October 5th 2021: $1.36 Echoes Vulnerability on GBP/USD

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Focus remains on prime support at $1.1473-1.1583, a long-term base sharing chart space with a 100% Fibonacci projection at $1.1613 and a 1.27% Fibonacci extension at $1.1550. Note the 100% value represents a harmonic AB=CD bullish point, bringing a 1.13% BC Fibonacci extension to the table at $1.1623. As you can see, modest signs of bullish life is visible from the zone.

Also technically interesting on the weekly scale is the possibility of long-term sell-stops being tripped south of late September lows at $1.1612 (2020). Sell-stops could help fuel larger buyer interest from $1.1473-1.1583.

Trend studies show that with the break of $1.1612 lows, the pair is perhaps in the early phase of a trend change to the downside.

Daily timeframe:

Meanwhile, out of the daily chart, technical structure remains concentrated on Fibonacci support between $1.1420 and $1.1522 (glued to the lower side of the weekly timeframe’s prime support at $1.1473-1.1583) and Quasimodo support-turned resistance at $1.1689.

From the relative strength index (RSI), the indicator’s value exited oversold territory in recent trading. Continued upside brings attention to the 50.00 centreline. Therefore, this will be a level to keep a tab on going forward.

H4 timeframe:

The combination of resistance at $1.1622, a previous Quasimodo support, and descending resistance, extended from the low $1.1794, made its way into the spotlight on Monday.

In the event sellers defend the aforementioned resistances, travelling back to Quasimodo support at $1.1563 is on the table. Air space north of $1.1622 displays resistance at $1.1666.

With immediate flow facing lower since June, sellers potentially have the upper hand at current resistance.

H1 timeframe:

In conjunction with H4 resistances (see above), H1 channel resistance, extended from the high $1.1607, a 50.00% retracement at $1.1631 and a 38.2% Fibonacci retracement at $1.1634 added additional resistance on Monday heading into early US hours.

Above the aforementioned resistances on the H1 scale, H4 resistance noted at $1.1666 calls for attention, while continued interest to the downside has $1.16 in view, along with channel support, drawn from the low $1.1563.

Observed Technical Levels:

While H4 and H1 resistances are in play, together with sentiment facing lower since June, the concern for shorts in this market is prime support at $1.1473-1.1583 on the weekly timeframe, in addition to the daily timeframe exhibiting scope to approach resistance at $1.1689.

With the above taken on board, longs could be on the menu today from $1.16ish, joined by H1 channel support.

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Buyers and sellers remain battling for position around the upper perimeter of prime support at $0.6968-0.7242.

$0.6968-0.7242 buyers have prime resistance at $0.7849-0.7599 to target; failure to command position from $0.6968-0.7242, on the other hand, opens up support at $0.6673.

Trend studies on the weekly scale show we’ve been higher since early 2020. Consequently, any decisive response from $0.6968-0.7242 might be the start of a dip-buying attempt to join the current trend.

Daily timeframe:

Leaving Fibonacci support between $0.7057 and $0.7126 unopposed last week, Monday extended the currency pair’s recovery gains. Exploring higher levels on this timeframe gives rise to eventually testing prime resistance at $0.7506-0.7474. Immediately above, we also see Quasimodo support-turned resistance at $0.7621, which happens to join closely with the 200-day simple moving average at $0.7584, a 61.8% Fibonacci retracement at $0.7585 and a 100% Fibonacci projection at $0.7551.

Movement from the relative strength index (RSI) informs traders that the indicator is shaking hands with the lower side of the 50.00 centreline. Journeying higher remains something to keep an eye out for, action advising traders that average gains exceed average losses.

H4 timeframe:

There’s not really much to update on this timeframe, aside from the unit edging closer to resistance at $0.7317. Area above the level shows (potential) stacked supply between $0.7376 and $0.7347 and Quasimodo resistance at $0.7394.

Area below shows support at $0.7223.

H1 timeframe:

Monday had $0.73 step into the frame after discovering support around $0.7258ish. It’d be unwise to rule out further selling from $0.73, though clearing the round number unlocks the trapdoor to Quasimodo resistance coming in at $0.7339, a level dovetailing with a 1.618% Fibonacci projection at 0.7333.

