November 17th 2021: DXY Tests Major Resistance Between 96.37-95.80

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Down 1.0 percent on the week, and with prime support at $1.1473-1.1583 in the rear-view mirror, a 61.8% Fibonacci retracement at $1.1281 as well as a 1.618% Fibonacci projection from $1.1237 is on the verge of welcoming price.

Harmonic traders will acknowledge the 1.618% ratio represents an ‘alternate AB=CD bullish pattern’.

This, coupled with the currency pair taking out 2^nd November low (2020) at $1.1603, suggests (technically) we may be transitioning to a downtrend.

Daily timeframe:

In conjunction with the weekly timeframe’s technical setting, price action on the daily chart reveals further selling could develop in the days ahead.

Quasimodo support is calling for attention at $1.1213, arranged a handful of pips south of the weekly timeframe’s Fibonacci structure.

While immediate flow has been trending lower since late May tops at $1.2266, momentum, according to the relative strength index (RSI), dropped in on oversold territory. Traders, however, are urged to make allowances for the possibility of remaining oversold for a prolonged period, having seen downside flow take root earlier this year. With that being said, though, particular emphasis is now on indicator support from 21.87.

H4 timeframe:

The dollar index is on a tear right now, clocking levels not seen since July 2020 yesterday. The combination of another solid round of US retail sales data (1.7% vs. expected 1.3%) and a bid across US Treasury yields underpinned the USD, consequently weighing on EUR/USD (down for a fifth consecutive session).

Between $1.1387 and $1.1366 formed an acceptable decision point on Tuesday, an area that witnessed price tunnel through support at $1.1349 (now resistance) to refresh 2021 lows. Quasimodo support at $1.1243 represents the next (obvious) downside objective on the H4 scale—sitting in between the weekly timeframe’s Fibonacci structure ($1.1237 and $1.1281).

H1 timeframe:

The $1.1391-1.1378 decision point (residing under $1.14) served sellers well early hours yesterday, hauling the currency pair to within striking range of $1.13.

What’s interesting from a technical perspective is that although EUR/USD bears ended Tuesday in the driving seat, short-term momentum appears to be slowing. The relative strength index (RSI) is currently pencilling in bullish divergence (positive momentum: average gains beginning to exceed average losses), following a test of indicator support at 18.00 on Monday. This is, of course, joined by the daily timeframe’s RSI shaking hands with oversold.

Observed Technical Levels:

Short term, bears remain in control according to chart studies.

However, knowing weekly Fibonacci support is nearing between $1.1237 and $1.1281, with H4 Quasimodo support seen at $1.1243, $1.13 on the H1 could stand in as support.

$1.13, nevertheless, warrants caution. A whipsaw through this number (common occurrence in psychological figures) may materialise to bring in the upper edge of weekly support ($1.1281), before buyers attempt to step in.

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Resistance at $0.7501 proved notable, slotted just under prime resistance from $0.7849-0.7599. Notching back-to-back weekly bearish candles has likely reawakened interest at prime support from $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:

Little change on the daily scale.

Following an early November slide from resistance between $0.7621 and $0.7551, an area housing a 61.8% Fibonacci retracement and a 100% Fibonacci projection, price is on the doorstep of a 61.8% Fibonacci retracement at $0.7271 (sheltering Quasimodo support at $0.7220).

The trend on this timeframe, however, remains in line with weekly movement: favours upside following the break of 3^rd September high at $0.7478. Dip-buyers, therefore, could emerge between $0.7220 and $0.7271.

H4 timeframe:

Formed by way of a bearish outside reversal (range engulfed), early trading hammered lower and left behind Quasimodo resistance at $0.7380 alongside a neighbouring 38.2% Fibonacci retracement at $0.7384.

Aside from last Friday’s low at $0.7277, Quasimodo support is at $0.7250, set up with 78.6%/88.6% Fibonacci retracements at $0.7254 and $0.7264, respectively.

H1 timeframe:

Recent hours moved within reach of $0.73, urged lower on the back of USD outperformance and upbeat US data. Adding to the possibility of psychological support developing, the relative strength index (RSI) touched gloves with oversold space and a trendline resistance-turned support, taken from the high 68.65.

