Technical View for June 8th 2022: USD/JPY Eyes ¥133.45

Charts: Trading View

(Italics: Previous Analysis)

EUR/USD Technical Analysis:

Although finishing the session muted, EUR/USD displayed interesting price action on Tuesday. A meaningful ‘stop-run’ formed beneath $1.07 and shook hands with neighbouring H1 support between $1.0650 and $1.0671 (composed of 1.618% and 1.272% Fibonacci projections).

Current movement is attempting to reclaim $1.07+ status, a move that could have price approach a H1 61.8% Fibonacci retracement at $1.0723 in upcoming sessions, followed by H1 resistance at 1.0762. Interestingly, bolstering the H1 support zone yesterday was H4 supply-turned demand at $1.0655-1.0632. Upstream on the H4 scale also demonstrates scope to run for resistance at $1.0758 (residing just beneath H1 resistance at $1.0762).

Out of the higher timeframes, the outlook remains unchanged. Therefore, here’s a reminder of where we left the charts in Tuesday’s technical briefing:

Europe’s shared currency remains rooted within a primary bear trend (weekly scale), in addition to price shaking hands with the lower side of a heavy-duty weekly Quasimodo support-turned resistance at $1.0778. 2nd January low at $1.0340 (2017) appears a reasonable downside objective should sellers take the wheel.

While weekly price scans resistance, price action on the daily timeframe rebounded from support at $1.0638 last week. Overhead, a daily ascending support-turned resistance, drawn from the low $1.0340, is seen. For that reason, technicians cannot rule out the possibility of a short-lived ‘pop’ higher to test the ascending line before sellers make an impression. From the daily chart’s relative strength index (RSI), we continue to view support from the 50.00 centreline (positive momentum).

AUD/USD Technical Analysis:

The Reserve Bank of Australia (RBA) surprised investors on Tuesday, hiking rates by 50 basis points—its largest increase in more than 20 years. The immediate aftermath guided AUD/USD 60 pips north, violently whipsawing any offers around $0.72 to touch a high of $0.7247, before seeking shelter south of the psychological figure. As you can see, H1 Quasimodo support from $0.7159 proved a stable floor yesterday and eventually led the currency pair above $0.72.

Currently reinforcing bids in this market is H4 demand coming in at $0.7147-0.7204. Though it is important to recognise price is also testing the lower side of a recently breached channel support-turned resistance, drawn from the low $0.6829. Therefore, this could hinder upside attempts north of $0.72 on the H1. Consequently, $0.72 is likely a short-term key level to monitor.

A retest of the area, one that holds as support, may entice a bullish wave to target H1 resistance around $0.7266 (in line with price trading within H4 demand). However, a dip under $0.72 could prove enough to draw breakout sellers in, given where the unit is positioned on the bigger picture (see below).

Overall, the higher timeframe structure remains unmoved. For those who read Tuesday’s technical briefing, therefore, you will likely recognise the following text:

The Australian dollar eked out a third successive weekly gain versus the U.S. dollar last week, following a lower low that breached 28th Jan $0.6968 low on the weekly. While an extended pullback is on the table, this remains a sellers’ market in observance of a clear downtrend since August 2011 (check monthly scale) and weekly flow topping at $0.8007 in early February 2021. Weekly support structure remains between $0.6632 and $0.6764, comprised a 100% Fibonacci projection, a price support, and a 50% retracement.

A closer reading of price action on the daily timeframe has buyers and sellers battling for position around the 200-day simple moving average at $0.7255. Although sellers have the edge, Fibonacci resistance between $0.7364 and $0.7322 merits consideration. Adding to the technical landscape on the daily, the relative strength index (RSI) cemented position north of its 50.00 centreline (positive momentum) and directed the technical headlights towards indicator resistance at 74.80 (nestled within overbought territory).

