Charts: Trading View
(Italics: Previous Analysis)
The US Dollar Index (USDX) extended recovery gains Wednesday, underpinned on rising US Treasury yields and upbeat US economic data. EUR/USD consequently spun lower and erased 0.8 per cent.
Wednesday’s technical briefing noted the following in regards to weekly trend and structure:
Technically, sellers making a show should not surprise. In a market decisively trending lower since 2021, weekly Quasimodo support-turned resistance at $1.0778 was tested.
Follow-through selling on the weekly scale has 2nd January low (2017) at $1.0340 to target. Meanwhile on the daily timeframe, support at $1.0638 welcomed price action, leaving an ascending support-turned resistance, drawn from the low $1.0340, unchallenged. Joining price support, the daily timeframe’s relative strength index (RSI) is shaking hands with its 50.00 centreline, echoing the possibility of support.
Across the page, H1 price action established a bullish AB=CD formation in recent hours which dovetails with a Quasimodo resistance-turned support at $1.0631 as well as a number of nearby Fibonacci ratios. Bolstering the aforementioned H1 areas is H4 supply-turned demand from $1.0655-1.0632.
Despite clear confluence out of H1, H4, and daily timeframes, traders are encouraged to take note of where the pair is coming from on the weekly scale: resistance at $1.0778. This may pressure upside efforts and lead to H1 crossing swords with $1.06. Any buying, however, will likely take aim at H1 Quasimodo support-turned resistance at $1.0672.
Wednesday exhibited a clear risk-off vibe, weighing on the Australian dollar. Flow on the daily timeframe came within striking distance of connecting with Quasimodo support-turned resistance at $0.7245—complemented by a 200-day simple moving average at $0.7256. Of note on the daily scale, of course, is the relative strength index (RSI) attempting to cement position north of its 50.00 centreline (positive momentum).
For those who read recent technical writing you may recall the following, covering weekly, H4 and H1 structure:
Recent weeks observed AUD/USD establish a lower low (breaching 28th Jan $0.6968 low) and subsequently fashion a 2-week recovery (3.2 per cent). While an extended pullback is on the table, this remains a sellers’ market in observance of a clear downtrend since August 2011 (check monthly scale) and weekly flow topping out at $0.8007 in early February 2021. Weekly support structure remains seen between $0.6632 and $0.6764, comprised a 100% Fibonacci projection, a price support, and a 50% retracement.
Resistance is visible on the H4 scale between $0.7246 and $0.7217 (lower edge derived from a Fibonacci cluster), which houses daily resistance at $0.7245 within its upper limit. Of technical relevance on the H1 chart, we can see the noted H4 resistance is nestled above $0.72, raising the prospects of a whipsaw (or ‘stop-run’) beyond the psychological figure. This, of course, is strengthened by the overall trend facing south and daily resistance plotted at $0.7245.
As evident from the H1 scale, a stop-run north of $0.72 came to fruition and tagged H4 resistance from $0.7246-0.7217 on Wednesday. Confirmation of further bearish flow may come about on a H1 trendline support breach, taken from the low $0.6829, action perhaps clearing the path to H1 support at $0.7126 and $0.71.
Leaving weekly support from ¥125.54 unopposed, USD/JPY trades 2.4 per cent higher on the week and threatens to refresh multi-year pinnacles. We also clearly remain entrenched within a primary bull trend, though daily price is now on the doorstep of reconnecting with supply at ¥131.93-131.10. Aiding the bullish picture is the daily timeframe’s relative strength index (RSI) strongly rebounding from 40.00-50.00 support (an area representing an oversold zone since May 2021).
An almost one-sided advance is evident on the H4 timeframe, with Wednesday dethroning Quasimodo resistance at ¥129.67 (now potential support) and unearthing Quasimodo resistance from ¥130.58. Based on the H1 timeframe, short-term movement reclaimed ¥130+ status and, in recent hours, retested the level as support. Upstream points to the H4 Quasimodo resistance at ¥130.58, while south of the big figure throws light on H1 demand at ¥129.21-129.55 (arranged just under H4 support from ¥129.67).
