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

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

Charts: Trading View

US Dollar Index (Daily Timeframe):

(Italics: previous analysis)

The US dollar, according to the dollar index, cruised to fresh 2021 pinnacles last week at 96.24. Despite this, and irrespective of registering a fourth successive week in the green, USD confidence elevated price to resistance between 96.37 and 95.80—largely made up of Fibonacci ratios, including a 100% Fibonacci projection from 95.94 (AB=CD harmonic structure).

  • Reinforcing current resistance is last week’s rejection. In addition, the weekly timeframe’s relative strength index (RSI) recorded overbought (check weekly chart), and the daily timeframe’s RSI may chalk up bearish divergence around overbought territory in the days ahead. Any downside from resistance has a decision point at 94.96-95.26 to target, followed by support from 94.65 and trendline support, taken from the low 89.84.
  • Another school of thought is the break of resistance this week. Supporting higher levels is current trend: established through a series of higher highs and higher lows since price made contact with support from 89.69 in May. The trend, therefore, could reinforce a dip-buying scenario from either 94.96-95.26 or 94.65ish this week.

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

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

The euro was kicked around last week, dropping 1.4 percent and registering fresh 2021 troughs against its US counterpart.

However, support, composed of a 61.8% Fibonacci retracement at $1.1281 and a 1.618% Fibonacci projection from $1.1237, delivers a possible ‘floor’ this week. Harmonic traders will acknowledge the 1.618% component represents an ‘alternate AB=CD bullish pattern’. Upriver, resistance is stationed at $1.1473-1.1583.

Trend studies reveal the pair took out 2nd November low (2020) at $1.1603, suggesting a primary downtrend. Consequently, this questions the value of current support ($1.1237-1.1281).

Daily timeframe:

Quasimodo support at $1.1213 (positioned beneath the weekly timeframe’s Fibonacci structure) is central on the daily chart. Defending the latter backs current weekly support, yet rupturing the daily level reinforces a bearish environment, targeting support around the $1.0991ish neighbourhood.

While immediate flow has been trending lower since late May tops at $1.2266, momentum, according to the relative strength index (RSI), is engaging oversold space and launched the beginnings of potential bullish divergence. Ultimately, technicians will want to see continued upside within the indicator, preferably testing the 50.00 centreline.

H4 timeframe:

The $1.1387-1.1366 decision point served sellers well in the second half of the week, guiding movement to lows ahead of Quasimodo support at $1.1243.

$1.1243 is arranged just north of daily Quasimodo support at $1.1213, and is set within the walls of weekly support from $1.1237-1.1281.

H1 timeframe:

Early European hours entered a one-sided decline on Friday, pencilling in a decision point at $1.1361-1.1351 and squeezing $1.13 interest out of the market.

$1.1235-1.1248 demand—taken from early July 2020—came within a whisker of entering the frame after $1.13 support stepped aside. Note support out of the relative strength index (RSI) at 18.00 also came close to making an entrance, before the indicator exited oversold space and made for the 50.00 centreline.

Having seen short-term movement conclude the week beneath $1.13, sellers could strengthen their grip early week.

Observed Technical Levels:

Long term:

Weekly support at $1.1237-1.1281 is key this week. However, having noted scope to elbow lower on the daily timeframe to Quasimodo support at $1.1213 and weekly trend direction facing south, traders may question $1.1237-1.1281.

Short term:

The combination of H1 demand at $1.1235-1.1248 and H4 Quasimodo support at $1.1243 is noteworthy. The short-term zone also welcomes a connection with current weekly support. Consequently, a bounce from $1.1235-1.1248 might form.

Prior to the above coming to fruition, a bearish scene could unfold sub $1.13. A retest of the figure that holds in the form of a bearish candlestick pattern may draw in short-term bearish expectations towards $1.1235-1.1248.

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

 

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Three back-to-back bearish candles taking shape from $0.7501 resistance landed price at the door of prime support from $0.6968-0.7242 last week—November is down 3.9 percent.