USD/JPY Technical Analysis:

USD/JPY continued higher Tuesday amid monetary policy divergence. Further buying—supported by the primary bull trend since 2021—exposes ¥135.16: 28^th January high (2002) on the weekly chart. Supply from ¥131.93-131.10 on the daily timeframe was engulfed as a result of the spirited upside. Engulfing this area bolsters the pair’s bullish vibe on the weekly scale and opens the curtains on daily Quasimodo resistance at ¥133.45.

We can also see that the daily chart’s relative strength index (RSI), following a strong rebound from 40.00-50.00 support (an area representing a ‘temporary’ oversold zone since May 2021), is testing overbought space. As a result, indicator resistance is likely on the radar at 87.52.

H4 channel resistance, pencilled in from the high ¥130.13, made an entrance on Tuesday, which could pull H4 back to channel support, drawn from the low ¥126.86. Aligning with the channel support is the ¥132 figure based on the H1 timeframe. Therefore, a retreat back to $132 may, given the higher timeframe picture, be enough to attract dip-buyers.

GBP/USD Technical Analysis:

The British pound continued to outperform against the U.S. dollar on Tuesday, up 0.8 per cent, week to date. As evident from the daily timeframe, price action is now within reach of trendline resistance (etched from the high $1.3639), sheltered south of a daily Quasimodo support-turned resistance from $1.2762 (placed nearby weekly resistance at $1.2719).

In addition to higher timeframe resistances, we have been working with a primary downtrend since early 2021. Notably, nonetheless, the relative strength index (RSI) on the daily chart appears poised to find grip above its 50.00 centreline. A decisive move above here, however, is questionable in light of daily trendline resistance plotted overhead.

H4 resistance between $1.2686 and $1.2614, made up of a number of technical resistances, is close by—an area capping buying since the beginning of May. As a result, H4 support is also watched at $1.2475.

The H1 timeframe is interesting, as price circles just beneath $1.26. As underlined in recent analysis, beyond $1.26, resistance resides between $1.2627 and $1.2609. This may be an area we see price welcome, should a whipsaw north of $1.26 emerge, which will likely be followed by a subsequent bearish scene. Note that the H1 resistance area is also glued to the lower side of H4 resistance at $1.2686-1.2614.

BTC/USD Technical Analysis:

Daily support from $28,849 continues to serve price, a level that’s surprisingly withstood several downside attempts in a market displaying a clear primary bear trend since 2021. As underlined in recent writing, overthrowing this level would be disturbing for many buyers at this point as the next obvious area of support resides around $20,000. Adding to the bearish picture, the relative strength index (RSI) is rejecting the lower side of the 50.00 centreline (negative momentum).

Prime resistance at $30,714-30,590 on the H1 timeframe is now on the radar, following a rebound from H1 support coming in at $29,358. H1 resistance is also noteworthy at $31,000. Given the current assessment of price action on the bigger picture, sellers appear to have the upper hand for now and, therefore, this places favourable light on current H1 resistances.

Gold (XAU/USD) Technical Analysis:

Spot gold in $ terms came within a whisker of connecting with H1 support between $1,828 and $1,836 before rotating higher and pulling towards H1 Quasimodo resistance at $1,856. Overrunning this level re-opens the possibility of an approach to H1 Quasimodo support-turned resistance at $1,872.

Interestingly, a move higher is supported on the daily timeframe as price engages with a harmonic Gartley pattern’s PRZ (Potential Reversal Zone) between $1,815 and $1,843, aided by the 200-day simple moving average at $1,841. Should the relative strength index (RSI) break above the 50.00 centreline (positive momentum) this would add weight to further buying (average gains exceeding average losses). Upside price targets, as noted in previous analysis, are at $1,896 (38.2% Fibonacci retracement derived from legs A-D of the current harmonic pattern) and a $1,959-1,974 resistance zone.

According to the primary trend, we are in the early stages of a bear market. Ultimately, though, if the daily chart’s Gartley pattern holds and entices buying, this may attract further bids and draw H1 price beyond $1,856 to at least $1,872.

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