Weekly Technical Market Insight: 22nd – 26th March 2021

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

Partly modified from previous analysis –

Dollar movement, as measured by the US dollar index (DXY), echoed an indecisive stance last week and settled mostly unchanged.

Price action continues to hug resistance at 92.38/91.96, an area made up of a 61.8% Fib level at 92.38, a 127.2% Fib projection at 92.36, a fixed resistance level at 92.26, a 100% Fib extension at 91.96 and a 50.0% retracement residing at the same level. Also close by, as underlined in previous analysis, is a 200-day simple moving average, circling 92.68. MAs regularly offer support and resistance when tested, therefore resistance off this angle remains possible, should the greenback climb this week. Traders will note price action has traded beneath this value since June 2020, a bearish signal.

Also aired in recent weekly writing, the index topped south of the 103.00 figure in March 2020 and launched a series of lower lows and lower highs (a clear-cut downtrend—price swings: see black arrows).

In terms of technical support, 91.00 calls for attention, with subsequent downside throwing light on support around 90.00, followed by longer-term support at 89.34. Submerging the aforementioned supports will likely add conviction to the bearish narrative, perhaps activating longer-term breakout selling interest.

With the above on board, in a market trending lower, the resistance zone at 92.38/91.96—coupled with the nearby 200-day simple moving average—delivers an area of confluence to work with this week.

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets

EUR/USD:

Monthly timeframe:

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

March remains toying with the upper side of 1.1857/1.1352 demand, lower by 1.4 percent.

Price action traders will have noted the demand’s entrance, possibly viewing it as a bullish signal.

A decisive rebound from the aforesaid demand shifts attention back to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641). An extension to the downside, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

In terms of trend, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Since March 11, buyers and sellers have been battling for position around support priced in at 1.1887. Additional technical elements are visible in the form of a 127.2% Fib projection at 1.1843, a 100% Fib extension at 1.1855 (harmonic traders will note this represents an AB=CD formation), and a 200-day simple moving average at 1.1843.

Upriver, technical framework reveals a 38.2% Fib level at 1.2021—considered by many chartists as an initial target out of AB=CD patterns.

In the context of trend on this timeframe, the unit has faced north since 2020 despite the 2021 retracement so far.

H4 timeframe:

March 11 tops, just ahead of resistance at 1.1992, followed by a subsequent top on Thursday, established what many technicians label as a double-top pattern, with a neckline at 1.1882.

Friday, as you can see, probed the neckline, yet was unable to initiate downside interest, consequently forming a half-hearted hammer candle, often considered a bullish signal at troughs.

A close beneath the said neckline is likely to prompt follow-through selling. Sellers, however, may be discouraged by neighbouring support between 1.1818 and 1.1860 (Quasimodo support at 1.1818, a 161.8% Fib projection at 1.1835, and a 100% Fib extension at 1.1860).

H1 timeframe:

Early London Friday, amidst USD upside (DXY), had EUR/USD dip a toe in waters south of 1.19 and eventually shake hands with demand at 1.1881/1.1865. The response from the zone witnessed price reclaim 1.19+ status heading into US hours and retest the number by the close.

Additional areas of note this week are the 100-period simple moving average (1.1922), with a break here perhaps unmasking 1.1950 resistance. Lower on the curve, though, demand at 1.1851/1.1867 is worthy of mention. This is where a decision was made to not only breach 1.1887 tops and penetrate 1.19 resistance.

RSI followers have resistance at 54.40 to work with this week. Oversold territory also reveals familiar support at 20.64.

Observed levels:

Long term:

From the monthly scale, technical structure implies buyers could make an entrance off demand from 1.1857/1.1352.

Buyers defending support at 1.1887 on the daily timeframe offers a sign monthly price may defend its demand area. The challenge for daily buyers is the 38.2% Fib level at 1.2021.

