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March 25th 2021: Risk Soured into the Close; DXY Testing Underside of 200-Day SMA

By:
Aaron Hill
Published: Mar 24, 2021, 23:40 UTC

Technical action on AUD/USD suggests additional bearish activity, with price potentially pursuing territory south of 0.76.

March 25th 2021: Risk Soured into the Close; DXY Testing Underside of 200-Day SMA

Note—Charts provided by Trading View

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 is seen dipping into 1.1857/1.1352 demand, lower by 2.1 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). An extension to the downside, 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:

EUR/USD sellers remained at the wheel Wednesday as the US dollar index continued to climb, shaking hands with the 200-day simple moving average.

This also had EUR/USD extend losses beyond the 200-day simple moving average at 1.1851, potentially setting the technical stage for a run to Quasimodo support at 1.1688. Sustained moves below the 200-day simple moving average is likely to be interpreted as a bearish signal.

In terms of the RSI oscillator, trendline resistance remains unchallenged with the value now pursuing ground south of 40.00.

H4 timeframe:

Quasimodo support at 1.1818 welcomed price movement on Wednesday, a level which, as you can see, has held form so far. Despite this, soft buying interest is seen, suggesting a break to test the double-top pattern’s take-profit target (yellow) at 1.1774 (measured by taking the distance from the highest peak in the pattern to the neckline and extending this measurement to the downside at the breakout point).

H1 timeframe:

1.1850 resistance did a fine job holding back buyers early Wednesday. This led to subsequent weakness emerging through Quasimodo support pinned at 1.1844, a level later serving as resistance.

Follow-through downside has since developed during the US session, nudging the 1.18 big figure in sight, along with a 161.8% Fib level at 1.1796.

Interestingly, the RSI exited oversold territory yesterday and has established bullish divergence.

Observed levels:

The combination of the double-top pattern’s take-profit target (yellow) at 1.1774, 1.18 on the H1 and the 161.8% Fib level at 1.1796, forms a possible support base.

Though a bullish scenario from 1.1774/1.18 is somewhat reinforced by monthly demand at 1.1857/1.1352, buyers still face the possibility of daily selling below the 200-day simple moving average.

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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.

March, as you can probably see, trades lower by 1.5 percent, on course to rupture the lower limit of February’s range. Should sellers make a push, 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:

AUD/USD slid for a second successive session Wednesday, pressured lower amid DXY upside surpassing 92.50.

Sustained weakness has February’s low at 0.7563 to target. Subsequent downside may take aim at demand from 0.7453/0.7384 (previous supply), an area dovetailing closely with a 100% Fib extension at 0.7465 and a 161.8% Fib projection at 0.7389.

RSI movement also inched under 40.00, possibly bound for oversold space.

H4 timeframe:

Wednesday’s downside momentum led candle action to Quasimodo support priced at 0.7592. Despite the level offering some respite, recent hours observed price action dip lower, movement highlighting Quasimodo support at 0.7529.

Should sellers take hold south of 0.7592, a retest of the level is a possible scenario.

H1 timeframe:

London hours Wednesday had AUD/USD defend resistance at 0.7622, which, during US hours, led price through 0.76 and underlined demand plotted at 0.7546/0.7555.

Leaving the 50.00 centreline unchallenged on the RSI indicator, the value, as of writing, is within close range of retesting oversold terrain.

Observed levels:

Each of the 4 timeframes indicate a bearish tone.

This may lead to continuation selling south of 0.76 on the H1, initially targeting H1 demand at 0.7546/0.7555 (set just beneath February’s low from 0.7563).

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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 2.1 percent, is closing in on descending resistance, etched from the high 118.66. A spirited break of the latter swings the technical pendulum in favour of further upside.

To the downside, support inhabits 101.70.

Daily timeframe:

Unchanged from previous analysis –

Buyers and sellers continue to square off south of Quasimodo resistance from 109.38. Of particular interest is the Quasimodo formation fusing closely with the monthly timeframe’s descending resistance.

While the aforesaid Quasimodo cannot be disregarded, recognising that supply resides at 110.94/110.29 is important, as a run for stops above the Quasimodo head (blue arrow—109.85) could materialise.

Areas visible to the downside are support at 107.64—a previous Quasimodo resistance—and supply-turned demand at 107.58/106.85.

With respect to trend, 2021 has pointed to the upside.

Based on the RSI oscillator, the value exited overbought space, leaving resistance at 83.02 unchallenged.

H4 timeframe:

Since March 9, USD/JPY has been sandwiched between Quasimodo resistance at 109.16 (sited just under supply at 109.59/109.37—houses daily Quasimodo resistance at 109.38) and demand at 108.31/108.50.

Beneath demand, we also have support at 108.09 and fresh demand parked at 107.81/108.01.

H1 timeframe:

Technical levels to be mindful of heading into Thursday are 109 psychological resistance, the 100-period simple moving average and 108.36 support, followed by 108 psychological support. Note that price recently crossed back under the 100-period SMA.

As for the RSI indicator, the value is seen bouncing ahead of trendline support, currently trading around 53.00.

Observed levels:

Longer term, eyes likely remain on daily Quasimodo resistance at 109.38 and merging monthly descending resistance.

Across the page on the H4 and H1 charts, H4 demand at 108.31/108.50 continues to hold, which may eventually lead H1 back above the 100-period simple moving average to the 109 region.

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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. March currently trades lower by 1.7 percent, contained within February’s range.

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:

Weighed by a bullish dollar, sterling slipped below support at 1.3755 Wednesday and shined the technical spotlight on Quasimodo support at 1.3609.

Interestingly, RSI flow recently took on support between 46.21 and 49.16, and is now seen pursuing territory south of 40.00.

H4 timeframe:

Latest to come out of the H4 chart is a breach of 1.3730/1.3749 demand and a subsequent retest of the area to form supply. Holding beneath the newly formed demand-turned supply places the 127.2% Fib projection in sight at 1.3649, closely shadowed by Quasimodo support at 1.3611.

H1 timeframe:

Despite reclaiming 1.37+ status on Wednesday, upside pressure flatlined heading into the US session and retreated back under the big figure. This, of course, reignites interest of support drawn from 1.3653, arranged just north of the 127.2% Fib projection at 1.3649.

What’s interesting from a technical standpoint is the RSI oscillator faded trendline resistance on Wednesday. The value is currently circling 36.00.

Observed levels:

With daily price navigating waters beneath support at 1.3755, displaying scope to reach Quasimodo support at 1.3609, this could lead H4 lower from supply at 1.3730/1.3749 and potentially feed a bearish theme under 1.37 on the H1 scale.

Possible downside targets to be aware of are H1 support at 1.3653, the 127.2% Fib projection at 1.3649, the daily Quasimodo support at 1.3609 and the 1.36 figure on the H1.

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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.

About the Author

Aaron Hillcontributor

Aaron graduated from the Open University and pursued a career in teaching, though soon discovered a passion for trading, personal finance and writing.

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