Weekly Technical Market Insight: 9th -13th November 2020

US Dollar Index:

With US elections sparking a risk-on rally (major US equity benchmarks finished strongly higher across the board), safe-haven demand for the US dollar, as measured by the US dollar index (DXY), declined considerably last week.

Down 1.8 percent, the DXY drowned previous gains and crossed paths with daily support at 92.26. Although there’s scope for a recovery off the aforesaid support this week to daily supply forged between 94.02/93.82, shifting to September’s low at 91.74, or perhaps daily support at 90.99, might also be perceived as a possibility.

As underlined in previous analysis, the primary trend on the monthly timeframe, since March 2008, is entrenched within a large-scale pullback. Additionally, the daily timeframe’s trend, since March 2020, constructed a series of lower highs and lower lows.

  • We also recognise price crossed under the 200-day simple moving average, currently circling 96.50, heading into June of this year.
  • Traders with a focus on momentum-based indicators will also note the daily RSI oscillator penetrated trendline support at the beginning of October and is in the midst of establishing a descending channel. The value, as you can see, is rapidly approaching channel support after dislodging 50.00.
Weekly Technical Market Insight: 9th -13th November 2020, FP Markets

EUR/USD:

Monthly timeframe:

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

Following the break of long-term trendline resistance (1.6038) in July, buyers and sellers have since been squaring off around the upper section of supply from 1.1857/1.1352. Whilst this argues additional upside may be on the horizon, targeting ascending resistance (prior support – 1.1641), a dip to retest the recently penetrated trendline resistance (support) is still on the table.

The primary downtrend (since July 2008) remains intact until 1.2555 is engulfed (Feb 1 high [2018]).

Daily timeframe:

Discovering support off September’s low at 1.1612 (confirmed by RSI bullish divergence), EUR/USD, over the course of four (mostly) bullish moves, eventually tested, and mildly bettered, supply from 1.1872/1.1818 last week, an area secured beneath another supply extended from May 2018 at 1.2012/1.1937.

Trending higher since March, this implies buyers may stretch to 1.2012/1.1937 this week.

Progressing beyond 50.00, RSI action is also seen potentially preparing to join hands with its overbought range this week.

H4 timeframe:

EUR/USD took on supply at 1.1760/1.1779 (prior demand) on Thursday, as demand for the single currency persisted and eventually gave rise to a trendline resistance (1.2011) break.

An extension to the upside this week ignites interest at supply from 1.1928/1.1902 (prior demand), yet puncturing the zone directs attention to supply at 1.2026/1.1992 (prior demand), drawn from December 2017.

H1 timeframe:

Heading into the London session Friday, EUR/USD toppled the upper line of a bullish pennant pattern (1.1859/1.1791) and also brushed aside 1.1850 resistance. This shines light on the 1.19 level, 1.1950 resistance and the pennant pattern’s take-profit target at 1.1970 (red boxes).

RSI bearish divergence forming Friday, however, communicates a potential 1.1850 retest, or a retest of the bullish pennant’s upper edge, before buyers make an entrance.

Observed levels:

Long term:

Daily supply at 1.1872/1.1818 is under threat, driving a possible test of supply at 1.2012/1.1937 this week.

Short term:

H4 appears cleared for an advance to supply from 1.1928/1.1902, yet H1, according to the bullish pennant pattern’s take-profit target, suggests moves beyond here to around 1.1950/1.1970. As a result, traders are likely monitoring 1.1850 on the H1 for a retest and also have eyes on a possible 1.19 breach.

Weekly Technical Market Insight: 9th -13th November 2020, FP Markets

AUD/USD:

Monthly timeframe:

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

The months of September and October, as you can see, developed a mild correction and addressed the upper border of demand at 0.7029/0.6664 (prior supply).

Buyers have so far responded well from demand (up by 3.3 percent in November), free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In terms of trend, though, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Elevated amidst upbeat risk sentiment weighing on the DXY, AUD/USD collided with supply at 0.7345/0.7287 in the second half of the week, a rally-base-drop formation. Attention should also be drawn to supply seated just above at 0.7453/0.7384, taken from August 2018, as well as the RSI indicator fast approaching overbought territory after brushing aside resistance at 52.00.

The daily supply highlighted above could potentially hinder upside this week, despite the 7-month long uptrend.

H4 timeframe:

Friday, as you can see, displayed a non-committal tone, sandwiched between supply at 0.7324/0.7282 and demand from 0.7253/0.7237 (prior supply).

Resistance is seen at 0.7340, for those who feel we’re headed for higher ground this week, while support is tipped to appear around 0.7210 in the event of a dip lower.

H1 timeframe:

Friday’s lacklustre tone fashioned a bullish flag (0.7289/0.7250), arranged a few pips above support at 0.7234 and RSI support around 42.48. Folding over the upper line of the bullish flag this week immediately throws light on 0.73 resistance, with a violation unmasking resistance at 0.7324.

