November 19th 2021: Sterling Eyes Higher Territory North of $1.35 Ahead of Retail Sales

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Support composed of a 61.8% Fibonacci retracement at $1.1281 and a 1.618% Fibonacci projection from $1.1237, as expected, delivered a ‘floor’ in recent trading. Harmonic traders will acknowledge the 1.618% component represents an ‘alternate AB=CD bullish pattern’.

Upriver, resistance is at $1.1473-1.1583.

While we have active support from $1.1237-1.1281, the currency pair taking out 2^nd November low (2020) at $1.1603 suggests (technically) we may be transitioning to a downtrend.

Daily timeframe:

Wednesday pencilled in a hammer candle pattern (bullish signal in oversold markets), a pattern confirmed by Thursday extending recovery gains. The recent combination, as you can see, took shape ahead of Quasimodo support at $1.1213 (positioned beneath the weekly timeframe’s Fibonacci structure).

Interestingly, the daily timeframe’s shooting star on the dollar index from resistance between 96.37 and 95.80 also witnessed extended losses.

While immediate flow has been trending lower since late May tops at $1.2266, momentum, according to the relative strength index (RSI), has exited 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:

Latest out of the H4 chart shows the currency pair shaking hands with a decision point at $1.1387-1.1366.

Failure to attract a bearish scene unmasks the possibility of a run to Quasimodo support-turned resistance from $1.1438. Though should sellers take the wheel from $1.1387-1.1366, spinning back to Wednesday’s low at $1.1263 is in the offing, a base printed just north of Quasimodo support from $1.1243.

H1 timeframe:

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

Weekly support making an entrance between $1.1237 and $1.1281, together with the daily timeframe forming a hammer candlestick pattern (and the dollar index forming a shooting star [inverse signals]), could elevate short-term flow to H4 resistance at $1.1349 [since removed] and the decision point at $1.1387-1.1366.

The above implies buyers may hold ground north of $1.13 on the H1 and take aim at the decision point from $1.1391-1.1378 (wrapped around the upper edge of the H4 decision point mentioned above at $1.1387-1.1366).

As evident from the H1 scale, the unit did indeed fashion support above $1.13 on Thursday and, in recent hours, closed in on the H1 timeframe’s decision point at $1.1391-1.1378.

In addition to the short-term technical framework, the relative strength index (RSI) is crossing swords with overbought territory (previous overbought signal seen 28^th October).

Observed Technical Levels:

A clear difference of opinion is seen in this market at the moment.

On the one hand, the higher timeframes technical pendulum is swinging in favour of further recovery gains until reaching weekly resistance at $1.1473-1.1583.

On the other hand, the H4 timeframe gravitated into a decision point at $1.1387-1.1366, which happens to have the H1 timeframe’s decision point from $1.1391-1.1378 wrapped around its upper edge.

Therefore, a short-term dip lower could materialise before longer-term buyers gear up for another push.

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 positions the unit on the doorstep of prime support from $0.6968-0.7242.

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

Daily timeframe:

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 testing a 61.8% Fibonacci retracement at $0.7271 (sheltering Quasimodo support at $0.7220).

The trend on this timeframe 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:

The combination of profit taking, USD downside and easing of COVID restrictions in Australia, helped AUD/USD eke out modest gains on Thursday.

In addition to the above, technical support maintained its position through a Quasimodo formation at $0.7250—set up with 78.6%/88.6% Fibonacci retracements at $0.7254 and $0.7264, respectively.

South of current support is the daily timeframe’s Quasimodo support at $0.7220.

H1 timeframe:

As already noted, the H4 timeframe’s Quasimodo support level at $0.7250 accepted price (to the pip) heading into early US hours and subsequently navigated to highs of $0.7283, as of current writing.

$0.73 calls for attention, a level raising short-term resistance on Wednesday. Territory above, however, sets the technical stage for an approach to supply at $0.7358-0.7349.

Concerning the relative strength index (RSI), the indicator’s value is seen engaging the lower side of the 50.00 centreline. Rupturing the latter encourages positive momentum until registering overbought conditions.

