Weekly Technical Market Insight: Week Ending 2nd April 2021

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

Note—Charts provided by Trading View

US Dollar Index (Daily Timeframe):

  • Against a basket of foreign currencies, the US dollar index added nearly 1 percent last week and touched four-month highs.
  • In the shape of three consecutive bullish candles, price overthrew resistance at 92.26 and the 200-day simple moving average, currently circling 92.56. This is likely interpreted as a bullish signal, with Quasimodo resistance at 93.90 targeted this week. Subsequent upside shines light on another layer of resistance at 94.65 (dovetailing with a 38.2% Fib level a 94.54).
  • With reference to trend on the daily scale, we have seen an upside bias in 2021 (secondary trend). Though since the index topped in March 2020, the primary trend has echoed a bearish tone, launching a series of clear-cut lower lows and lower highs.
  • Momentum, as measured by the relative strength index (RSI), is in the process of forming potential bearish divergence ahead of overbought territory.

Going forward, assuming buyers maintain position north of the 200-day simple moving average, Quasimodo resistance at 93.90 is likely to welcome price action this week.

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

EUR/USD:

Monthly timeframe:

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

As we head into the closing stages of March, EUR/USD dipped a toe in 1.1857/1.1352 demand, currently lower by 2.3 percent.

A decisive rebound from the aforesaid demand shifts attention back to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641). Extending lower, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

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

Daily timeframe:

Europe’s single currency rose 0.3 percent against the US dollar on Friday, snapping a three-day bearish move that had price dethrone the 200-day simple moving average around 1.1857.

Retesting the underside of the SMA is possible this week, while a continuation south has Quasimodo support from 1.1688 to target.

Technicians will also note early bullish divergence forming out of the RSI oscillator, with upside moves eyeing trendline resistance, taken from the peak 76.00.

H4 timeframe:

Thursday’s test of Quasimodo support at 1.1779 and the double-top pattern’s take-profit target at 1.1774 (yellow) welcomed some mild respite Friday.

Resistance at 1.1818—a previous Quasimodo support level—could reinvigorate a bearish scenario early week. Territory north of the level, though, throws light on trendline resistance, taken from the high 1.2242.

H1 timeframe:

Friday’s buying pressure lifted the currency pair to the 1.18 figure, with the base delivering moderate resistance amid US hours.

Clearing 1.18 resistance this week brings the 100-period simple moving average to light around 1.1833, closely followed by resistance at 1.1844 and the 1.1850 figure. Note that between 1.1850 and 1.18, supply appears reasonably thin.

RSI movement concluded the week above 50.00, consequently positioning the value within striking distance of trendline resistance, etched from the peak at 73.00.

Observed levels:

Long term:

The daily timeframe making its way through the 200-day simple moving average voices a bearish vibe this week, suggesting monthly buyers out of demand are unwilling to commit at this point.

Short term:

Absence of decisive bearish interest from 1.18 on the H1 Friday, together with room to advance on the H4 to resistance at 1.1818, may trigger a breakout move above 1.18 early trade.

While 1.1818 on the H4 could hamper upside, the H1 reveals room to approach 1.1850ish, which happens to coincide closely with the 200-day simple moving average at 1.1857.

Therefore, according to the charts, a short-term bullish scenario above 1.18 could form this week, targeting 1.1850. It is here, sellers will perhaps anticipate a bearish presence, given the 200-day SMA connection.

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

AUD/USD:

Monthly timeframe:

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

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s interesting was February came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

As March draws to an end, the pair trades lower by 0.9 percent, probing February’s lows. Should sellers take the reins going forward, demand is in view at 0.7029/0.6664 (prior supply).

With respect to 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:

Shaped by way of a doji morning star pattern, the currency pair established a bottom last week and formed a one-sided bullish candle Friday, bolstered by upbeat risk sentiment and USD softness.

Upstream, trendline support-turned resistance is visible, pencilled in from the low 0.5506. While lower on the curve, demand from 0.7453/0.7384 is seen (previous supply)—dovetailing closely with a 100% Fib extension at 0.7465 and a 161.8% Fib projection at 0.7389.

Out of the RSI oscillator, the value left oversold space unchallenged last week and rotated higher to reclaim 40.00+ status.

H4 timeframe:

Quasimodo support at 0.7592 made an entrance in the latter half of last week, prompting Friday’s upside.

Continued enthusiasm swings the pendulum in favour of a test of supply from 0.7696/0.7715, an active zone since late January that’s plotted just south of the 38.2% Fib level at 0.7731 and a 61.8% Fib level from 0.7741.

Failure to extend recovery gains could lead AUD/USD under 0.7592 to another layer of Quasimodo support at 0.7529.

H1 timeframe:

Notable developments Friday had the US session extend recovery gains, consequently taking on trendline resistance, etched from the high 0.7849, along with two nearby resistances at 0.7622 and 0.7636 and the 100-period simple moving average.

Should traders extend Friday’s outperformance this week, the 0.77 figure calls for attention, a psychological level anchored just beneath supply plotted at 0.7716/0.7707.

Interestingly, RSI action nudged into overbought territory at the close Friday, following Thursday’s trendline resistance breach. Resistance at 80.85, therefore, will likely be a watched base early trade this week, with any downside moves to target trendline support, drawn from the low 19.00.

