October 26th 2021: Technical Outlook
Charts: Trading View
(Italics: previous analysis)
Prime support at $1.1473-1.1583 remains a focal point on the weekly scale, an area inviting a bullish phase last week. The reaction is potentially fuelled on the back of long-term sell-stops tripped beneath lows at $1.1612 (2020), with $1.1981-1.1848 supply recognised as the next upside objective on this scale.
In the event buyers fail to agree higher prices, south of current support shines the technical spotlight on a 61.8% Fibonacci retracement at $1.1281.
Weighed on renewed USD optimism, Europe’s single currency was on the ropes on Monday, retesting the mettle of support from $1.1614.
Quasimodo support-turned resistance at $1.1689 remains in the spotlight, sharing chart space with trendline resistance, taken from the high $1.2254. Tunnelling south of $1.1614, on the other hand, throws light back on Fibonacci support between $1.1420-1.1522.
The relative strength index (RSI) voyaged into the 50.00 centreline in recent trading. Overthrowing this line informs traders that average gains exceed average losses and momentum is to the upside, while 50.00 offering resistance suggests bears could put in another appearance.
In terms of trend, sentiment has favoured downside since June.
Resistance at $1.1665, arranged with a tight Fibonacci cluster set just above, proved a stubborn blend of resistance. Welcoming sellers again on Monday, bearish forces dropped beneath support at $1.1622 (a level perhaps now serving as resistance) and shifted interest to a 61.8% Fibonacci retracement at $1.1581, followed by another support coming in from $1.1563.
Mid-way through London’s morning session, EUR/USD carved through trendline support, taken from the low $1.1525, and dethroned support from $1.1628-1.1615 (houses H4 resistance at $1.1622).
Establishing a session trough at $1.1591 heading into US hours—a handful of pips ahead of Quasimodo support from $1.1548—the currency pair staged a comeback and subsequently retested the lower side of $1.1628-1.1615 to perhaps form resistance.
Observed Technical Levels:
The absence of fresh bullish interest developing north of daily support at $1.1614 places a question mark on weekly prime support at $1.1473-1.1583. This, coupled with H4 price dropping through support at $1.1622 and H1 flow shaking hands with resistance at $1.1628-1.1615, signals sellers may be looking to take the wheel and take aim at Quasimodo support from $1.1584 on the H1 (set above the H4 timeframe’s 61.8% Fibonacci retracement at $1.1581).
(Italics: previous analysis)
Prime resistance at $0.7849-0.7599 remains central focus. Buyers, as you can see, have cheered higher price levels since departing from prime support from $0.6968-0.7242 at the end of September.
Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, the response from $0.6968-0.7242 might be the start of a dip-buying attempt to join the current uptrend, which could eventually overrun $0.6968-0.7242.
Price continues to hover beneath resistance between $0.7621 and $0.7551—made up of a Quasimodo support-turned resistance at $0.7621, the 200-day simple moving average at $0.7560, as well as a 61.8% Fibonacci retracement at $0.7585 and a 100% Fibonacci projection at $0.7551. Interestingly, the noted resistance between $0.7621 and $0.7551 is fastened to the lower boundary of weekly prime resistance mentioned above at $0.7849-0.7599.
A bearish presence did develop just south of the aforementioned area at the tail end of the week, though follow-through has been thin thus far.
The relative strength index (RSI) welcomed an overbought signal last week, missing indicator resistance at 74.80 by a whisker. With respect to trend on the daily scale, last week probed fresh highs, helping to confirm interest to the upside.
Alternative trendline support, drawn from the low $0.7226, greeted price action in recent trading, delivering an ‘ascending floor’ for traders to work with. This followed last week withdrawing from Fibonacci resistance between $0.7529 and $0.7516.
Support at $0.7441 is also nearby, closely shadowed by trendline support, taken from the low $0.7170, and Quasimodo resistance-turned support from $0.7394.
Underpinned amidst Monday’s risk-on theme, AUD/USD extended recovery gains north of Quasimodo resistance-turned support at $0.7456 to touch gloves with $0.75. Technicians will view latest movement formed a consolidation between the aforementioned levels.
Outside of the recently created range, the $0.7548-0.7541 decision point calls for attention to the upside, while lower on the curve a Quasimodo resistance-turned support can be seen from $0.7428.
Observed Technical Levels:
Scope to discover higher terrain on the weekly scale until reaching prime resistance at $0.7849-0.7599, and resistance not expected to show on the daily timeframe until $0.7621-0.7551, breaking out above the H1 consolidation at $0.75, aided by H4 trendline support, could take shape. Breakout buyers above $0.75 will likely zero in on the H1 timeframe’s decision point at $0.7548-0.7541.
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