EUR/USD flat as attention shifts to ECB meeting

EUR/USD:

Monthly timeframe:

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

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.  

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]). 

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure largely unchanged from previous analysis.

Ahead of today’s European Central Bank meeting and impending US inflation release, EUR/USD concluded Wednesday notably off session tops. This formed what many will recognise as a shooting start candlestick pattern—a bearish signal. 

Technical structure on the daily chart remains fixed on Quasimodo resistance at 1.2278, while navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average. 

Momentum studies, according to the RSI, reveals the value holding position north of support at 51.36. As long as the indicator maintains this position, momentum could head for overbought status. 

H4 timeframe:

For those who have followed our recent technical briefings you may recall the following (italics):

Technically speaking, Tuesday’s retreat shaped just south of a 61.8% Fib retracement at 1.2206. Harmonic traders will note the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094). 

As evident from the H4 chart, the 61.8% Fib retracement at 1.2206 made an entrance on Wednesday and effectively took out the second take-profit target from the AB=CD 1.2123 formation. 

Areas to be mindful of going forward are resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

In Wednesday’s technical briefing, the report highlighted the following (italics):

Against the backdrop of higher timeframe structure, the space between the 1.22 figure and resistance at 1.2211 on the H1 may still be of interest to lower timeframe traders, which houses the H4 timeframe’s 61.8% (AB=CD) Fib level at 1.2206.

As you can see, short-term action did indeed shake hands with the 1.2211/1.22 neighbourhood on Wednesday and withdrew to within reach of the 100-period simple moving average, currently circling around 1.2165. Support at 1.2132 could call for attention should sellers topple the aforementioned SMA today. 

Helping to frame resistance yesterday, of course, was RSI resistance at 78.97, boasting historical significance since early 2021.

Observed levels:

Based on H4 and H1 charts, given both timeframes addressed resistance on Wednesday, short-term direction appears poised to explore lower levels. This could mean a H1 close south of the 100-period simple moving average around 1.2165, with subsequent downside to perhaps hone in H1 support at 1.2132. 

AUD/USD:

Monthly timeframe: 

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support - 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]). 

Daily timeframe: 

Technical structure unchanged from previous analysis.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).  

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7536. Above 0.7816, supply falls in around 0.8045-0.7985. 

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021. 

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s.

H4 timeframe: 

The Australian dollar tunnelled lower against a ‘recovering’ USD (US dollar index: ticker DXY) on Wednesday. This led the currency pair to challenge 0.7726—Monday’s session low—which, if a breach comes to pass could guide price action as far south as 0.7632-0.7653 demand. 

A 0.7726 recovery, on the other hand, throws light on Quasimodo resistance from 0.7782.

H1 timeframe: 

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

Although sellers made a show and we’re now back at the aforementioned support, upside objectives rest at the 38.2% and 61.8% Fib retracement levels at 0.7740 and 0.7750, respectively. Harmonic traders will note these targets are derived from the AB=CD (the 100% Fib projection). 

Territory south of the noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

In terms of where we stand on the RSI, the value registered 40.00 on Wednesday. Knowing we’re plotting space south of the 50.00 centreline—breaking beneath this level suggests weakening upside—oversold territory could be on the cards, targeting support at 19.30.

Observed levels:

Up till now, upside strength echoes a fragile tone off H1 Fib support from 0.7720-0.7728. Moving through the latter today opens the door to a short-term bearish theme, with initial targets arranged around the 0.77 figure and nearby 61.8% Fib retracement at 0.7692. Below here, sellers may also take aim at H1 demand from 0.7634-0.7649, housed within the walls of H4 demand at 0.7632-0.7653.

However, to reach 0.7632-0.7653 involves pushing through the lower side of the daily timeframe’s consolidation at 0.7699.

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 concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66. 

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.1 percent. 

Daily timeframe: 

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021. 

The RSI remains stationed under resistance at 57.00, though recently rebounded from the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

For those who’ve been following recent technical reports you may recall the following (italics):

Limited change was observed on Tuesday, though bulls did manage to maintain position north of demand at 109.02-109.20, which, as underlined in previous writing, represents a decision point to initially push above 109.71 tops. Also technically notable is trendline support, drawn from the low 107.48, intersecting with the noted demand base.

Assuming the market remains bid, supply is seen fixed just north of tops (110.33—last Thursday’s peak) at 110.85-110.46, which happens to house a 100% Fib projection at 110.59 and a 1.618% Fib expansion at 110.69.

With USD/JPY eking out modest upside on Wednesday, this reinforces a bullish wind today, targeting the above noted resistance structures. 

H1 timeframe:

It was noted in Wednesday’s technical briefing that short-term direction was potentially bound for the 100-period simple moving average around 109.60ish. This followed Monday’s recovery from demand at 109.07-109.19—set within H4 demand at 109.02-109.20.

Going forward, H1 price taking on the said SMA today unlocks the trapdoor to possible follow-through buying towards resistance at 109.95 and the 110 figure. 

With reference to the RSI, the value is within a stone’s throw from touching gloves with overbought, following yesterday driving through the 50.00 centreline. 

Observed levels:

H1 and H4 demand areas standing ground (109.07-109.19 and 109.02-109.20), in conjunction with monthly action balancing off descending resistance-turned support, brings to light a potential bullish scene above the 100-period simple moving average on the H1 scale around 109.60, targeting 110 (H1).

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 subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.7 percent), albeit recording fresh YTD peaks at 1.4250.

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

Daily timeframe: 

Technical structure unchanged from previous analysis.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart. 

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week and recently witnessed the value cruise towards the 50.00 centreline. 

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact. 

Technical structure above the current consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Technical structure unchanged from previous analysis.

Aside from short-term fluctuations developing around the 100-period simple moving average at 1.4146 this week, focus, as noted in previous reports, remains on the 1.42 and 1.41 figures (the latter joins with a 61.8% Fib), echoing a similar picture to the H4 (see above). 

Outside of these levels, emphasis is on support at 1.4078 and resistance formed from 1.4246.

The RSI, however, is trekking just ahead of oversold territory. 

Observed levels:

Technical structure unchanged from previous analysis.

Aside from the monthly and daily timeframes showing us price trades near 2021 highs at 1.4250, immediate technical structure on these timeframes is limited for the time being. Despite this, traders are urged to keep an eye on daily Quasimodo resistance at 1.4250 and daily support at 1.4003. 

The H4 timeframe’s range between 1.4096 and 1.4219 is likely still on the radar for medium-term traders, looking to fade range extremes. This will see H1 traders hone in on the 1.41/42 figures. 

It’s also worth pointing out the technical convergence existing between H4 support at 1.4007 and the key figure 1.40 on the H1 (below current structure—not visible on the screen). The 1.40 zone could actually prove a solid platform to help facilitate a fakeout through H4 trendline support seen just above it around 1.4030ish.