Observed Technical Levels:

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

The upper edge of weekly prime support at $0.7242, current daily support between $0.7220 and $0.7271 (clipped to the upper edge of weekly prime support at $0.6968-0.7242) and the H4 Quasimodo support coming in at $0.7250 shapes a potential floor to be mindful of.

$0.7220-0.7271 may be a location sellers liquidate partial profits, and fresh buyers possibly make a show.

Continued interest to the upside, therefore, is likely to connect with $0.73 on the H1. Overthrowing this psychological boundary, as noted in the main body of text, underlines the possibility of further buying until H1 supply at $0.7358-0.7349.

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, echoing a possible 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 15^th December 2016 high at ¥118.66). Thursday, nonetheless, was subdued, passing the time around previous session lows.

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 could force the line to overbought.

H4 timeframe:

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 ¥113.44 (harmonic players will note this represents an AB=CD bullish pattern).

H1 timeframe:

Following H4 resistance putting in an appearance at ¥114.46, the ¥114 psychological level resides below, displaying possible support. An additional layer of support also exists at ¥113.81—capping sellers since 10^th November.

The road above ¥114.46 points to H1 trendline support-turned resistance, extended from the low ¥112.78, which shares chart space with ¥115 and the H4 Quasimodo resistance underscored above at ¥114.76.

Following the relative strength index (RSI) registering oversold on Wednesday, the indicator climbed to the 50.00 centreline. A break of here informs short-term participants that average gains exceed average losses: positive momentum. Conversely, respecting 50.00 indicates a bearish environment.

Observed Technical Levels:

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, and H4 resistance at ¥114.46 recently making a show, tells us that bears are healthy.

Based on the above, taking on H1 supports between ¥113.81 and ¥114 to take aim at H4 prime support from ¥113.28-113.59 may be seen.

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 1.3 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:

A closer reading of price action on the daily chart shows the unit tentatively extended recovery gains on Thursday, further validating position north of support at $1.3449. The latest round of buying was largely derived on the back of a soft dollar.

The $1.3449 breach unmasks resistance at $1.3602 and trendline resistance, taken from the high $1.4250—both forming clear upside objectives should optimism persist.

Longer-term sentiment has remained biased to the downside since June. In the event sellers step in, and we overthrow $1.3449 as support, keep a tab on Fibonacci support between $1.3262 and $1.3337.

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 on Thursday, chalking up a shooting star pattern (bearish signal).

Despite an initial decline, buyers stepped in at $1.3464, leaving neighbouring support from $1.3447 unchallenged. North of the aforementioned resistance, eyes are perhaps on resistance between $1.3583 and $1.3570.

H1 timeframe:

For those who read Thursday’s technical report you may recall the following points (italics):

H1 Quasimodo resistance at $1.3517, set within H4 resistance between $1.3524 and $1.3510, is positioned to welcome any whipsaw above $1.35. A decisive close back under $1.35 is also likely to attract further short-term downside, zeroing in on at least daily support at $1.3449.

As evident from the chart, the currency pair did whipsaw above $1.35 and touched gloves with $1.3524-1.3510 on Thursday. However, as aired on the H4 scale, sellers swiftly run low on fuel and allowed buyers to make an appearance.

H1 Quasimodo resistance at $1.3517, nevertheless, remains untested. Therefore, this could be a level brought into the fray early hours today.

Closing above $1.3517, on the other hand, gives the green light for possible moves to H1 Quasimodo resistance at $1.3580 and the $1.36 handle. Note the former rests within H4 resistance ($1.3583-1.3570).

Observed Technical Levels:   

                           

While the H1 Quasimodo resistance at $1.3517 could draw minor bearish interest, the absence of bearish intent derived from H4 resistance between $1.3524 and $1.3510 indicates short-term buyers are in the driving seat for now.

With the above analysis, breakout buying might materialise above $1.3517. A retest of the level as support might entice additional interest to the upside, targeting H4 resistance ($1.3583-1.3570).

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