November 12th 2021: DXY Refreshing 2021 Tops Weighs on Peers

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Down 1.0 percent on the week, prime support at $1.1473-1.1583 had its lower wall clipped. As a result, further selling may materialise, targeting a 61.8% Fibonacci retracement at $1.1281 as well as a 1.618% Fibonacci projection from $1.1237.

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:

In what was a relatively subdued session Thursday.

Europe’s shared currency eked out modest losses against its US counterpart and refreshed year-to-date lows. Fibonacci support derived from $1.1420-1.1460 (comprises a 78.6% Fibonacci retracement and a 1.272% Fibonacci projection) made an entrance.

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:

Following Wednesday’s bold losses, bearish forces pulled Thursday to within a stone’s throw of Quasimodo support at $1.1438—joined by a 1.618% Fibonacci expansion at $1.1441, a 1.618% Fibonacci projection coming in from $1.1444 and a 100% Fibonacci projection from $1.1431.

Coupled with the daily timeframe’s Fibonacci support at $1.1420-1.1460, H4 support between $1.1431 and $1.1444 could have buyers attempt to establish a floor. Willing bids are likely to zero in on resistance at $1.1495.

Continuation moves below H4 support, on the other hand, tips the weight in favour of daily price engulfing its Fibonacci support.

H1 timeframe:

Out of the relative strength index (RSI), the indicator reveals early bullish divergence (positive momentum: average gains beginning to exceed average losses), despite price action forging fresh troughs in recent hours.

Technical space, nonetheless, shows that sub $1.1467 resistance we have scope to take aim at $1.14.

Observed Technical Levels:

The combination of daily Fibonacci support from $1.1420-1.1460, H4 support between $1.1431 and $1.1444 and the H1 timeframe’s RSI chalking up bullish divergence, echoes a potential short-term recovery. However, recognising the downtrend in this market, any upside attempt may be capped by H1 resistance at $1.1467.

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Resistance at $0.7501 proved a notable ceiling, slotted just under prime resistance from $0.7849-0.7599. Further losses will reignite prime support at $0.6968-0.7242, with subsequent interest below shifting focus to support at $0.6673.

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

Daily timeframe:

Down 3.0 percent MTD, following a one-way slide from resistance between $0.7621 and $0.7551, the unit is on the doorstep of a 61.8% Fibonacci retracement at $0.7271, a level sheltering Quasimodo support at $0.7220.

Helping to validate the bearish presence, the relative strength index (RSI) tunnelled through 40.00 (average losses > average gains) and is fast approaching oversold terrain.

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 between $0.7220 and $0.7271.

H4 timeframe:

The removal of Quasimodo support at $0.7332, a level now serving as possible resistance, unlocks the door to Quasimodo support from $0.7250.

H1 timeframe:

Bullish divergence out of the relative strength index (RSI) is underway, in spite of price dipping a toe under the $0.73 figure. RSI enthusiasts will likely want to see the value consume trendline resistance, extended from the high 68.66, before considering a bullish setting.

Quasimodo support at $0.7280 calls for attention; above $0.73, nonetheless, a bullish wind could lift the currency pair to resistance coming in at $0.7349.

Observed Technical Levels:

While the pair is clearly entrenched within a downward spiral right now, technical support is visible from between the daily timeframe’s 61.8% Fibonacci retracement at $0.7271 and the H1 timeframe’s Quasimodo support from $0.7280, in addition to an RSI divergence signal.

A break of noted supports, of course, would confirm the current downside bias.

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:

Wednesday decorating the chart with a near-full-bodied bullish candle witnessed modest follow-through on Thursday, placing resistance between ¥114.94 and ¥114.61 back in the line of fire (Fibonacci ratios). Lower on the curve, attention remains on supply-turned demand at ¥112.66-112.07.

From the relative strength index (RSI), the value recently rebounded from 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:

Thursday had buyers and sellers square off around the ¥114 vicinity, with the headlights also fixed on Quasimodo resistance coming in from ¥114.22. Below ¥114, aside from local lows around ¥113.73 and ¥113.81, support is calling at ¥113.50.

In terms of the relative strength index (RSI), bearish divergence is currently unfolding with the value finishing Thursday around the 60.00ish neighbourhood.

Observed Technical Levels:

In similar fashion to Wednesday’s technical briefing, knowing we have scope to navigate higher on weekly and daily timeframes until at least ¥114.38, selling from ¥114 is unlikely to develop. In fact, a decisive H1 close north of the latter should not surprise, with breakout buyers targeting H1 Quasimodo resistance at ¥114.22 and 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 surrendered position. Couple this with price closing under a double-top pattern’s ($1.4241) neckline at $1.3669 in August, the weekly chart clearly supports a bearish position at the moment.

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.

Daily timeframe:

Support at $1.3449 is now in the rear-view mirror, accepting defeat amidst Wednesday’s one-sided decline. Consequently, Fibonacci support is in view between $1.3262 and $1.3337.

The relative strength index (RSI) has been working with resistance between 60.00 and 50.00 since August; the indicator’s value, as you can see, is now within striking distance of the 30.00 oversold threshold, a level that’s provided impressive support.

With respect to trend on the daily scale, the unit has been lower since June, with yesterday refreshing 2021 lows.

H4 timeframe:

Thursday extended the recent retracement slide, moving through Quasimodo support at $1.3382 and positioning the currency pair on the cusp of bringing in a 100% Fibonacci projection at $1.3333 and a 1.618% Fibonacci extension at $1.3311.

Note the 100% projection represents what harmonic traders will refer to as an AB=CD bullish formation—many, however, prefer to trade these patterns in dip-buying environments.

H1 timeframe:

Quasimodo support from $1.3363 is under siege on the H1 scale, following failure to command position above $1.34. Buyers losing their flavour at current support builds a case for a bearish scenario towards $1.33.

Interestingly, though, the relative strength index (RSI) is in the process of forming bullish divergence, suggesting downside momentum is slowing.

Observed Technical Levels:   

The weekly timeframe shows scope to approach the $1.31ish range, with daily price honing in on Fibonacci support between $1.3262 and $1.3337. This, alongside room on the H4 to drop in on Fibonacci support between $1.3311 and $1.3333, in addition to the H1 timeframe’s Quasimodo support at $1.3363 on the brink of giving way, could see sellers take the wheel again today.

A short-term bearish theme, therefore, is possible south of $1.3363, targeting $1.3337.

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