November 11th 2021: EUR/USD Tests YTD Lows; DXY Breaks Key Daily Resistance

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Prime support at $1.1473-1.1583 came under considerable pressure in recent movement, reminding traders that further selling may eventually materialise to a 61.8% Fibonacci retracement at $1.1281. On top of this, price taking out 2^nd November low (2020) at $1.1603 suggests the currency pair is transitioning to a downtrend.

Daily timeframe:

Weighed by upbeat US inflation (CPI m/m) and the US dollar flexing its financial muscle—DXY reaching highs not seen since July 2020—EUR/USD refreshed year-to-date lows and is zeroing in on Fibonacci support derived from $1.1420-1.1460.

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

Immediate flow has been trending 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) and might continue until shaking hands with oversold territory.

H4 timeframe:

Despite the hesitant start, prime resistance at $1.1613-1.1580 served sellers with a robust platform to work with. Wednesday sketched a one-sided decline from the noted area, slicing beneath Quasimodo support at $1.1529 and testing the mettle of support between $1.1495 and $1.1480 (a 1.272% Fibonacci projection).

A recovery from noted support, however, is unlikely to gather much backing, though a retest of Quasimodo support-turned resistance at $1.1529 could be a welcomed sell-on-rally scenario.

H1 timeframe:

Recent hours nosedived through $1.15 bids, touching a low of $1.1482 and underlining support coming in from $1.1467. The near-20-pip push below $1.15 is enough to lure breakout selling orders, and jolt those attempting to fade the big figure.

Should $1.15 hold, causing what’s known as a bear trap, H4 resistance mentioned above at $1.1529 marks a potential target.

Momentum studies drawn from the relative strength index (RSI) reveals the value is probing oversold space. Bringing in 18.00 support is perhaps on the cards.

Observed Technical Levels:

H4 support between $1.1495 and $1.1480 making an entrance, coupled with H1 whipsawing beneath $1.15 (and perhaps filling stops) and the RSI signalling an oversold environment, echoes a short-term recovery could be in the offing, with H4 resistance from $1.1529 arranged as an upside objective.

The noted H4 resistance may also be welcomed by sellers—those attempting to extend bearish pressure knowing the higher timeframe technical picture points to at least $1.1460.

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 recently came under fire and gave out on Wednesday. Clearance of the latter shifts the 61.8% Fibonacci retracement from $0.7271 in sight. Helping to validate the bearish presence, the relative strength index (RSI) tunnelled through the 50.00 centreline: average losses > average gains.

The trend on this timeframe, however, is currently in line with weekly movement: favours upside following the break of 3^rd September high at $0.7478, and therefore dip-buyers could still emerge.

H4 timeframe:

Quasimodo support at $0.7332 is currently being tested on the H4 scale after failing to find acceptance above $0.7393. Removal of current support shines the technical spotlight on Quasimodo support at $0.7250.

H1 timeframe:

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

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. H1 Quasimodo support at $0.7349 is recognised as a support target, with H4 Quasimodo support at $0.7332 also an option.

As evident from the H1 timeframe, price missed the $0.7412-0.7395 decision point by a whisker on Wednesday before collapsing through Quasimodo support at $0.7349. In terms of upcoming support, we have a limited view until reaching $0.73.

With the relative strength index (RSI), the value is seen on the doorstep of oversold after failing to find acceptance north of the 50.00 centreline.

Observed Technical Levels:

In similar fashion to Wednesday’s technical writing, knowing the higher timeframes reflect a bearish environment right now, this places a question mark on the H4 timeframe’s Quasimodo formation at $0.7332. As a result, bearish forces on the H1 are perhaps looking to remain beneath resistance at $0.7349 and take on $0.73.

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. Should the latter step aside, traders are urged to pencil in the 1.272% Fibonacci projection from ¥116.09.

Further selling, on the other hand, 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:

Up 1.0 percent, the US dollar benefitted from a surprise beat on US inflation (CPI m/m) on Wednesday, as well as safe-haven demand.

Leaving supply-turned demand at ¥112.66-112.07 and converging 1.272% Fibonacci projection at ¥112.56 unchallenged, yesterday’s stronger-than-expected recovery throws resistance between ¥114.94 and ¥114.61 back in the line of fire (Fibonacci ratios).

Also aiding the recent advance, the relative strength index (RSI) shook 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 base, as has been the case since May.

H4 timeframe:

Interestingly, on the H4 chart, limited resistance is visible until the Quasimodo formation at ¥114.46, suggesting weekly price is likely to welcome resistance at ¥114.38 once again.

To the downside, a newly formed decision point at ¥112.78-112.96 is on the radar, with a break exposing support from ¥112.63.

H1 timeframe:

Joined by trendline resistance, taken from the high ¥114.44, and an ascending resistance line, drawn from the low ¥113.26, the big figure ¥114 accepted sellers on Wednesday.

Noted resistances benefit from the strength index (RSI) exploring high terrain within overbought, touching a peak of 85.00. Defined bearish divergence forming will help cement a bearish position, with ¥113.50 echoing price support.

Observed Technical Levels:

Given scope to navigate higher on weekly and daily timeframes until at least ¥114.38, additional selling from ¥114 is unlikely to unfold. In fact, a H1 close north of the latter should not surprise, with breakout buyers targeting weekly resistance from ¥114.38, followed by H4 Quasimodo resistance at ¥114.46.

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 is on the verge of surrendering position. Couple this with price closing under a double-top pattern’s ($1.4241) neckline at $1.3669 in August, the weekly chart supports a bearish position.

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:

Support at $1.3449 is on the brink of accepting defeat, following Tuesday’s test of resistance from $1.3602. Fibonacci support is seen 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, with yesterday refreshing 2021 lows.

H4 timeframe:

Closing trade on Wednesday pushed through Quasimodo support at $1.3447 and is now within touching distance of Quasimodo support at $1.3382.

H1 timeframe:

Tension surrounding a post-Brexit deal on Northern Ireland, along with stronger-than-expected US CPI figures and a healthy USD bid, had sterling on the ropes yesterday.

Technically speaking, after dethroning $1.35, the path was cleared for a one-way slide to the $1.34 region—set just above Quasimodo support at $1.3363 (positioned below H4 Quasimodo support at $1.3382).

Observed Technical Levels:                              

Higher timeframes point to an extension lower, underlining the possibility that H1 price may overthrow $1.34 in upcoming trade. However, although the daily timeframe shows support not expected until around $1.3337, H1 and H4 Quasimodo supports at $1.3363 and $1.3382, respectively, could put up a fight. With that being the case, traders interested in short positions sub $1.34 are likely to seek a retest of the latter before committing.

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