-1.3444. As a result, if sellers regain consciousness from, traders may witness a dip back to the aforementioned demand zone.
$1.36 served well as resistance Monday, hauling price to a session low of $1.3532 and whipsawing through trendline support, etched from the low $1.3173.
$1.36, however, remains in a vulnerable position. Above, a Quasimodo support-turned resistance ($1.3627) is seen within the walls of H4 supply at $1.3665-1.3625, opening the door to a possible whipsaw (stop run) above $1.36.
The relative strength index (RSI) recently made its way north of the 50.00 centreline (positive momentum), suggesting further upside in this market until overbought space is seen.
Observed Technical Levels:
The combination of weekly resistance at $1.3629-1.3456 and daily resistance at $1.3602 casts a bearish cloud over price action. In conjunction with higher timeframe resistances, a (bearish) whipsaw north of $1.36 is a possibility on the H1 timeframe to test H4 supply at $1.3665-1.3625 and the H1 Quasimodo support-turned resistance from $1.3627.
Conservative sellers will likely watch for a test of $1.3665-1.3625 and a subsequent close back under $1.36 to form before pulling the trigger.
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.