All four timeframes support additional upside. Should ¥130 remain strong, follow-through buying to H4 Quasimodo resistance at ¥130.58 and ¥131 may be on the cards. A ¥130 break, on the other hand, highlights a potential dip-buying opportunity from H1 demand at ¥129.21-129.55.
Sterling finished Wednesday on the ropes against its US counterpart, shedding nearly 1.0 per cent and chalking up a second consecutive bearish day.
In spite of recent movement, higher timeframe technical structure remains unchanged, therefore the following may serve as a reminder of where we left the charts heading into Wednesday’s technical briefing:
Long term, this market has been entrenched within a strong primary downtrend since early 2021, emphasising weekly resistance at $1.2719 and daily Quasimodo support-turned resistance at $1.2762 as a possible ceiling. Interestingly, the daily timeframe’s relative strength index (RSI) is on the verge of finding grip above the 50.00 centreline: positive momentum.
Shorter-term price action based on the H4 scale witnessed price knock on the door of resistance from between $1.2686 and $1.2614, made up of a number of technical resistances. Downside support targets fall in at $1.2375 and $1.2186. Interestingly, on the H1 timeframe, US hours on Wednesday saw a rebound take shape from a Fibonacci support between $1.2451 and $1.2471, which lifted the pair to the lower side of $1.25. North of here, resistance is at $1.2554.
Scope to push lower on weekly, daily and H4 timeframes casts a dark cloud over H1 Fibonacci support, therefore highlighting the prospect of a bearish scene unfolding from $1.25.
Joined by the daily timeframe’s relative strength index (RSI) rejecting its 50.00 centreline, BTC/USD rotated south on Wednesday and reclaimed a portion of Monday’s 7.5 per cent rally. Daily support remains in the spotlight at $28,849, a level withstanding downside attempts since mid-May. $36,361 and $34,048, both daily Quasimodo support-turned resistance barriers, are seen to the upside on the daily scale. Though in view of this market facing southbound since November 2021 (primary bear trend), these levels may go untested.
Across the screen, H1 price action tunnelled through a decision point at $30,485-30,861 yesterday, clearing the river for a test of Quasimodo resistance-turned support coming in from $29,885. Overhead, the recently breached decision point now serves as possible resistance, while continuation selling beyond $29,885 has support to zero in on at $29,358.
Having seen a reluctant bid from daily support at $28,849, the H1 timeframe’s resistance at $30,485-30,861, as well as resistance at $31,000, could be a platform we see sellers work with to draw the crypto lower in upcoming sessions.
It was a good day for XAU/USD buyers on Wednesday as the yellow metal rallied 0.6 per cent versus the US dollar. Technically speaking, daily price action continues to engage with a harmonic Gartley pattern’s PRZ (Potential Reversal Zone) between $1,815 and $1,843. As communicated in Wednesday’s technical briefing, the PRZ benefits from the 200-day simple moving average at $1,840 and a 61.8% Fibonacci retracement at $1,827. Upside price targets remain noted at $1,895 (38.2% Fibonacci retracement derived from legs A-D) and a $1,959-1,974 resistance zone. Meanwhile, the daily chart’s relative strength index (RSI) is hovering around the lower side of the 50.00 centreline. A break north demonstrates positive momentum and implies an optimistic tone for the noted Gartley pattern.
From the H1 scale, the unit rebounded from a 61.8% Fibonacci retracement at $1,831, fixed above a 50.0% retracement and a 1.272% Fibonacci projection at $1,828. As you can probably see, resistance is reasonably thin until reaching a Quasimodo formation at $1,862, closely shadowed by a Quasimodo resistance priced at $1,865. And in light of the daily timeframe’s current position, buyers may attempt to hold recent gains and target the noted H1 resistances.
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.