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Aaron Hill
Currency

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

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The greenback was on the ropes last week, consequently snapping a two-week bullish phase. Measured by the US dollar index, the buck shed 0.7 percent, following a bearish outside reversal formed on February 5 from a 127.2% Fib projection at 91.44.

Friday settling considerably off best levels, together with the RSI oscillator burrowing through channel support and the 50.00 centreline, places the 90.04 trough (January 21) in sight. Violating the aforesaid level this week shines the technical spotlight on support drawn from 89.34.

In addition to last week’s retreat, the US dollar has echoed a downside bias since topping south of the 103.00 figure in early March 2020. Consequently, January’s pullback and the recent decline may be interpreted as a bearish cue. Submerging support at 89.34 and the 88.25 February 16 low (2018) is likely to further confirm the current bearish narrative.

From a technical perspective, therefore, the 90.00 figure might be worth keeping a tab on this week, with a break perhaps calling for support at 89.34.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February has witnessed a healthy floor of bids emerge around the 1.1950 neighbourhood, consequently stirring a hammer formation (though we will not know this until the month concludes).

Downstream, 1.1857/1.1352 represents demand, while northbound shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Up by 0.6 percent, EUR/USD bulls wrapped up the week on the front foot. Earlier action witnessed the pair extend recovery gains north of demand at 1.1923/1.2001—an area housing support at 1.1965 (previous Quasimodo resistance).

As you can see, Friday settled off worst levels (shaped by way of a hammer candle pattern), suggesting bulls could grow in confidence this week and approach 1.2190 tops, shadowed by Quasimodo resistance from 1.2278.

RSI fans will note the value ended the week engaging with the 50.00 centreline, which happens to share space with two converging trendline resistances (yellow box).

H4 timeframe:

Quasimodo resistance at 1.2142—aligning with a 78.6% Fib level at 1.2138 and a 50.0% retracement at 1.2149—remains centre of attention on the H4 scale, withstanding two upside attempts last week. Space north of here may call for resistance at 1.2179, with subsequent buying to possibly take aim at another resistance plotted at 1.2214.

As you can see, Friday also discovered a healthy pocket of bids from swing support recognised at 1.2087, leaving 1.2075 support unchallenged.

H1 timeframe:

Mid-way through London Friday observed buyers attempt to arrange a defence off 1.21 psychological support, with price movement even establishing a hammer candle pattern—a formation generally viewed as a bullish signal. However, heading into US hours, the majority of buyers were squeezed out of the market as the pair whipsawed to lows ahead of demand at 1.2078/1.2062. This has stop-run written all over it.

Quasimodo resistance at 1.2142 noted on the H4 scale remains a prominent fixture on the H1 timeframe. Taking on higher levels this week may see buyers push beyond what appears to be a consumed H1 Quasimodo resistance at 1.2173 to pursue 1.22 resistance.

47.05/54.20 continues to serve as support and resistance out of the RSI indicator, an area in play since the beginning of February.

Observed levels:

Long term:

Both monthly and daily timeframes ended last week off worst levels, in the shape of a hammer pattern—movement often interpreted as a bullish cue.

By the same token, both charts demonstrate room to scale higher this week, targeting 1.2190 tops on the daily chart.

Short term:

H4 Quasimodo resistance at 1.2142, despite blending closely with Fib studies, has failed to invite selling beneath local H4 support at 1.2087. The non-committal tone from sellers, along with H1 reclaiming 1.21+ status Friday, places a question mark on the H4 Quasimodo formation.

According to chart studies, therefore, this week favours buyers until around the 1.22 neighbourhood.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

January’s half-hearted shooting star candle (often construed as a bearish indication at peaks) has so far failed to seduce sellers. February, as you can see, trades a touch off session highs, up by about 1.6 percent.

This brings light to 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776). In the event sellers regain consciousness, however, long-term demand resides at 0.7029/0.6664 (prior supply).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Amid renewed USD softness, AUD/USD bulls remained on the offensive heading into the latter part of last week. Northbound, 0.7782 tops are in sight this week, along with the 2021 peak at 0.7820, whereas sellers regaining consciousness could lead trendline support back into the fight, an ascending level drawn from the low 0.5506.

RSI flow dethroned the 50.00 centreline and landed the indicator at RSI trendline resistance, with further upside to possibly touch overbought space.

H4 timeframe:

Bearish bets from supply at 0.7769/0.7749 appear somewhat restrained right now, implying a move to resistance at 0.7805 could be in the offing.

In case sellers make an entrance, nonetheless, support at 0.7698 might call for attention.

H1 timeframe:

With the help of the 100-period simple moving average around 0.7726 and Quasimodo support at 0.7719, Friday gathered traction and dethroned 0.7750 resistance.

North of Thursday’s peak at 0.7771, Quasimodo resistance at 0.7777 resides nearby as a possible upside objective this week, with a break uncovering 0.78 psychological resistance.

