EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
The month of February witnessed EUR/USD revisit the upper limit of demand at 1.0488/1.0912 and chalk up a reasonably appealing (bullish) hammer candlestick pattern – a noteworthy area of demand given the momentum derived from its base. Additional upside is, therefore, achievable, with demand-turned supply at 1.1857/1.1352 and long-term trendline resistance (1.6038) established as upside targets.
To the downside, however, traders looking beyond the current demand zone likely have crosshairs fixed on a reasonably ‘fresh’ demand at 0.9581/1.0221 (boasts history dating back as far as 2003).
The primary downtrend in this market has remained lower since 2008, exhibiting clear lower peaks and troughs.
Daily timeframe:
Partially altered outlook from previous analysis –
Demand at 1.0680/1.0781, an area formed April 2017, elbowed its way into the spotlight in recent trade and, for the time being, remains a dominant fixture on this timeframe.
Supply coming in at 1.1117/1.1078, which intersects with the 200-day SMA, put up little fight Monday, exposing familiar supply at 1.1281/1.1208, which entered view Tuesday. Wednesday, nevertheless, observed a rotation to the downside, snapping a four-day winning streak and drawing the candles back to 1.1117/1.1078, specifically the 200-day SMA, currently circulating around 1.1097.
What’s also notable from a technical perspective here is the RSI indicator recently piercing overbought levels, as well as an RSI trendline support-turned resistance entering play.
H4 timeframe:
Supply at 1.1190/1.1172 remains in the frame (houses a deep 88.6% Fibonacci retracement within at 1.1185 – grey), capping upside since the beginning of the week. Supply-turned demand at 1.1109/1.1087 also remains in the mix, doing a good job of containing downside this week. As a result of this, H4 price is currently labelled rangebound, according to our technical studies.
A H4 close above the current supply could tip EUR/USD for more outperformance this week, with some traders betting on an increase to 1.1239 December 31st high. Moves lower, on the other hand, shines the spotlight on neighbouring demand at 1.1036/1.1073.
H1 timeframe:
The dollar index regained some of the post emergency rate-cut losses Wednesday, shattering a four-day losing streak. The euro navigated lower ground throughout the day as coronavirus cases continued to pick up in the Eurozone.
1.11 welcomed an approach into the US open, forming a clear-cut hammer candlestick pattern, considered a bullish signal at troughs. Price followed up with a strong bullish rotation candle, closing at highs, though drifted thereafter into the close. Surfacing beneath 1.11, supply-turned demand is visible at 1.1091/1.1080, alongside the 100-period SMA, trading at 1.1094.
With respect to upside levels from here, technical research reveals limited supply until reaching the 1.12 handle. Despite this, 1.1157/1.1145, a support/resistance area, could play a role in movement today, based on its history.
Structures of Interest:
With monthly price eyeing higher levels out of demand, daily price recently testing demand and H4 price fading the lower edge of its range, a break of 1.1157/1.1145 on the H1 is probable. This may encourage breakout buying, with traders’ crosshairs fixed on 1.12, closely followed by H1 supply at 1.1214/1.1204.
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, with price attempting to bottom within its lower limit. An eventual break of the said demand zone has another layer of demand close by at 0.6094/0.5866, while a recovery could eventually lead to trendline support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.
Daily timeframe:
Partially altered outlook from previous analysis –
Supply at 1.6585/1.6625 remained under pressure Wednesday; price however failed to penetrate the previous day’s high at 0.6645.
0.6680ish offers resistance (red oval), while proven supply can also be seen at 0.6778/0.6731, aligning with trendline resistance (0.7393).
The RSI recently exited oversold territory, poised to approach 50.00.
H4 timeframe:
Supply at 0.6655/0.6629 continues to offer a ceiling on the H4 timeframe, though sellers appear to lack conviction. On top of this, price failed to break the lower boundary of its ascending channel (0.6434), and in recent hours penetrated trendline resistance (0.7031).
A break of channel support is required here to ignite conviction to the downside, while gravitating higher could lead to supply at 0.6695/0.6677 making an entrance.
H1 timeframe:
Wednesday, although logging gains above 0.66 and closing higher for a third successive session, AUD/USD H1 movement is compressing within what appears to be a rising wedge pattern (0.6577/0.6614). 0.6650 remains in view as possible resistance on this timeframe, bolstered by a 161.8% Fibonacci ext. at 0.6648.
Assuming a breakout lower from the current rising wedge pattern, reclaiming 0.66 to the downside may be on the cards. Calculating take profit targets for rising wedge patterns involves measuring the base and applying the value to the breakout point.
