EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
The month of February witnessed EUR/USD revisit the upper limit of demand at 1.0488/1.0912 – a noteworthy area given the momentum derived from its base – and pencil in an appealing (bullish) hammer candlestick pattern.
Upside this month, currently trades +3.77%, manoeuvred the pair into demand-turned supply at 1.1857/1.1352 which intersects with long-term trendline resistance (1.6038).
The primary downtrend remains in motion and has remained lower since 2008, exhibiting clear lower peaks and troughs.
Daily timeframe:
The 200-day SMA limited downside from 1.1159/1.1233 last week, eventually generating sizeable moves to the upside heading into the close. Follow-through buying materialised Monday, driving through supply at 1.1394/1.1342 (now potential demand) and shaking supply at 1.1540/1.1486. Trendline resistance is seen close by (1.1852), in the event we continue pushing north today.
What’s also notable from a technical perspective is the RSI indicator piercing overbought levels, and testing values not seen since March 2008.
H4 timeframe:
Supply at 1.1496/1.1471, which happens to converge with a 161.8% Fib ext. point at 1.1475, entered play on Monday, following a move through supply at 1.1399/1.1376. So far both levels are holding ground. Note that the current supply is glued to the underside of daily supply mentioned above at 1.1540/1.1486.
H1 timeframe:
Amidst a sharp slump in US Treasuries, scoring all-time lows, and the US dollar index, or DXY, breaching 95.00 to the downside, EUR/USD journeyed north Monday, adding more than 150 points, or 1.35%.
Technically, the H1 candles are seen compressing within what appears to be a bullish pennant pattern (1.1494/1.1365) atop the 1.14 handle. Should the euro breakout to the upside, a move, measured from 1.1287 to the top edge of the pennant’s formation (blue arrow) added to the breakout point, could be seen.
With reference to the RSI indicator, the value drifts a touch beneath its overbought perimeter.
Structures of Interest:
Monthly action likely has longer-term players anticipating a pullback after closing in on 1.1857/1.1352; some, however, will watch trendline resistance, sited higher up on the curve. Daily supply at 1.1540/1.1486, housed within the current monthly supply, is in motion, which itself supports H4 supply at 1.1496/1.1471.
Despite each of the above timeframes displaying supply zones, H1 price is chalking up a potential pennant pattern, which if it comes to pass, could signal a break of the current H4 and daily supplies and maybe even a test of monthly trendline resistance.
Traders interested in the H1 pennant likely wait for a H1 close north of 1.15 to form before committing.
AUD/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Demand at 0.6358/0.6839 remains in the fight, with price attempting to bottom within its lower boundary after clipping the lower edge yesterday. An eventual break of the said demand zone has another layer of demand close by at 0.6094/0.5866, while a recovery could eventually lead to trendline support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.
The primary trend in this market continues to face a southerly trajectory.
Daily timeframe:
0.6680ish (red oval) welcomed price action on Monday, as did long-term demand drawn from late 2008 at 0.6330/0.6245 (note this demand contained the break of monthly demand mentioned above at 0.6358/0.6839). Proven supply also resides at 0.6778/0.6731, aligning with trendline resistance (0.7393).
The RSI recently exited oversold territory, though yet unable to conquer 50.00.
H4 timeframe:
Supply at 0.6655/0.6629 experienced a decisive whipsaw through its upper boundary on Monday, rolling out a test of supply at 0.6695/0.6677.
To the downside we have demand lingering at 0.6511/0.6542, albeit likely weakened by yesterday’s pivotal move to lows at 0.6314.
H1 timeframe:
After missing supply at 0.6695/0.6686 by a hair amid US hours, price declined, whipsawing through orders at 0.66, likely tripping sell-stop liquidity, and testing supply-turned demand at 0.6562/0.6586.
Beneath 0.6562/0.6586, we have 0.6550 as potential support, with a break pointing the finger towards 0.65.
Structures of Interest:
Despite a break of its lower boundary, monthly demand at 0.6358/0.6839 remains in the fight. Daily price, nevertheless, is seen holding south of resistance around 0.6680ish. H4 price may retest 0.6655/0.6629, while buyers and sellers are seen battling for position on the H1 timeframe around 0.66.
