September 28th 2021: Markets Somewhat Muted; USD/JPY Eyeing Whipsaw North of ¥111

Charts: Trading View

EUR/USD:

(Italics: previous analysis)

Weekly timeframe:

Technical elements on the weekly timeframe reveal EUR/USD has been somewhat stationary since mid-June. Deserving attention, however, is 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.

Also technically interesting on the weekly scale is the possibility of long-term sell-stops residing south of late September lows at $1.1612 (2020).

In addition to the above, we see trend on the weekly chart has largely been bullish since early 2020.

Daily timeframe:

Quasimodo support at $1.1689 welcomed healthy buying Thursday, yet has so far failed to excite any follow-through despite joined by what is known as hidden bullish divergence out of the relative strength index (RSI).

Failure to command a bullish position above $1.1689 swings the technical pendulum in favour of eventually reaching 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).

Progressing to the upside, nevertheless, seats $1.1900ish resistance in sight. The opening above $1.1900 shines light on prime resistance at $1.2115-1.1990 and the 200-day simple moving average at $1.1975.

H4 timeframe:

Buyers and sellers remain squaring off between a $1.1690-1.1705 decision point and resistance at $1.1742, a previous Quasimodo support. Of late, action bumped into the aforesaid decision point.

Beyond range extremes, Quasimodo resistance at $1.1771 and Quasimodo support from $1.1666 are observable barriers. Fibonacci enthusiasts will also note converging Fibonacci levels around $1.1769ish.

H1 timeframe:

Monday was a relatively muted session for EUR/USD, with trade lower by 0.1 percent heading into the close.

Of technical note, however, was short-term flow dipping a toe below the $1.17 figure and shaking hands with demand at $1.1675-1.1686. Current movement is circling the upper side of the round number. To the upside, aside from a handful of road bumps, resistance jumps out at $1.1750, closely shadowed by prime resistance coming in at $1.1767-1.1776, joined by supply at $1.1762-1.1774 (and H4 Quasimodo resistance mentioned above at $1.1771).

Interestingly, stops are perhaps located a touch above the high at $1.1755, liquidity that may excite sellers from $1.1767-1.1776/$1.1762-1.1774.

Observed Technical Levels:

Recognising scope to approach prime support on the weekly timeframe at $1.1473-1.1583, and intersecting Fibonacci studies, the odds of daily price establishing a solid defence off Quasimodo support from $1.1689 appear thin.

With the above, in similar fashion to Monday’s technical briefing, buying is likely fragile. That being said, continuation buying north of $1.17 is questionable, with possible bearish setups forming beneath the round number to take on H1 demand at $1.1675-1.1686 and test H4 Quasimodo support at $1.1666.

AUD/USD:

(Italics: previous analysis)

Weekly timeframe:

Recent action connecting with prime support at $0.6968-0.7242 last week, in the shape of a doji candle, emphasises prior downside is losing steam and an upside reversal could be on the menu.

Buyers regaining consciousness has 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, the response from $0.6968-0.7242 might be the start of a dip-buying attempt to join the current trend.

Daily timeframe:

Attention remains concentrated on Fibonacci support at $0.7057-0.7126 and prime resistance at $0.7506-0.7474.

Beyond the aforementioned areas is a Quasimodo support-turned resistance at $0.7621 and 200-day simple moving average at $0.7593. Nearby we also note a 100% Fibonacci projection at $0.7604, a 61.8% Fibonacci retracement at $0.7585 and a 1.618% Fibonacci extension at $0.7644.

To the downside, support falls in around $0.7021.

Those who follow the relative strength index (RSI) will acknowledge the indicator zeroing in on the 50.00 centreline, coming from below. Moving above the latter signals momentum is to the upside.

H4 timeframe:

$0.7317 resistance held strong in the second half of last week, in play since late July. Upstream, stacked supply remains between $0.7347 and $0.7376, together with Quasimodo resistance a short distance away at $0.7394.

Also on the technical radar is a decision point at $0.7200-0.7218. In the event we probe lower, Quasimodo support at $0.7144 is in sight, which has joined forces with a deep 88.6% Fibonacci retracement at $0.7146.

H1 timeframe:

US hours establishing session lows at $0.7250 in the form of a bullish outside reversal, positions the candles within touching distance of the $0.73 big figure. Traders may also note that tucked a few pips above this barrier we have two Fibonacci clusters, with the lowest of the two coming in between $0.7307 and $0.7302, and the higher base drawn between $0.7320 and $0.7315, which already welcomed a whipsaw above the $0.73 big figure last week.

Should the unit continue exploring higher terrain and test $0.73, another whipsaw could be in the offing. Between $0.7320-0.7315 and $0.7307-0.7302, therefore, is a location sellers may be willing to short into buy-stops north of $0.73.