Short term:

Knowing we’re working with a higher timeframe bullish vibe this week, H1 buyers could attempt to hold 1.19 and dethrone the 100-period simple moving average. Alternatively, a dip into H1 demand from 1.1851/1.1867 may emerge before a bullish theme forms as it shares space with H4 support at 1.1818/1.1860.

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets

AUD/USD:

Monthly timeframe:

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

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s interesting was February came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

March, as you can probably see, trades higher by 0.4 percent, and remains within February’s range.

Should sellers regain consciousness, demand at 0.7029/0.6664 is in view (prior supply).

With respect to trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

The week assumed a somewhat indecisive stance, rocking between 0.7849 and 0.7699 just south of trendline support-turned resistance, taken from the low 0.5506. A bearish scenario materialising this week will have February’s low at 0.7563 to target, with subsequent downside perhaps taking aim at demand from 0.7453/0.7384 (previous supply).

Despite the trendline support breach early March, the chart has yet to form a DECISIVE lower low. For that reason, the trend remains to the upside.

RSI followers will note the value continues to test the grip of the 50.00 centreline, following 42.00 lows formed March 8.

H4 timeframe:

Technical structure on the H4 to be mindful of this week are demand-turned supply at 0.7848/0.7867 (housing a 61.8% Fib level at 0.7859 and a 127.2% Fib projection at 0.7849), together with demand fixed at 0.7696/0.7715 as well as another layer of demand plotted at 0.7601/0.7627.

An additional technical drawing to be aware of is an early ascending channel, taken from the low at 0.7621 and the high 0.7800.

H1 timeframe:

Movement was muted on Friday, developing resistance off the 100-period simple moving average around 0.7757.

A break above the SMA this week will likely have price action traders shift attention back to the 0.78 limit, while any downside calls attention towards Quasimodo support from 0.7710, a 61.8% Fib level at 0.7708 and the 0.77 figure. Another area worth recognising is demand at 0.7643/0.7667, closely joined by Quasimodo support at 0.7636.

From the RSI oscillator, the value recoiled from familiar support at 33.44 on Friday and is on track to possibly welcome resistance at 54.51.

Observed levels:

Long term:

The monthly timeframe’s bearish stance, on top of daily sellers making an appearance south of trendline resistance, echoes a bearish narrative on the bigger picture.

Although daily price can still retest the trendline resistance, the next downside target falls in around February’s low at 0.7563.

Short term:

H1 Quasimodo support at 0.7710 and the 0.77 figure, housed within H4 demand at 0.7696/0.7715, delivers nearby technical confluence this week. A whipsaw through the H4 ascending channel must form in order for this to take shape.

Should H1 voyage through 0.77, watch H1 demand at 0.7643/0.7667 to potentially greet price action. Interested buyers here, however, are urged to pencil in the possibility of a whipsaw through demand to test bids at Quasimodo support from 0.7636.

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets

USD/JPY:

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, up by 2.2 percent, is seen closing in on descending resistance, etched from the high 118.66. A spirited break of the latter swings the technical pendulum in favour of further upside.

To the downside, support inhabits 101.70.

Daily timeframe:

Largely unchanged from previous analysis –

The pair wrapped up the week unchanged, launching back-to-back indecision candles just south of Quasimodo resistance from 109.38. Of particular interest is the Quasimodo formation fusing closely with the monthly timeframe’s descending resistance.

While the aforesaid Quasimodo cannot be disregarded, recognising supply resides at 110.94/110.29 is important, as a run for stops above the Quasimodo head (blue arrow—109.85) could materialise.

Areas visible to the downside are support at 107.64—a previous Quasimodo resistance—and supply-turned demand at 107.58/106.85.

With respect to trend, 2021 has pointed to the upside.

Based on the RSI oscillator, the value remains within overbought space, hovering beneath resistance at 83.02 and forming early divergence (the value exiting overbought will add more conviction).

H4 timeframe:

Unchanged from previous analysis –

The Quasimodo formation at 109.16 proved stubborn resistance last week, shutting down any attempts to shake hands with supply at 109.59/109.37. Notably, the supply houses daily Quasimodo resistance at 109.38.