Beneath $0.73, attention is on Quasimodo support at $0.7280; a $0.73 rebound, on the other hand, directs interest to supply coming in at $0.7358-0.7349.

Observed Technical Levels:

Scope to trade lower remains in this market on the bigger picture until daily support between $0.7220 and $0.7271 (clipped to the upper edge of weekly prime support at $0.6968-0.7242). Room to navigate lower is also seen on the H4 timeframe towards support made up between $0.7250 and $0.7264 (formed within daily support).

While it would appear bearish forces are in control, a short-term reversal from $0.73 (H1) is not out of the question—given H1 RSI confluence—targeting H1 supply at $0.7358-0.7349.

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. Since then, we’ve seen a back and forth between bids and offers and established what appears to be a bullish flag between ¥114.70 and ¥113.41.

Bulls have remained on the offensive so far this week, exploring 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 should further buying come about.

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

Daily timeframe:

Bolstered on the back of upbeat risk sentiment, higher US Treasuries and impressive USD performance, demand for the Japanese yen faded and drew resistance between ¥114.94 and ¥114.61 into the spotlight (Fibonacci ratios).

Quasimodo resistance is visible above current resistance at ¥116.33, organised a touch above the weekly timeframe’s 1.272% Fibonacci projection from ¥116.09.

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

RSI (relative strength index) analysis reveals the value rebounded from 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), and is within touching distance of overbought.

H4 timeframe:

Latest developments out of the H4 chart shows price is testing 2021 peaks at ¥114.70, following a decisive push through Quasimodo resistance at ¥114.46 (now potential support).

Below the noted Quasimodo, technical eyes will note the ¥114.10-114.31 decision point, while upstream shows Quasimodo resistance at ¥114.76 (drawn from March 2017).

H1 timeframe:

Short-term market action exposes support at ¥114.28 and trendline support, extended from the low ¥112.78, should we observe price reject 2021 tops at ¥114.70. Though refreshing 2021 highs pushes the unit in the direction of ¥115.

The relative strength index (RSI) is testing overbought terrain. Although exiting this area highlights a bearish vibe, note that during up moves, the indicator can remain oversold for prolonged periods.

Observed Technical Levels:

Rejecting 2021 highs at ¥114.70 has H4 support at ¥114.46 to target, set above H1 support at ¥114.28.

Continuation moves higher, on the other hand, will have short-term eyes hone in on ¥115 (H1), and further confirm the bullish flag on the weekly timeframe.

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 surrendered position last week, following a third consecutive weekly decline in the red. Month to date, November is down 1.9 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 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:

Sterling finished Tuesday considerably off best levels against its US counterpart, pressured lower on a robust USD bid (lifting the dollar index to fresh 2021 pinnacles) and healthy US retail sales numbers. Technical action kissed the lower side of resistance at $1.3449 and formed a clear upper shadow (note that for this to be a shooting star pattern, the formation must form following a well-defined up move). Holding noted resistance throws light on Fibonacci support between $1.3262 and $1.3337.

Out of the relative strength index (RSI), the value has discovered modest support just north of oversold levels. Resistance between 60.00 and 50.00 has remained a key zone since August, which is common in persistent downside action.

H4 timeframe:

Resistance between $1.3472 and $1.3447 as well as trendline resistance, taken from the high $1.3800, developed a ceiling on Tuesday (green).

Downside from current resistance shines the headlights on a Fibonacci combination—a 100% Fibonacci projection at $1.3333 and a 1.618% Fibonacci extension at $1.3311. Testing this area assumes we dethrone Friday’s low at $1.3353.

H1 timeframe:

Local trendline support, drawn from the low $1.3353, was taken in recent movement, following the reaction from H4 resistance at $1.3472.

$1.34 may offer support, along with a nearby Quasimodo formation at $1.3363.

With reference to the relative strength index (RSI), we are now circling sub 50.00 which could eventually bring on an oversold signal.

Observed Technical Levels:                              

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 recent test of resistance at $1.3449 places Fibonacci support between $1.3262 and $1.3337 in the line of fire.

Knowing higher timeframe flow points lower, the H4 timeframe’s rejection from resistance between $1.3472 and $1.3447, and the H1 timeframe’s trendline support breach, indicates candle action may be gearing up for a $1.34 break.

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