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November 10th 2021: Dollar Index Prints Third Consecutive Close Lower; Eyes Daily Trendline Support

By:
Aaron Hill
Published: Nov 9, 2021, 22:56 UTC

Short term on the EUR/USD, H1 prime resistance at $1.1628-1.1619 calls for attention, an area sellers may employ to fade buy-stops above $1.16...

Depositphotos_165381696_s-2019 (1)

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Prime support at $1.1473-1.1583 remains in the frame, though echoes vulnerability, emphasised through failure to find acceptance above $1.1692 highs. $1.1981-1.1848 supply is recognised as the next upside objective should buyers regain dominance, yet further underperformance shines the technical spotlight on a 61.8% Fibonacci retracement at $1.1281.

With reference to trend on the weekly chart, price taking out 2nd November low (2020) at $1.1603 suggests the currency pair is transitioning to a downtrend.

Daily timeframe:

Fibonacci support between $1.1420 and $1.1522—an area fastened to the lower side of weekly support—made its way into view on Friday, and was well received in early trading this week.

Upstream features trendline resistance, taken from the high $1.2254, shadowed by Quasimodo support-turned resistance at $1.1689.

Favouring the aforementioned resistances is sentiment pointing lower since late May tops at $1.2266. Also confirming downside is the relative strength index (RSI) accepting the 50.00 centreline as indicator resistance since late October. What this tells traders is that momentum is lower: average losses exceeding average gains.

H4 timeframe:

Prime resistance at $1.1613-1.1580 greeted price action on Tuesday, triggering a wave of back-to-back indecision candles. Lacklustre selling swings the pendulum in favour of testing the decision point at $1.1636-1.1620, with subsequent upside uncovering Quasimodo resistance at $1.1669.

Should sellers regain dominance, Friday’s trough at $1.1514 is on the radar, marked ahead of support from $1.1495, a clean support and resistance level boasting strong historical significance.

H1 timeframe:

Tuesday watched buyers and sellers square off between psychological resistance from $1.16 and support coming in at $1.1572.

Space south of $1.1572 deserves notice, exhibiting scope to approach $1.1513 lows, followed by $1.15. Interestingly, though, above $1.16, prime resistance at $1.1628-1.1619 (secured to the lower side of the H4 decision point at $1.1636-1.1620) is a prominent base. Traders, therefore, may attempt to take advantage of buy-stops above $1.16 from here.

Regarding momentum, the relative strength index (RSI) touched gloves with the 50.00 centreline, pushing forward indicator support and informing traders that positive momentum is seen, and consequently could have price eventually probe $1.16.

Observed Technical Levels:

Short term, H1 prime resistance at $1.1628-1.1619 calls for attention, an area sellers may employ to fade buy-stops above $1.16. It’s important to note the H1 zone joins hands with the H4 timeframe’s decision point at $1.1636-1.1620. Another equally important scenario to take on board, of course, is a possible spike to daily trendline resistance, currently at $1.1650ish, meaning a whipsaw above the H4 and H1 prime resistance areas could be on the cards before sellers look to take the wheel.

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AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Resistance at $0.7501, slotted just under prime resistance from $0.7849-0.7599, remains active. Further losses could reignite prime support at $0.6968-0.7242, with subsequent interest below here shifting focus to support at $0.6673.

Despite current resistance, trend studies show we’ve been higher since early 2020.

Daily timeframe:

The 38.2% Fibonacci retracement at $0.7379, as you can see, is under siege. Clearance of the latter shifts the 61.8% Fibonacci retracement from $0.7271 in sight. Note that $0.7379 entered the frame following November’s depreciation from resistance between $0.7621 and $0.7551.

Helping to validate a bearish presence, the relative strength index (RSI) tunnelled through the 50.00 centreline: average gains< average losses.

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

H4 timeframe:

The decision point at $0.7476-0.7461 is clear higher up, together with a local trendline resistance, drawn from the high $0.7555; lower, Quasimodo support can be seen from $0.7332.

Trend on this timeframe is lower, forged by the recent breach of trendline support, taken from the low $0.7170.

H1 timeframe:

A mild Fibonacci cluster around $0.7428, made up of a 61.8% Fibonacci retracement and a 1.272% Fibonacci expansion, served well as resistance, withstanding two upside attempts with price subsequently chiselling through $0.74 on Tuesday. Friday’s low point at $0.7360 is next in the line of fire, arranged above Quasimodo support from $0.7349, while above, $0.74 and a decision point from $0.7412-0.7395 demands notice.

With respect to momentum, the relative strength index (RSI) took support from oversold recently, though currently trades at 35.00. Technicians will be watching for the indicator’s value to either generate bullish divergence or overthrow the 50.00 centreline to help confirm a bullish phase.