The longer-term trend has been higher since pandemic lows of $0.5506 (March 2020). As a consequence, dip-buying could be on the cards from $0.6968-0.7242.

Daily timeframe:

Embracing the idea of moves from weekly prime support is the daily timeframe’s Quasimodo support at $0.7220 and intersecting trendline resistance-turned support, etched from the high $0.7891.

As evident from the daily chart, resistance between $0.7621 and $0.7551 is visible to the upside, sharing space with the 200-day simple moving average around $0.7532. Territory below $0.7220, on the other hand, points to nearby Fibonacci support between $0.7057 and $0.7126.

The trend on this timeframe remains in line with weekly movement: favours upside following the break of 3rd September high at $0.7478.

H4 timeframe:

A closer reading of price action on the H4 shows resistance developed at $0.7250, a prior Quasimodo support level. Note the level’s response generated a healthy bearish upper shadow, directing flow towards Quasimodo support underlined on the daily timeframe at $0.7220.

A level of interest above $0.7250 is $0.7287, a Quasimodo support-turned resistance.

H1 timeframe:

Quasimodo support calls for attention at $0.7208, arranged above the $0.72 figure. Higher on the curve, however, prime resistance is at $0.7278-0.7262, followed by the $0.73 figure and a well-placed prime resistance at $0.7324-0.7309.

Interestingly, the relative strength index (RSI) formed bullish divergence on Friday out of oversold terrain. A break above the 50.00 centreline would confirm bullish action: positive momentum (average gains exceeding average losses).

Observed Technical Levels:

Long term:

Mixing the upper boundary of weekly prime support at $0.7242 and daily Quasimodo support from $0.7220 (as well as daily trendline resistance-turned support) gives rise to a potential recovery phase this week.

Short term:

Adding H1 Quasimodo support at $0.7208 (and the round number $0.72) to daily Quasimodo support from $0.7220 strengthens the possibility of a bullish showing.

Therefore, between $0.72 and $0.7220 is an area buyers could welcome (green zone on H1).

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

 

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

Despite clocking a fresh 4-year pinnacle at ¥114.97, action failed to find a reception above resistance from ¥114.38 and the upper edge of a bullish flag between ¥114.70 and ¥113.41. This resulted in a decisive upper shadow taking shape, producing a half-hearted shooting star formation: bearish signal.

Should we eventually explore space above resistance and the upper range of the noted flag, traders are urged to pencil in the 1.272% Fibonacci projection from ¥116.09.

In terms of trend, the unit has been advancing since the beginning of this year.

Daily timeframe:

A closer examination of technical structure on the daily chart shows Wednesday produced a bearish outside reversal from a 78.6% Fibonacci retracement at ¥114.94 (drawn from 15th December 2016 high at ¥118.66). Friday subsequently formed another bearish outside reversal, engulfing Thursday’s subdued range.

Lower, technicians will note attention remains on supply-turned demand at ¥112.66-112.07.

RSI (relative strength index) analysis reveals clear support between 40.00 and 50.00 (amid prolonged uptrends, indicator support often forms around the 50.00 area and operates as a ‘temporary’ oversold base).

H4 timeframe:

For those who read Friday’s technical outlook you may recall the following (italics):

Buyers attempted to make an entrance on Thursday, yet found resistance at ¥114.46 (arranged just beneath Quasimodo resistance at ¥114.76).

The technical surroundings on the H4 scale indicates follow-through selling could be on the menu, movement sinking through Monday’s trough at ¥113.75 to connect with prime support at ¥113.28-113.59, a 61.8% Fibonacci retracement at ¥113.60 and a 100% Fibonacci projection at ¥113.49 (harmonic players will note this represents an AB=CD bullish pattern).

As seen from the chart, price absorbed willing bids from ¥113.28-113.59 Friday (a to-the-pip test) and dialled in a high of ¥114.07. Prime support is also seen from ¥113.32-113.66, a longer-term zone extended from 28th September.

A ¥112.78-113.00 decision point is noted should sellers take control.

