Charts: Trading View
(Italics: Previous Analysis)
Europe’s single currency wrapped up Thursday in a neutral stance, echoing movement seen on Tuesday and Wednesday. Upbeat flash manufacturing and services PMIs out of Europe delivered bullish impetus in early London hours, though proved short-lived. Technical expectations for EUR/USD, therefore, remain mostly unchanged heading into Friday.
Employing a top-down approach, weekly channel support, extended from the low $1.1186 (arranged north of weekly Quasimodo support at $1.0778), remains a technical ‘floor’ for the time being. Weekly resistance calls for attention at $1.1174. The aforementioned level is a particularly prominent barrier, strategically positioned within the current downtrend. The longer-term trend has reflected bearish status since topping at $1.2350 at the beginning of January (2021). This is reinforced by a weekly trendline support breach, drawn from the low $1.0636, together with the break of the $1.1602 November 2020 low (circled) and the pair refreshing year-to-date lows at $1.0806.
Closely joining weekly resistance at $1.1174 is daily resistance at $1.1224. Chart space north of the level unearths area to daily resistance at $1.1483 (located nearby the 200-day simple moving average at $1.1510). A familiar daily decision point at $1.0788-1.0854 remains on the radar to the downside (as well as an intersecting ascending support, drawn from the $1.0340 3rd January low 2017—price has traded under this value since mid-June). An additional study on the daily scale is the relative strength index (RSI), hovering beneath the 50.00 centreline. Voyaging above 50.00 reveals positive momentum (average gains exceeding average losses) and suggests an approach to weekly and daily resistances ($1.1174-1.1224).
Technical studies based on the H4 timeframe reveals the unit respected trendline resistance (drawn from the high $1.1495) in mid-March, a descending line intersecting with the $1.1139-1.1090 supply at the time. Interestingly, the H4 chart exhibits scope to press as far south as support coming in at $1.0903.
H1 support around $1.0972, made up of a 78.6% Fibonacci retracement ratio and a 50.00% level, has proved a stubborn base, withstanding three downside attempts. Despite this, buyers have been unable to find acceptance north of $1.10, hindered by trendline resistance, taken from the high $1.1137. Territory south of $1.10 casts focus towards two Quasimodo supports at $1.0932 and $1.0958, followed by $1.09.
In spite of a downward facing market, both weekly and daily timeframes indicate scope to pursue higher prices until resistance between $1.1174-1.1224. However, traders are also urged to prepare for the possibility of continuation moves lower from current price.
Short term, between $1.10 and H1 support at $1.0972 is a key zone. Having noted room to navigate lower prices on the H4 scale until $1.0903 support, chart action suggests a $1.10 breach is likely, a move igniting a potential test of H1 Quasimodo supports at $1.0932 and $1.0958, as well as possibly reaching for $1.09 (aligns with H4 support).
Recent trading witnessed weekly price shake hands with resistance at $0.7501.This followed a decisive bid from weekly prime support at $0.6948-0.7242.
For those who read Thursday’s technical briefing you may recall the following text regarding higher timeframes:
Weekly prime resistance at $0.7849-0.7599 also warrants focus, having seen the daily timeframe’s double-bottom pattern profit objective residing within the area at $0.7660. The trend, however, appears to be averse to the idea of surpassing the noted resistance levels on the weekly scale. Longer term—the monthly timeframe—has portrayed a downtrend since August 2011, suggesting the 12.6 percent correction from mid-Feb tops at $0.8007 (2021) on the weekly timeframe might be the start of a bearish phase and not a dip-buying correction from the 2021 advance from pandemic lows of $0.5506. This highlights a possible bearish scene from $0.7051 resistance or prime resistance at $0.7849-0.7599. If a $0.6948-0.7242 break lower should come to pass, weekly support at $0.6673 and a 50% retracement at $0.6764 are observable.
From the daily timeframe, we can see the currency pair sailed above trendline resistance, drawn from the high $0.8007. Technical expectations shine the spotlight on the possibility of a continuation run towards $0.7660. As you can see, the double-bottom pattern ($0.6991) had its neckline taken ($0.7314) in early March, with the pattern drawing attention to its profit objective at $0.7660. Upside momentum is clearly lacking energy. According to the relative strength index (RSI), despite a rebound from the 50.00 centreline, the indicator has yet to engulf the high 68.24 formed on 4th March. Consequently, bearish divergence could eventually emerge. Overbought territory may also be challenged, with indicator resistance from 74.80 of particular importance.
Price action on the H4 timeframe exposes Quasimodo resistance at $0.7527. Technically this level shares chart space closely with the weekly timeframe’s current resistance. To the downside, Quasimodo resistance-turned support can be seen at $0.7451.