Structures of Interest:
Monthly demand at 0.6358/0.6839 is still in play, holding on by a thread. Daily price, on the other hand, suggests additional buying, north of supply at 1.6585/1.6625.
H4 price holds at supply, though traders likely lack confidence in the zone until penetrating the current channel support. The rising wedge on the H1 is interesting as it forms along the underside of H4 supply. The downside to trading shorts out of the rising wedge pattern, of course, is the possibility of 0.66 handle holding as support and daily action threatening higher levels.
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 retreated lower, forming a shooting star pattern into February’s end.
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.
Daily timeframe:
Partially altered outlook from previous analysis –
The 200-day SMA, currently circulating around 108.37, remains in position to offer further resistance on this timeframe, along with channel support-turned resistance (104.44) and demand-turned supply at 109.52/109.99.
Tuesday’s 120-point downside move drew the market into the jaws of demand coming in at 106.60/107.09, which witnessed a minor breach in October 2019. Demand at 105.57/106.17, albeit not the prettiest of areas given the lack of momentum drawn from the base, is next in line should we push lower.
The RSI indicator is seen bottoming just ahead of oversold values.
H4 timeframe:
Demand at 106.94/107.30, in recent trade, came under pressure and had its lower boundary engulfed. While this may trigger further downside, with the next layer of demand not stepping in until 105.64/105.89, traders are urged to pencil in the possibility of an approach forming to a familiar demand-turned supply zone at 108.41/108.70.
H1 timeframe:
Following Fed-induced loss Tuesday, early hours Wednesday refreshed multi-month lows at 106.84, shaped by way of a hammer candlestick pattern that pierced 107 into demand at 106.77/106.94. In recent movement we conquered 107.50 to the upside and are poised to retest the level as support.
Upside from here has 108 in sight, bolstered by the 100-period SMA and a 127.2% Fibonacci ext. point at 107.91.
Structures of Interest:
Holding off 107.50 this morning could lead to 108 re-entering the fight. The 108 handle may offer resistance today, knowing it brings 127.2% Fibonacci confluence and the 100-period SMA to the table. In addition, monthly price suggests further selling, as does H4 price after nudging through sell-stop liquidity beyond demand at 106.94/107.30. Despite this, though, downside could still be capped off daily demand at 106.60/107.09.
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, a recovery formed off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high. The month of February, however, declined nearly 3.00%.
Daily timeframe:
Partially altered outlook from previous analysis –
Demand formed at 1.2649/1.2799 entered view in recent movement, refreshing YTD lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019).
The 200-day SMA also resides within the current demand zone, circulating around 1.2696.
North of price we have a local trendline resistance (1.3514), with supply seen at 1.3303/1.3184 in the event we travel higher.
H4 timeframe:
Partially altered outlook from previous analysis –
1.2718/1.2751, an area comprised of 161.8% Fibonacci ext. studies, continues to cap downside. This area is also housed within current daily demand.
Thanks to recent upside, price is closing in on supply at 1.2885/1.2921, which houses a 50.0% retracement value within at 1.2897. A break of here could trigger another wave of buying to supply coming in at 1.3023/1.3006.
H1 timeframe:
Sterling was relatively volatile Wednesday, ending the session nearly 60 points higher, or 0.46%, amidst speculation the BoE may follow the Fed.
Technically, though, the candles retested 1.28 and firmed, surpassing 1.2850 and testing around the 1.2870ish region.
As highlighted in Wednesday’s analysis, 1.2850 still offers a particularly attractive area of resistance, bolstered by a trendline support-turned resistance (1.2849), a 61.8% Fibonacci retracement at 1.2861 and a 50.0% retracement at 1.2870. Traders are, however, urged to pencil in the 127.2% Fibonacci ext. point at 1.2888 (brown line), and 1.29, in the event the zone fails and heads for the underside of H4 supply at 1.2885/1.2921.
Structures of Interest:
Daily demand at 1.2649/1.2799 remains a reasonably dominant fixture in this market, with room to continue pursuing higher ground.
While longer term we’re trading from demand, price is testing a confluent area of resistance on the H1 between 1.2870/1.2850, which may hold and send the candles back to 1.28. Also, we’re fading overbought territory on the RSI. The threat of H4 price testing supply at 1.2885/1.2921, however, could see a run through the H1 resistance area, in favour of higher-timeframe structure. Therefore, sellers out of the H1 zone should consider positioning stop-loss orders accordingly.
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