H1 timeframe:

US hours Friday cemented position off support from ¥113.67, subsequently drawing price to the lower side of ¥114. This followed a convincing decline from H4 resistance highlighted above at ¥114.46, action penetrating a head and shoulders top pattern’s (¥114.30/¥114.91/¥114.54) neckline, taken from the low ¥113.75.

According to the head and shoulders profit objective at ¥112.86 likely to call price lower, ¥114 holding as resistance is possible early trade this week, driving through ¥113.67, as well as a decision point at ¥113.35-113.49.

In terms of where we stand on the relative strength index (RSI), the indicator registered bullish divergence Friday and is on the verge of greeting the 50.00 centreline. Pulling above the latter helps validate any up move, indicating positive momentum in the form of average gains exceeding average losses.

Observed Technical Levels:

Long term:

The weekly timeframe failing to command a presence above resistance from ¥114.38, together with the daily timeframe’s mid-week dip—shaped by a bearish outside reversal—from Fibonacci resistance at ¥114.94, suggests sellers assuming command to daily supply-turned demand at ¥112.66-112.07.

Short term:

While prime supports on the H4 scale (¥113.28-113.59/ ¥113.32-113.66) accepted price on Friday, and has the capacity to reach for resistance at ¥114.46, the H1 timeframe’s head and shoulders top pattern confirmation and ¥114 resistance is also likely to draw attention, targeting as low as ¥112.86.

Given higher timeframe direction, sellers from ¥114 may assume control early trade, pursuing the ¥113ish neighbourhood.

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

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 recently surrendered position. Month to date, November is down 1.8 percent.

Couple this with price closing under a double-top pattern’s ($1.4241) neckline at $1.3669 in August, the weekly chart reflects a bearish technical outlook. The double-top pattern’s profit objective—measured by taking the distance between the highest peak to the neckline and extending this value lower from the breakout point—delivers a downside target around $1.3093.

Daily timeframe:

Friday convincingly snapped a three-day bullish phase, throwing light back on Fibonacci support between $1.3262 and $1.3337 this week. To the upside, resistance is at $1.3602 and trendline resistance, taken from the high $1.4250—both forming upside objectives should buyers regain consciousness.

Longer-term sentiment has remained biased to the downside since June (add this to indicator resistance formed between 60.00 and 50.00 on the relative strength index [RSI] since August).

H4 timeframe:

Resistance between $1.3524 and $1.3510 (a Fibonacci area including a 100% Fibonacci projection, which many harmonic traders will recognise as a bearish AB=CD) captured the attention of sellers late in the week, sending the currency pair to a low of $1.3407.

Absence of support on this timeframe until trendline resistance-turned support, taken from the high $1.3800, indicates further declines could come to fruition this week.

H1 timeframe:

US trading Friday pushed through a short-term bearish outside reversal ahead of resistance between $1.3482 and $1.3476, following a bottom just north of $1.34.

Additional areas to be mindful of are the $1.35 figure and Quasimodo resistance from $1.3517. Lower on the curve, two Quasimodo supports are seen at $1.3359 and $1.3387.

Studies out of the relative strength index (RSI) show trendline resistance, drawn from the high 69.98, capped upside around the 50.00 centreline on Friday. Climbing above the latter informs short-term traders that upside momentum is gaining traction and could continue until reaching overbought.

Observed Technical Levels:                       

Long term:

The weekly timeframe shows scope to approach the $1.31ish range after closing under supply-turned demand at $1.3629-1.3456.

The daily timeframe’s Fibonacci support between $1.3262 and $1.3337, however, is recognised as an immediate downside objective on the higher timeframes.

Short term:

Room to explore lower levels on the H4 timeframe implies H1 sellers south of resistance ($1.3482-1.3476) may zero in on $1.34 early week.

$1.34 is also an interesting support. It’s common to view price whipsaw round numbers. Having H1 Quasimodo support at $1.3387 tucked under the big figure suggests this might be a location buyers attempt to fade sell-stop flow derived from stops under $1.34.

Weekly Technical Market Insight: 22nd – 26th November 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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