H1 prime resistance at $0.7529-0.7517 (houses $0.7527 H1 resistance) greeted price action on Thursday and subsequently delivered price to $0.75. Downstream, H1 Quasimodo resistance-turned support from $0.7459 is seen.
Weekly resistance at $0.7501, joined closely with H4 resistance at $0.7527 and H1 prime resistance from $0.7529-0.7517, could be sufficient to hold back additional buying. Sellers, nonetheless, are likely to want to observe a H1 close establish sub $0.75 before committing, targeting H1 Quasimodo resistance-turned support at $0.7459 and the H4 timeframe’s Quasimodo resistance-turned support from $0.7451.
USD/JPY powered higher on Thursday, closing positive for a fifth consecutive session and gaining nearly 1 percent. WTD, the currency pair is higher by 2.6 percent, while MTD the pair trades 6.3 percent higher. Technical resistance on the weekly timeframe nears at ¥122.76 (88.6% Fibonacci retracement), sheltered under Quasimodo resistance at ¥124.42. In terms of weekly support, ¥118.66 is visible. Despite longer-term resistance, it’s important to remain cognisant of where we are regarding trend studies. The overall longer-term trend has been climbing since 2012 (check monthly timeframe). The 21.5 percent correction from June 2015 to June 2016 provided a dip-buying opportunity, as did a subsequent 14.8 percent correction from December 2016 to pandemic lows formed early March 2020. Overall, the primary trend is higher, with the secondary trend promoting additional advances.
The daily chart, in line with the weekly timeframe, is seen zeroing in on resistance coming in at ¥123.72. Demand warrants attention to the downside at ¥118.25-119.16 should sellers make a show. Additional technical notes show the relative strength index (RSI) trading high within overbought terrain. Traders are urged to exercise caution, however, as amidst trending environments the RSI can remain within overbought space for prolonged periods and cause a number of false bearish signals.
H4 activity has buyers and sellers battling for position around resistance at ¥122.27. Calling above throws light on Quasimodo resistance at ¥122.88 (blending closely with weekly resistance at ¥122.76), while dipping lower has a support area at ¥121.44-120.89 to target.
Following a clear whipsaw under ¥121 on the H1 timeframe, price rebounded from a decision point at ¥120.52-120.83. Early trade on Thursday watched price retest ¥121 that led to a subsequent close above ¥122 and a formation of a decision point at ¥121.84-122.00.
H4 resistance at ¥122.27 is unlikely to offer much of a ceiling. This is due to both weekly and daily timeframes showing room to climb at least until ¥122.76 on the weekly scale, which happens to merge closely with H4 Quasimodo resistance at ¥122.88.
With the above in mind, H1 price could withdraw and retest its decision point at ¥121.84-122.00. In light of the higher timeframes indicating higher prices, buyers may be drawn to the aforementioned decision point, targeting ¥122.76/¥122.88.
Buyers and sellers settled on neutral ground Thursday, ranging between $1.3214 and $1.3157.
Buying remains questionable on GBP/USD. Not only is the trend to likely weigh on upside efforts, prime resistance is a focal point on the weekly timeframe at $1.3473-1.3203 with the chart demonstrating scope to drop as far south as weekly support from $1.2719. Trend direction has been southbound since late 2007 tops at $2.1161. As a result, the 25 percent move from pandemic lows in March 2020 to February 2021 might be viewed as a pullback within the larger downtrend. This, of course, places a question mark on the 8.5 percent ‘correction’ from February 2021 to March 2022; it may in fact be the beginning of a longer-term push to the downside and not a dip-buying scenario.
Based on daily analysis, nevertheless, GBP/USD continues to work with space north of a recently engulfed resistance from $1.3082. Should the latter pencil in support, this builds a foundation to test resistance at $1.3355. Unsupportive of follow-through buying, of course, is the relative strength index (RSI), seen modestly levelling off ahead of the key 50.00 centreline. For any longer-term trend followers watching the longer-dated moving averages, you will also note the currency pair continues to operate south of the 200-day simple moving average at $1.3580—a (technical) bearish view.
Moving over to the H4 timeframe, technicians will acknowledge support was taken at $1.3194 and subsequently retested as resistance. Should sellers remain in the driving seat and overthrow support from $1.3120, downside appears clear until support from $1.2965. From the H1 timeframe, Thursday’s action retested the lower side of $1.32 and trendline support-turned resistance, extended from the low $1.3000. South of here, a modest Fibonacci cluster inhabits the $1.3111ish region, followed by $1.31.
Given weekly prime resistance at $1.3473-1.3203 receiving price action this week, and H4 resistance now in play around $1.3194, H1 sellers may attempt to hold ground below $1.32. Downside targets fall in at H4 support from $1.3120, closely shadowed by H1 Fibonacci (cluster) support at $1.3111 and the $1.31 figure.
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