Charts: Trading View
(Italics: Previous Analysis)
Europe’s single currency wrapped up higher against its US counterpart on Monday, adding 0.4 per cent by the close of European trading. In what was a somewhat quiet session—US banks closed in observance of Memorial Day—price action on the weekly timeframe, however, shook hands with Quasimodo support-turned resistance at $1.0778. Sharing chart space with the aforementioned weekly resistance is also the daily ascending support-turned resistance, drawn from the low $1.0340. The ascending line become visible after the unit overthrew the $1.0638 resistance, which is now echoes possible support.
In a market decisively trending lower since 2021, and the daily timeframe’s relative strength index (RSI) edging closer to indicator resistance at 63.66, the area between the noted daily ascending resistance line and weekly resistance could be a zone longer-term sellers draw to.
On the H4 timeframe, Monday dethroned resistance at $1.0758, along with H1 resistances at $1.0755 and $1.0762, all of which now represent supports. H1 resistance at $1.0829, a level enclosed within a H4 decision point at $1.0859-1.0828 (which also shares a connection with the daily ascending resistance line), is visible to the upside as we head into Tuesday’s session. Consequently, the H4 decision point is a base sellers could make an entrance from, having recognised the technical confluence joining the area.
AUD/USD bulls remained on the offensive Monday, extending Friday’s 0.8 per cent rally. As a consequence, the unit overpowered resistance at $0.7170 on the daily scale, casting light on the 200-day simple moving average at $0.7257 and pulling the daily timeframe’s relative strength index (RSI) north of its 50.00 centreline (positive momentum).
Recent analysis noted the following on the weekly timeframe:
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 between $0.6632 and $0.6764, comprised a 100% Fibonacci projection, a price support, and a 50% retracement.
Out of the H4 timeframe, resistance calls for attention between $0.7246 and $0.7217 (lower edge derived from a Fibonacci cluster), which happens to share chart space with daily resistance at $0.7245. 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.
Due to lacklustre price movement on Monday, higher timeframe structure remains unchanged:
Month to date, USD/JPY is 1.8 per cent lower, on track to take a bite out of April’s 6.7 per cent advance. Registering a third consecutive weekly loss last week, the secondary correction within the primary uptrend (since the beginning of 2021) on the weekly timeframe demonstrates room to extend losses to support from ¥125.54, a resistance-turned support drawn from as far back as 2002. A similar picture is evident on the daily chart, though it is worth underlining that the relative strength index (RSI) is touching gloves with familiar support between 40.00-50.00 (temporary oversold base since May 2021), together with testing a double-top pattern (87.52) profit objective at 45.83.
The H4 timeframe currently supports selling, having seen the pair touch gloves with trendline resistance, taken from the high ¥131.35, bolstered by a 100% Fibonacci projection at ¥127.79 (and a 1.272% Fibonacci extension at ¥127.86) on the H1 timeframe (AB=CD bearish pattern). In the event of a break higher, nonetheless, traders are encouraged to pencil in H1 supply from ¥128.35-128.12 and the ¥128 figure.
Having noted scope to discover deeper water on the bigger picture, and H4 and H1 are seen testing resistances, sellers could strengthen their grip, targeting an initial break of ¥127 on the H1, followed by a possible run to ¥126.00 (H4 double-top pattern profit objective).
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 cementing position above the 50.00 centreline: positive momentum.
Out of the H4 timeframe, buyers and sellers continue to battle for position within resistance between $1.2686 and $1.2614, with buyers taking the edge so far. A closer reading of price action on the H1 timeframe shows the unit spent Friday and Monday establishing an ascending triangle from $1.2658 and $1.2586. Outside of this pattern, eyes will be on H1 Quasimodo support-turned resistance at $1.2695 (taken from September 2020), as well as $1.26 and trendline support, drawn from the low $1.2155.
As a result, alongside the bigger picture demonstrating some elbowroom to extend the current pullback, and H1 on the verge of breaking out to the upside (to attack resistance mentioned above at $1.2695), H4 resistance ($1.2686-1.2614) is likely to be engulfed.
As communicated in this week’s weekly technical briefing, daily support from $28,849 remains critical structure, withstanding a number of downside attempts since 11th May. In light of Monday’s spirited advance, $36,361 and $34,048, both daily Quasimodo support-turned resistance barriers, are now on the table as potential upside objectives. Submerging current support is likely a concern for $28,849 bids, as a decisive push unlocks the path to support around the $20,000 neighbourhood. Should the daily chart’s relative strength index (RSI) climb beyond its 50.00 centreline (positive momentum), this bodes well for current longs.
According to the H1 chart, however, short-term flow aggressively recovered from range support at $28,710 on Monday and is now crossing swords with range resistance at $30,626 (threatening a move to neighbouring Quasimodo resistance at $31,000). In a market entrenched within a primary bear trend (and daily price trekking beneath its 200-day simple moving average at $42,793 since December 2021), the area between H1 Quasimodo resistance and H1 range resistance may be a platform sellers work with and attempt to push lower.
It was a relatively slow day for the yellow metal on Monday; despite ranging between $1,864 and $1,847, XAU/USD finished the session muted. Attention remains fixed on the daily timeframe’s harmonic Gartley pattern’s PRZ (Potential Reversal Zone) between $1,815 and $1,843. Complementing the PRZ is the 200-day simple moving average at $1,840 and a 61.8% Fibonacci retracement at $1,827. Upside price targets remain noted at $1,896 (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 poised to confront the lower side of the 50.00 centreline. A break north demonstrates positive momentum and echoes an optimistic tone for the noted Gartley pattern.
On the back of the daily timeframe producing support, dip buyers could target Quasimodo support from $1,836 on the H1 chart, which is linked with a 100% Fibonacci projection at $1,835 (along with a 50.0% retracement and a 38.2% Fibonacci retracement at $1,838ish). Similar to Monday’s weekly technical briefing, breakout buyers might also emerge above Quasimodo resistance at $1,865 to take on H1 Quasimodo support-turned resistance at $1,872.
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