May 11th 2021: USD/JPY 109.00 Resistance in Sight

May 11th 2021: USD/JPY 109.00 Resistance in Sight, FP Markets

Charts: Trading View


Monthly timeframe:

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

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. Month-to-date action for May also currently trades higher by 1.1 percent.

April upside—alongside May’s gains—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price also breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Monday had the US dollar index (ticker: DXY) spike to lows just north of the 90.00 figure—levels not seen since February 25th—following Friday’s dismal US employment situation report. EUR/USD movement recently touched gloves with Quasimodo resistance at 1.2169 and pencilled in modest losses.

A decisive 1.2169 rejection nudges the 1.1985 May 5th low in view, arranged just north of the 200-day simple moving average at 1.1945. The flip side of this, of course, is buyers scale above 1.2169 and shine light on another Quasimodo formation at 1.2278.

From the RSI indicator on the daily scale, traders will note the value rebounded from support at 51.36 last week and clocked 65.00ish. This threatens a possible visit to overbought, in particular resistance at 80.39.

As for trend, despite the 2021 retracement, the general bias remains to the upside.

H4 timeframe:

A closer reading of price action from the H4 scale reveals a modest top unfolded on Monday, south of Quasimodo resistance at 1.2180. Interestingly, the aforesaid barrier is situated just above the daily timeframe’s Quasimodo resistance at 1.2169. North of 1.2180, H4 resistance resides around the 1.2222ish neighbourhood.

Support at 1.2108 will demand attention should a downside move emerge, a level which essentially shelters an interesting demand base coming in at 1.2044-1.2071. Note this area, according to the H4 timeframe, represents a decision point to break through not only 1.2108, but also the 1.2150 top (April 29).

H1 timeframe:

For those who read Monday’s technical briefing you may recall the following points (italics):

Clearance of Quasimodo resistance at 1.2135 (now labelled support) on Friday—and having noted limited active (potentially consumed) supply to the left of price (see late February)—could have the 1.22 figure call for attention this week. Price action traders will also note supply at 1.2239-1.2216 shelters the aforementioned round number (not visible on the chart).

However, before climbing to the 1.22 zone, traders are urged to pencil in the possibility of a 1.2135 retest.

The above analysis remains valid on the H1 timeframe as we move into Tuesday’s session.

Out of the RSI, however, recent moves sliced through trendline support, taken from the low 16.20, and is now within touching distance of support at 47.50.

Observed levels:

Analysis unchanged from previous report.

The vibe out of the monthly timeframe shows price extending recovery gains from demand at 1.1857-1.1352, consequently placing a question mark on the daily timeframe’s Quasimodo resistance at 1.2169.

With the daily timeframe’s Quasimodo unlikely to deliver much to write home about, a retest of H1 support at 1.2135 is a bullish theme that could unfold and attract dip-buyers. Upside targets from this area are seen at H4 Quasimodo resistance from 1.2180, followed by the 1.22 figure on the H1 and nearby H1 supply at 1.2239-1.2216.

May 11th 2021: USD/JPY 109.00 Resistance in Sight, FP Markets


Monthly timeframe:

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Yet, with May trading 1.7 percent in positive territory, visiting the aforesaid areas could be on the table.

Should a bearish scenario unfold, on the other hand, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

AUD/USD wrapped up Monday considerably off best levels—multi-month tops at 0.7890—and established what many traders will recognise as a shooting star candle pattern (often interpreted as a bearish signal).

Voyaging lower on the back of the recent candle formation could have price action drop in on (retest) support at 0.7816 (a resistance level breached on Friday [capped upside since early March]). Should buyers regain consciousness, the pendulum swings firmly in favour of a run to supply from 0.8045-0.7985 (stationed just south of monthly supply mentioned above at 0.8303-0.8082).

The view within the RSI reveals the value remains above the 50.00 centreline—a sign of a strengthening trend—and appears poised to reach trendline resistance, extended from the high 80.12.

With respect to trend, despite a two-month retracement, we have been decisively higher since the early months of 2020.

H4 timeframe:

A somewhat spirited reversal moulded itself ahead of resistance at 0.7899 on Monday (many will refer to this formation as a pivot high—lower highs either side of the pivot high point [0.7890]). Sustained downside on this chart throws light on support at 0.7816, a daily level positioned just above demand at 0.7759-0.7791 (decision point to break resistance at 0.7816 [now labelled support]).

H1 timeframe:

Based on the H1 chart’s technical framework, we can see the unit went head-to-head with resistance at 0.7891 yesterday (previous Quasimodo support), fixed just under the 0.79 level. Subsequent selling led price through 0.7850 support, movement highlighting a possible dip back to 0.78 (and neighbouring demand at 0.7775-0.7787 as well as the 100-period simple moving average).

As a result of Monday’s bearish setting, the RSI threw itself through the 50.00 centreline (a bearish cue) into trendline support, drawn from the low 17.40.

Observed levels:

Having H1 tunnel through 0.7850 support in recent hours, this—alongside the daily and H4 picture displaying scope to approach daily support at 0.7816—suggests further weakness could be on the cards in the short term. As such, a 0.7850 retest on the H1 may invite sellers into the market today.

May 11th 2021: USD/JPY 109.00 Resistance in Sight, FP Markets


Monthly timeframe:

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

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Partly modified analysis from the previous report.

The technical picture on the daily timeframe, despite monthly action attempting to cement some form of support (see above), is sandwiched between supply at 109.97-109.18 and trendline support, extended from the low 102.59.

Pushing beyond the aforementioned trendline support this week not only warns of upside weakness, it underlines demand at 107.58-106.85 (prior supply) and a 38.2% Fib level from 107.73 as potential downside objectives. North of 109.97-109.18, however, casts light towards longer-term resistance at 110.94-110.29, stationed under supply at 111.73-111.19.

Trend studies show the unit has been trending higher since the beginning of 2021.

The RSI indicator crossed paths with resistance at 57.00 last week and is currently flirting with the 50.00 centreline. If a break of 50.00 comes to pass, RSI support at 28.19 is seen.

H4 timeframe:

Support between 108.20 and 108.50 (made up of demand from 108.20-108.43, a 1.618% Fib expansion at 108.36, a 1.272% Fib projection at 108.48, and support at 108.50) continues to serve as a floor in this market, with buyers lifting the currency pair to resistance at 108.99 on Monday.

Unseating the aforementioned support area emphasises continuation selling to support priced in at 107.44 (dovetails with a 1.272% Fib projection at 107.41).

Charging above 108.99, on the other hand, highlights a 61.8% Fib level at 109.60, set beneath familiar supply at 109.97-109.72.

H1 timeframe:

109 made an entrance heading into the early hours of London on Monday, welcoming a bearish theme to lows at 108.65.

Territory above 109 has the 100-period simple moving average circling at 109.06, fitted alongside trendline resistance, drawn from the peak 109.69. Downside, however, calls on a support area at 108.15-108.34 (glued to the underside of H4 demand at 108.20-108.43), extended from early March 2020.

The RSI value is seen engaging the lower side of the 50.00 centreline, a base sheltered under an RSI resistance area from 69.26-61.80.

Observed levels:

109 on the H1, together with H1 trendline resistance and the nearby 100-period SMA, offers an area of resistance to be mindful of. Couple this with H4 resistance at 108.99 and the lower side of daily supply at 109.18, we could have sellers attempt to make another appearance should 109 be retested.

H4 support between 108.20 and 108.50 offers a reasonably logical target to the downside from 109.

May 11th 2021: USD/JPY 109.00 Resistance in Sight, FP Markets


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, 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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