Price action traders will also note we’re caught within a larger ascending channel from the 0.6993 low and 0.7221 high.

Observed levels:

Long term:

On one side of the field, Monthly price is rebounding from demand at 0.7029/0.6664, while on the other side daily sellers potentially prepare for countertrend strategies off supply at 0.7345/0.7287 this week.

Short term:

H1 is establishing a bullish continuation flag, which could, having noted monthly price trading from demand, be broken to the upside this week and force intraday price movement to take on the 0.73 level on the H1, along with H4 supply from 0.7324/0.7282.

Weekly Technical Market Insight: 9th -13th November 2020, FP Markets

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 carving out a descending triangle pattern between 118.66/104.62.

Notably, November, down by 1.3 percent, has taken on 104.62, shining light on demand from 96.41/100.81, followed by trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Partially modified from previous analysis –

In addition to the monthly chart, daily price forcefully slid through its descending triangle pattern’s support (between 106.94/104.18) on Thursday. Shifting focus back to demand at 100.68/101.85, this area holds within it the descending triangle’s take-profit level at 101.35 (red).

The RSI also recently made its way into its oversold area.

H4 timeframe:

Partially modified from previous analysis –

The downward break of support at 104.11 Thursday has seen buyers and sellers square off within a large demand zone from 103.04/103.58.

Chart action shows that sustained weakness this week could propel price beyond current demand into another demand area from 101.98/102.63.

H1 timeframe:

Since transitioning into US trading last Thursday, momentum diminished considerably and consequently established a descending channel configuration between 103.85/103.41, with price also pushing through 103.50 support.

Continuing to respect the aforesaid channel’s edges this week is likely to witness H1 work its way towards the 103 level.

It is also worth stressing that although additional bearish flow may unfold, the RSI indicator brings forth bullish divergence, therefore we may even see price try to take on 103.50 resistance before reaching 103.

Observed levels:

Long term:

Blowing through monthly and daily descending triangle pattern supports, along with the buck trading lower since 2017 against the Japanese yen, positions longer-term activity in a bearish stance until at least daily demand from 100.68/101.85, set around the upper edge of monthly demand at 96.41/100.81.

Short term:

Upside attempts out of H4 demand at 103.04/103.58 this week is likely to find resistance at the under ledge of channel resistance (prior support – 104.94). Together with 103.50 resistance on the H1, this area could attract fresh selling to attack 103 (represents the lower ledge of H4 demand at 103.04).

Weekly Technical Market Insight: 9th -13th November 2020, FP Markets

GBP/USD:

Monthly timeframe:

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

Leaving trendline resistance (2.1161) unopposed, the month of September fell 3.4 percent by way of a bearish outside reversal candle and snapped a three-month winning streak. This, despite November trading higher by 1.5 percent at the moment, advertises a possible dip to retest trendline support (prior resistance – 1.7191).

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April 2 high 2018.

Daily timeframe:

Partially modified from previous analysis –

In spite of Friday’s indecision candle, the fact sellers failed to retest demand at 1.2645/1.2773 on the previous correction from 1.3176 shows what could be interpreted as seller weakness. A 1.3201 resistance break this week lights up the 1.3483 September peak as possible resistance.

The RSI oscillator, as you can probably see, also held off 47.00 support last week.

H4 timeframe:

Partially modified from previous analysis –

Thursday’s 1.3 percent advance, action that took hold of Wednesday’s session high at 1.3140, permitted Friday to cross paths with a 61.8% Fib level at 1.3172 (green) and resistance area from 1.3201 and 1.3170. Traders will note the upper edge of the H4 zone represents daily resistance.

1.3320/1.3281 is seen as the next possible supply zone should buyers gain momentum, though a bearish showing from 1.3201/1.3170 has support in sight at 1.3078.

H1 timeframe:

Friday wrapped up modestly south of October 21 peak at 1.3177 (along with RSI bearish divergence), following an earlier rebound from 1.31 support. Subsequent bullish flow this week points towards supply from 1.3239/1.3199, an area that sits on top of the round number 1.32, the daily resistance from 1.3201 and also H4 resistance at 1.3201/1.3170.

Below 1.31, the 100-period simple moving average hovers above the widely watched 1.30 number and trendline support (1.2855).

Observed levels:

Long term:

Lacklustre selling beneath daily resistance at 1.3201 and room for monthly price to move higher could eventually have buyers run through 1.3201.

Short term:

Shorter-term charts, however, display strong confluence around the 1.32 level – as underlined above, H1 supply is seen at 1.3239/1.3199, daily resistance is found at 1.3201 and a H4 resistance zone forms at 1.3201/1.3170.

On account of the above, an intraday bearish scene may unfold around 1.32 this week, though ultimately higher timeframe activity points to an eventual break to higher terrain.

Weekly Technical Market Insight: 9th -13th November 2020, FP Markets

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