However, a whipsaw above $0.73 to H4 resistance at $0.7317 remains a possible scenario that could draw short-term selling interest.

Observed Technical Levels:

Of immediate interest is the likelihood of H1 price snapping above $0.73 offers and bringing in bearish orders from H4 resistance at $0.7317.

Downside momentum drawn from a $0.73 whipsaw, however, could be limited, thanks to weekly price engaging prime support at $0.6968-0.7242. Therefore, $0.7317 shorts are urged to work with strict trade management rules.

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

USD/JPY concluded last week off 19-month highs at ¥112.08, following a near-test of supply at ¥113.81-112.22.

Establishing what many candlestick enthusiasts refer to as a shooting star pattern, a bearish scene directs flow to familiar demand at ¥108.40-109.41—arranged north of descending resistance-turned support, taken from the high ¥118.61.

Daily timeframe:

The 1.618% Fibonacci expansion at ¥112.05 stepping into sight last week welcomed downside. Support at ¥110.70 is now within touching distance, with any breach to perhaps point at prime support from ¥108.96-109.34.

Note that a ¥110.70 test is likely to merge with support out of the relative strength index (RSI) at 56.85 (two black boxes).

Following recent ¥112.08 highs, the medium-term trend remains to the upside, therefore ¥110.70 is a location dip buyers appreciate.

H4 timeframe:

Supply-turned demand (formed early July) from ¥110.99-110.79 is under stress, pressured under supply at ¥111.49-111.24. This hints at moves to support coming in from ¥110.42, located a touch under daily support at ¥110.70.

H1 timeframe:

Adding to Monday’s downward pressure, ¥111 was engulfed and support from ¥110.48 has elbowed its way into the light as a feasible downside target. South of here, technicians will also note a 100% Fibonacci projection at ¥110.14 and a 61.8% Fibonacci retracement at ¥110.25.

Observed Technical Levels:

Breakout sellers below ¥111 are urged to pencil in support on the daily timeframe at ¥110.70 as a possible floor.

However, according to the H4 and H1 timeframes, support is not expected until around ¥110.42-110.48. In addition to this, let’s not forget the weekly timeframe established a shooting star pattern last week. As a result, sellers could still overthrow daily support.

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 had its lower edge breached last week, action potentially confirming the close below a double-top pattern’s ($1.4241) neckline at $1.3669. 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 neckline—sits around $1.3093.

Conservative pattern sellers are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Daily timeframe:

As evident from the daily timeframe, Quasimodo support-turned resistance at $1.3609 made an entrance on Monday. If sellers arrange a defence, this throws a Fibonacci cluster between $1.3121 and $1.3167 into the mix as possible support.

Alternatively, bulls extending recovery gains highlights the 200-day simple moving average at $1.3838.

With respect to the relative strength index (RSI), we may see the 50.00 centreline enter the fight today, which could form resistance.

H4 timeframe:

A closer reading of price movement on the H4 scale shows the pair crossed swords with resistance at $1.3640 in recent hours, a previous Quasimodo support base that aligns with trendline resistance, extended from the high $1.3913. This involved clearing resistance at $1.3570, a level which if retested could encourage support.

Removing current resistances opens up a familiar decision point at $1.3750-1.3721.

H1 timeframe:

Resistance at $1.3616 arrived on Monday after $1.36 was consumed. As you can see, price is currently sandwiched between the aforementioned levels, as we write. We also have local trendline support nearby, taken from the low $1.3433. Should we get above $1.3616, resistance at $1.3658 is seen. However, should the said trendline support give way, this helps confirm daily resistance at $1.3609 and H4 resistance at $1.3640, targeting a possible move to H4 support at $1.3570.

Observed Technical Levels:

The break of weekly supply-turned demand at $1.3629-1.3456, as well as daily resistance in play at $1.3609 and H4 resistance also active at $1.3640, indicates a H1 move below $1.36 and trendline support, etched from the low $1.3433. This, as underlined above, suggests a move to at least H4 support from $1.3570.

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