Observed levels:

Long term:

From the monthly timeframe, chart studies point to a bearish narrative. On the other side of the field, however, the daily timeframe forming a doji morning star (a bullish candlestick pattern) unlocks the possibility of buying this week.

Short term:

In conjunction with the daily timeframe’s technical position, H4 exhibits scope to approach resistance from 0.7696/0.7715, and H1 conquering resistances on Friday potentially clears the runway to 0.77. Note the big figure shares space with the H4 resistance, therefore should a short-term bullish phase materialise and we reach 0.77, bearish pressure could emerge.

Though do keep an eye on H1 supply at 0.7716/0.7707. A whipsaw through offers at 0.77 is possible, having seen the H1 supply essentially form the decision point to break under 0.77 on 23rd March.

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

USD/JPY:

Monthly timeframe:

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

Following January’s bullish engulfing candle and February’s outperformance, March, up by 3 percent, is shaking hands with descending resistance, etched from the high 118.66. A forceful break of the latter swings the technical pendulum in favour of further upside.

To the downside, support inhabits 101.70.

Daily timeframe:

Following three weeks of indecision just south of Quasimodo resistance at 109.38, USD/JPY bulls went on the offensive in the second half of last week and toppled the noted Quasimodo. Price action traders are now likely monitoring supply at 110.94/110.29 this week.

With respect to trend, 2021 has pointed to the upside. Also of interest is price has traded positively above the 200-day simple moving average since late February.

Based on the RSI oscillator, the value continues to circle overbought space, threatening to challenge resistance at 83.02.

H4 timeframe:

Demand at 108.31/108.50 served buyers well since early March, with Friday powering into supply at 110.08/109.54, an area housing June tops at 109.85 (represents the head of the Quasimodo formation on the daily timeframe).

H1 timeframe:

Together with the RSI connecting with resistance at 86.43 on Friday (ended the session connecting with RSI trendline support [taken from the low 33.14]), price action established a session peak at 109.84. This places the spotlight on the 1.10 figure this week. However, should we extend Friday’s retracement, demand at 109.21/109.28 is in sight. Notably, below this area, limited demand is visible until 109 support.

Observed levels:

Long term:

The monthly descending resistance and neighbouring supply on the daily timeframe at 110.94/110.29 are likely to interest this week.

Taking out the head of the daily Quasimodo resistance at 109.85 would also trigger stops, fuelling any offers around the aforesaid daily supply.

Short term:

From the H4, supply is in play at 110.08/109.54. This is an area placed approximately 20 pips south of daily supply mentioned above at 110.94/110.29.

According to the H1 timeframe we could have price drive higher within the H4 zone this week to reach the 1.10 figure.

Moves lower out of H4 supply may also ignite interest in H1 demand at 109.21/109.28.

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

GBP/USD:

Monthly timeframe:

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

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Contained within February’s range, March is on track to snap a five-month winning streak and form what candlestick fans call an inside pattern—represents a short-term consolidation with low volatility. A breakout lower tends to be considered a bearish signal.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

After Thursday forged a recovery ahead of Quasimodo support at 1.3609, upside gain speed Friday amidst optimism surrounding Britain’s vaccine rollout.

Further outperformance this week has trendline support-turned resistance on the radar, etched from the low 1.1409. We may, however, witness momentum level off as RSI movement approaches familiar resistance between 46.21 and 49.16.

H4 timeframe:

Bulls are clearly growing in confidence ahead of the 127.2% Fib extension at 1.3649, with 1.3852 resistance now in the headlights. Also sharing chart space here is trendline resistance, extended from the high 1.4241, and an ascending resistance plotted from the low 1.3778.

1.3852, therefore, represents a modest area of confluence that sellers may be drawn to this week. What’s also interesting is the daily timeframe’s trendline support-turned resistance merges closely with the H4 resistances.

H1 timeframe:

A closer look at price action on the H1 chart reveals short-term flow journeyed above trendline resistance heading into London hours Friday, taken from the high 1.4001. Subsequently, price retested the breached trendline, reinforced by the 100-period simple moving average around 1.3754 and the 1.3750 support.

US trading echoed a muted tone, connecting with offers around the 1.38 figure. North of here, bullish bets are likely to take aim at resistance anchored to 1.3878, a level joined by a 61.8% Fib level from 1.3875 (green).

Referring to the RSI oscillator, movement briefly knocked on the door of overbought levels on Friday and snapped to lows of 56.00 into the close. Interestingly, the retreat elbowed under trendline support, pencilled in from the low 23.20.

Observed levels:

Long term:

The monthly timeframe displaying signs of a bearish candlestick formation, in a market trending lower since 2008, is noteworthy. Before sellers get involved, nevertheless, daily flow may mount an assault on trendline support-turned resistance. As such, short-term bullish activity is perhaps still on the cards.

Short term:

Bearish bets from 1.38 appear reasonably thin, with bids bolstered by H4 action displaying room to advance to 1.3852 resistance and associated trendlines. As aired above, the daily timeframe’s trendline support-turned resistance merges closely with the H4 resistance.

As a result, chart action suggests breakout buying north of 1.38 could emerge early week, targeting the 1.3850ish neighbourhood, followed by a possible test of H1 resistance at 1.3878.

Weekly Technical Market Insight: Week Ending 2nd April 2021, FP Markets

 

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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