Observed Technical Levels:

Weekly and daily timeframes show a bearish hand right now, highlighting a potential sell-on-rally scenario from the H1 timeframe’s decision point at $0.7412-0.7395. H1 Quasimodo support at $0.7349 is recognised as a support target, with H4 Quasimodo support at $0.7332 also an option.

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USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

Mid-October had candles embrace resistance from ¥114.38 and touch a fresh three-year peak of ¥114.70. While sellers appear to have the upper hand right now, traders are urged to pencil in the 1.272% Fibonacci projection from ¥116.09, should buyers make a stand.

Further selling sets the stage for bringing in support at ¥112.16.

In terms of trend, we’ve been advancing since the beginning of this year.

Daily timeframe:

Latest out of the daily chart has candle action within reach of supply-turned demand at ¥112.66-112.07, shadowed by a decision point coming in from ¥111.18-111.79. Fibonacci traders will note the demand welcomes a 1.272% Fibonacci projection at ¥112.56, echoing what many harmonic enthusiasts will label: alternate AB=CD bullish pattern.

In conjunction with the above said support, the relative strength index (RSI) is shaking hands with support between 40.00 and 50.00. Note that amid prolonged uptrends, indicator support often forms around the 50.00 area and operates as a ‘temporary’ oversold, as has been the case since May.

H4 timeframe:

Support is nearby at ¥112.63, positioned closely with support at ¥112.25. Resistance, on the other hand, is found at ¥113.28-113.55.

While both weekly and daily timeframes show a trending market, the H4 scale penetrated trendline support, taken from ¥109.12.

H1 timeframe:

The key observation from the H1 chart is price establishing intraday resistance from ¥113. Note that directly above we have resistance layered at ¥113.20, a previous Quasimodo support.

Extending lower from ¥113 throws light on the H4 timeframe’s support at ¥112.63.

Recent movement from the relative strength index turned from oversold and knocked on the door of the 50.00 centreline, essentially confirming downside momentum from ¥113.

Observed Technical Levels:

Each timeframe analysed sponsors a bearish appearance until reaching the daily timeframe’s demand at ¥112.66-112.07, an area not only aligning with a 1.272% Fibonacci projection at ¥112.56, but also H4 support from ¥112.63.

As a result, a short-term bearish scene could unfold under ¥113 on the H1 timeframe, though chart studies anticipate a bullish stance from around ¥112.65ish.

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GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Despite buyers staging a modest recovery this week, supply-turned demand at $1.3629-1.3456 remains under fire. Couple this with price closing under a double-top pattern’s ($1.4241) neckline at $1.3669 in August, sellers are still at the wheel, structurally speaking.

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 reasonably objective downside target around $1.3093.

Trend on the weekly timeframe, nonetheless, has displayed an upside bias since pandemic lows in early 2020.

Daily timeframe:

While price on the weekly timeframe shows signs of an attempt at recovery, resistance on the daily scale from $1.3602 may throw a spanner in the works.

Territory above current resistance places trendline resistance nearby, extended from the high $1.4250, whereas below, support is visible at $1.3449, in addition to Fibonacci support between $1.3262 and $1.3337.

The relative strength index (RSI) has been working with resistance between 60.00 and 50.00 since August, with the 30.00 oversold threshold providing equally impressive support.

With respect to trend on the daily scale, the unit has been lower since June.

H4 timeframe:

The blend of trendline resistance, drawn from the high $1.3802, as well as resistances from $1.3583 and $1.3570, has, aided by daily resistance at $1.3602, thus far been sufficient to draw sellers.

Quasimodo support at $1.3447 proved a notable floor, strengthened by a 1.272% Fibonacci projection from $1.3437, therefore any further selling could zero back in on the aforementioned levels.

H1 timeframe:

Tuesday’s technical briefing aired the following (italics):

Daily resistance at $1.3602, combined with $1.36 on the H1 and H4 resistance at $1.3570, is an area that may welcome sellers, targeting $1.35ish.

As evident from the H1 scale, $1.36 stepped in on Tuesday, generating a 75-pip pop lower, before modestly bottoming ahead of $1.35. Note the move lower was supported by bearish divergence from the relative strength index (RSI), with the indicator currently testing the 50.00 centreline.

Observed Technical Levels:                              

The resistance active in this market is impressive: from daily resistance at $1.3602, to H4 and H1 resistances at $1.3570 and $1.36, respectively.

With that being the case, technical studies indicate additional weakness is in the offing, with $1.35 seen as a reasonable downside objective on the H1 scale.

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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.

 

 

 

About the Author

Aaron Hillcontributor

Aaron graduated from the Open University and pursued a career in teaching, though soon discovered a passion for trading, personal finance and writing.

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