Going on the above analysis, neither a long nor short is attractive right now.
USD/JPY:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern (118.66/104.62). February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into February’s end. March trades lower by 5.00%, breaching the lower edge of the descending triangle and is poised to connect with a demand area at 96.41/100.81.
Daily timeframe:
Monday’s near-300-point decline dipped through a number of key technical supports and landed within demand fixed from 100.68/101.85 (an area glued to the top edge of monthly demand underscored above at 96.41/100.81), hauling the RSI deeper into oversold ground, its lowest level since 2019.
The upward lift from current demand draws the limelight to resistance at 102.77; a break, however, has 104.44/105.06 on the radar as possible supply.
H4 timeframe:
Monday’s decline formed a nice-looking supply zone priced in at 105.75/105.17, while downside, as highlighted on the daily timeframe, is capped by demand at 100.68/101.85.
H1 timeframe:
Coronavirus remains the market’s key driver, guiding the pair to lows of 101.18 Monday. Global equities tanked, along with US Treasuries and the US dollar index.
Technical research based on the H1 timeframe reveals 102 holding ground, with the pair recently firming above 103 and a joining channel support-turned resistance (104.99). Continued upside here has 104 in view, intersecting closely with channel resistance (107.38) and supply coming in at 104.61/104.18.
Structures of Interest:
Daily demand at 100.68/101.85 holds firm in Asia, marginally breaking daily resistance at 102.77 and the 103 handle on the H1.
103, along with channel support-turned resistance and daily resistance at 102.77, is likely of interest today as a possible reversal zone and could cap upside.
The H1 supply zone at 104.61/104.18 is another potential area likely on the radar for sellers. A number of technical aspects support this view. Including the H1 surrounding confluence highlighted above, we can also note the lower edge of daily supply at 104.44/105.06 intersects with the said H1 supply zone. All this, coupled with the monthly timeframe recently breaking the lower edge of a descending triangle pattern with room to push lower, is likely enough to entice sellers from 104ish, should we reach this far north.
GBP/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This, along with trendline resistance (2.1161), remains a well-rounded resistance area to keep an eye on long term.
In recent months, a recovery formed off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high. The month of February declined nearly 3.00%, with March attempting to reclaim lost ground, currently trading at +1.90%.
Daily timeframe:
Partially altered outlook from previous analysis –
Demand at 1.2649/1.2799 entered view at the beginning of last week, fading YTD lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019), and has, over the course of last week and Monday, produced five successive bullish candles out of its base. Price tested supply at 1.3303/1.3184 yesterday and appears poised to retest a local trendline resistance-turned support (1.3514).
The 200-day SMA also resides within the current demand zone, circulating around 1.2703
H4 timeframe:
An area of supply made an appearance at 1.3209/1.3171 Monday, capping upside and positioning price in favour of testing supply-turned demand at 1.3023/1.3006. A breach of this area could lead the candles towards fresh demand plotted at 1.2947/1.2969.
H1 timeframe:
Void of Brexit news, pound sterling gathered strength on the back of USD weakness Monday. Technically, though, we’re now attempting to overthrow 1.31 to the downside, though supply-turned demand at 1.3071/1.3046 may pose problems for breakout sellers here.
Beyond this area, limited support is evident until reaching the key round number 1.30. While a widely watched level by and of itself, additional confluence is seen in the form of supply-turned demand at 1.2998/1.2981 and a 161.8% Fib ext. point at 1.2977. Note also we have the 100-period SMA drifting higher just south of the zone.
Structures of Interest:
Crossing swords with daily supply at 1.3303/1.3184 may weigh on the unit today, at least until challenging trendline resistance-turned support. Supporting further downside is the H4 timeframe after fading supply at 1.3209/1.3171.
Based on the above, H1 is likely to seek levels south of the current supply-turned demand area at 1.3071/1.3046, clearing the pathway south to the top edge of H4 supply-turned demand at 1.3023/1.3006, which coincides closely with the H1 supply-turned demand at 1.2998/1.2981 and its aligning confluence.
All in all, sellers likely favour bearish scenarios beneath 1.3071/1.3046, while buyers potentially have eyeball on 1.2998/1.2981.
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