Observed Technical Levels:

From a short-term perspective, attention is directed towards another fakeout above $0.73 to bring in any willing sellers from between $0.7320-0.7315 and $0.7307-0.7302 on the H1 scale.

USD/JPY:

(Italics: previous analysis)

Weekly timeframe:

Continuation buying is underway, following last week’s stronger-than-expected ¥108.40-109.41 demand test. USD/JPY bulls remaining on the offensive has ¥113.81-112.22 supply to target.

Should sellers take control, lying in wait under the aforesaid demand is neighbouring descending resistance-turned support, extended from the high ¥118.61.

Daily timeframe:

Prime resistance at ¥110.86-110.27—upper range limit since mid-July—suffered a breach Monday, as expected. Consequent to this, the currency pair is zeroing in on Quasimodo resistance at ¥111.11.

Supportive of a ¥110.86-110.27 break and subsequent upside is the relative strength index (RSI) running above its range resistance at 56.85. The indicator’s value exploring territory above the 50.00 centreline informs traders that average gains exceed average losses: positive momentum until we touch gloves with overbought space.

H4 timeframe:

Leaving supports at ¥110.42 and ¥110.48—both of which are previous Quasimodo resistance levels—unchallenged Monday, supply at ¥110.99-110.79, thanks to recent movement, is on the verge of stepping aside.

Upriver, Fibonacci resistance is visible between ¥111.32 and ¥111.20, fixed just above daily Quasimodo resistance at ¥111.11.

H1 timeframe:

Following a near-test of channel support, etched from the low ¥109.12, in early trading Monday, the pair marched to fresh highs and bonded with the ¥111 figure.

The interesting thing at ¥111 is what’s above the number: daily Quasimodo resistance at ¥111.11 and H4 Fibonacci resistance coming in from ¥111.32-111.20. For that reason, a stop-run could develop.

Observed Technical Levels:

Testing the ¥111 figure on the H1 is a level with ‘fakeout’ written all over it.

A whipsaw above the round number to daily Quasimodo resistance at ¥111.11 and H4 Fibonacci resistance coming in from ¥111.32-111.20 may be movement sellers welcome from either noted resistance.

GBP/USD:

(Italics: previous analysis)

Weekly timeframe:

Supply-turned demand at $1.3629-1.3456 stepped forward in July and has remained in place since. $1.3920ish on this timeframe appears troublesome for buyers.

Pattern traders will also note that the $1.3629-1.3456 test simultaneously witnessed price action close below a double-top pattern’s ($1.4241) neckline at $1.3669, advertising a relatively long-term sell signal. Conservative pattern sellers, however, are likely to pursue a candle close beneath $1.3629-1.3456 before pulling the trigger.

Daily timeframe:

Quasimodo support at $1.3609 made its way back into the spotlight at the tail end of last week, with price delivering solid gains Thursday.

It’s important to note, the previous $1.3609 reaction (20^th August) failed to find acceptance above the 200-day simple moving average at $1.3837, suggesting $1.3609 weakness. Sub $1.3609, limited support is visible until around $1.3168.

Momentum studies, according to the relative strength index (RSI), has the indicator’s value hovering within a stone’s throw from under the 50.00 centreline. Muscling above 50.00 indicates positive momentum, underpinning the current Quasimodo support, though remaining south of 50.00 voices that we are perhaps headed for space below $1.3609.

H4 timeframe:

Price action, following last Thursday’s recovery from daily Quasimodo support mentioned above at $1.3609, called in on the $1.3750-1.3721 decision point Monday. As you can see, though, seller interest is precarious. Giving up the area shines light on a Fibonacci cluster between $1.3809 and $1.3791, with additional interest to the upside perhaps pulling us back to prime resistance at $1.3940-1.3888.

H1 timeframe:

Aided by a 61.8% Fibonacci retracement at $1.3663, support formed at $1.3658. Early London on Monday observed noticeable interest to the upside, elevating the currency pair above $1.37. With the latter currently representing support, familiar resistance at $1.3751 calls for attention, followed by the $1.38 figure (resides within H4 Fibonacci resistance underlined above between $1.3809 and $1.3791).

Observed Technical Levels:

The H4 Fibonacci cluster between $1.3809 and $1.3791 is likely to interest Fibonacci followers, an area enclosing $1.37 applied to H1 candles. Whether this curiosity will be enough to overthrow the H4 decision point at $1.3750-1.3721 and H1 resistance from $1.3751, nonetheless, is difficult to judge at this point. Holding support at $1.37, of course, could provide an early cue of bullish intent.

Long-term action shows an absence of strong buying interest from supply-turned demand at $1.3629-1.3456 on the weekly timeframe, in addition to price action closing below a double-top pattern’s ($1.4241) neckline at $1.3669, delivers a potential bearish situation. As a result, daily Quasimodo support at $1.3609 is unlikely to offer much to work with.

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