Interestingly, movement out of the RSI indicator also shows the value rebounded off familiar trendline support Friday and clawed above the 50.00 centreline to highlight a possible move into overbought space.

Observed levels:

Long term:

The monthly could call for higher levels over the coming weeks, which may lend buyers support on the daily scale and have the pair refresh 2021 highs this week, with daily supply at 0.7937/0.7890 also to possibly make an entrance.

Short term:

With higher timeframes poised to pursue upside, and H4 supply at 0.7769/0.7749 displaying signs of vulnerability, H1 buyers may take this as a bullish sign and hold north of 0.7750 to take on H1 Quasimodo resistance at 0.7777 and 0.78 (which aligns with the 0.7805 resistance on the H4).

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Since January snapped a four-month bearish phase in the shape of a bullish engulfing candle, buyers have since struggled to find acceptance at higher levels. Consequent to this, February currently trades off best levels.

Resistance can be seen in the form of a descending line (not considered traditional trendline resistance), etched from the high 118.66, whereas follow-through weakness shifts focus to support at 101.70.

Daily timeframe:

Technical structure to be mindful of this week is the 200-day simple moving average at 105.54 and supply coming in from 106.33/105.78. While lower on the curve, trendline resistance-turned support, pencilled in from the high 111.71, could make a show. Demand at 103.56/103.93 is also seen close by.

The RSI indicator ended the week engaging with 57.00 support (previous resistance).

H4 timeframe:

The 38.2% Fib level taken from 104.50—a level representing the initial take-profit objective from the alternate AB=CD resistance at 105.63 (the 127.2% Fib extension)—provided a platform for buyers to work with last week.

Friday, however, witnessed supply at 105.26/105.14 make an entrance, a clear-cut drop-base-drop formation that boasts healthy downside momentum from its base. Technically speaking, a break of the aforesaid supply this week could swing the pendulum in favour of retesting AB=CD resistance, whereas a punch lower could draw in not only the 38.2% Fib, but also trendline support (102.59).

H1 timeframe:

In addition to supply underlined above on the H4 scale at 105.26/105.14, H1 resistance made up between 105.14, 105.08 (50.0% retracement) and the 105 figure stepped forward during the early hours of London on Friday.

Sellers making a show from 105.14/105.00 underlines demand at 104.78/104.89, with a breach underscoring 104.50 support. This demand is considered reasonably important, given it was here a decision was made to break above 105 resistance.

The RSI indicator shows the value finished the week within shouting distance of 50.00, following moves out of overbought space.

Observed levels:

Long term:

The lack of buying following the monthly timeframe’s bullish engulfing candle, together with room to push south on the daily timeframe to demand at 103.56/103.93, places sellers at the wheel this week, technically speaking.

Short term:

In line with the higher timeframe picture, H4 supply at 105.26/105.14 could interest sellers this week. A H1 close under demand at 104.78/104.89, therefore, could fuel a short-term bearish theme to 104.50 support.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has so far refreshed multi-month highs at 1.3866.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Partly modified from previous analysis –

In the shape of a bullish outside reversal, Friday witnessed buyers strengthen their grip north of support at 1.3755, following two back-to-back shooting star candle patterns—structure generally interpreted as a bearish signal. Bouncing higher this week throws light on supply at 1.3996/1.3918.

The RSI indicator remains circling the upper edge of a 3-month range between support around 47.00 and resistance at the 66.00 region (the value stands at 65.49). It is common to see higher oversold support areas form in an uptrend.

H4 timeframe:

Demand at 1.3761/1.3789 welcomed price action on Friday, movement which motivated a bullish wave back to resistance at 1.3852, a previous Quasimodo support. Rupturing the aforementioned level this week shines the headlights on supply at 1.3942/1.3900 (glued to the lower side of daily supply at 1.3996/1.3918).

H1 timeframe:

Reinforcing H4 resistance at 1.3852, we have a modest H1 Fib cluster (resistance) around 1.3850 (made up of a 161.8% Fib projection at 1.3850 and a 100% Fib extension at 1.3855), joined together with RSI trendline resistance making a show just ahead of overbought terrain.

Downside targets fall in around the 100-period simple moving average at 1.3810 and the 1.38 figure; a nudge through 1.3845, however, could see price bump heads with the 1.39 figure.

Observed levels:

Long term:

Along with daily buyers making a stand on Friday and highlighting supply at 1.3996/1.3918 as a possible upside target, monthly price remains optimistic above trendline resistance.

Short term:

Daily price exhibiting scope to advance this week places a question mark on H4 resistance at 1.3852 and, by extension, the H1 Fib cluster around 1.3850. This could prompt a bullish breakout scenario north of 1.3850 this week, targeting 1.39 on the H1 (aligns with the underside of H4 supply at 1.3942/1.3900, which itself is glued to the lower side of daily supply at 1.3996/1.3918).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

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