Further selling from the aforesaid Quasimodo could have sellers address demand coming in at 108.31/108.50, followed by support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

Demand at 108.67/108.78 (considered an important zone given it was here a decision was made to initially break through 109 offers) echoes a fragile tone. Having its lower side clipped twice last week and H1 defending the underside of 109 and 100-period simple moving average suggests downside risks are building.

Below demand signals the pair could test support at 108.36, a base withstanding a number of downside attempts earlier in March.

Observed levels:

Long term:

Current focus on the bigger picture is daily Quasimodo resistance at 109.38 and monthly descending resistance. However, as aired in recent analysis, before sellers attempt to put in an appearance, a whipsaw to daily supply at 110.94/110.29 could develop.

Short term:

Shorter term, noting H1 demand from 108.67/108.78 is perhaps fragile, H4 and H1 charts indicate price is bound for H4 demand at 108.31/108.50 this week, and possibly H1 support at 108.36 seen within.

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets

GBP/USD:

Monthly timeframe:

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

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. March currently trades lower by 0.5 percent, contained within February’s range.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Tuesday’s test of trendline support, drawn from the low 1.1409, albeit attracting bullish flow Wednesday, failed to encourage further buying heading into the second half of the week. Thursday was unable to find acceptance above 1.4001, with Friday extending its corrective slide back to the aforementioned trendline support. Breaching trendline support this week throws light on support coming in at 1.3755.

Quasimodo resistance drawn from 1.4250 is also worth a shout, should buyers rebound price, while territory beneath 1.3755 elbows Quasimodo support at 1.3609 in the line of fire.

The trend, clearly visible on this scale, has faced higher since early 2020.

The RSI indicator continues to test the mettle of support between 46.21 and 49.16, though the value modestly punched below the 50.00 centreline Friday.

H4 timeframe:

Quasimodo resistance at 1.4007—aligns with a 50.00% retracement—has formed a clear ceiling since early March. Equally impressive on this timeframe is 1.3852 support and additional support, in the form of a 61.8% Fib level from 1.3829.

Areas outside of the aforementioned levels to be conscious of this week are demand at 1.3761/1.3789, as well as demand fixed at 1.3730/1.3749. While above 1.4007, space to test 1.42 resistance is visible. The demand-turned supply at 1.4091/1.4054 (red), of course, may also hinder upside, but given buyers demonstrated a lack of interest from the zone on February 24 (black arrow), sellers might be cautious here.

H1 timeframe:

Following a mild recovery off 1.3830 as we stepped into US trading Friday (accompanied by an RSI oversold signal), the pair crossed swords with resistance at 1.3878, a previous Quasimodo support level. Resistances to note above are 1.39, the 100-period simple moving average, supply at 1.3938/1.3918 and Quasimodo resistance from 1.3952.

Should the unit leave the aforesaid resistances unchallenged, technical elements point to a test of 1.38, a level shadowed by a Quasimodo support from 1.3786 and a 161.8% Fib extension at 1.3782.

Observed levels:

Long term:

The fact daily flow has been unable to maintain a bullish presence following the rebound from trendline support hints at a dip to support at 1.3755 this week. Having noted monthly price delivering a reasonably bullish setting above trendline resistance, traders are likely to expect buyers to welcome daily support if tested.

Short term:

A bearish scenario taking shape from H1 resistance at 1.3878 is a possibility. The concern, of course, is H4 support at 1.3852 and the 61.8% Fib level from 1.3829.

Given the above, nevertheless, H4 coming off support from 1.3852, aided by daily trendline support and monthly flexing its muscle north of trendline resistance, could see buyers make a show early trading and attempt to tackle 1.39 on the H1, possibly followed by H1 supply at 1.3938/1.3918.

Weekly Technical Market Insight: 22nd – 26th March 2021, FP Markets


DISCLAIMER: 
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.




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