Technical Analytics Report

EUR/USD Technical Analytics Report 11 Jan 2021

 

Monthly timeframe: 

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

Shortly following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply from 1.1857/1.1352 in August, buyers made an entrance heading into the close of 2020 and recorded fresh multi-month highs. This reasons additional upside towards ascending resistance (prior support – 1.1641) may be on the horizon.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Since late December, upside momentum noticeably slowed. Last Thursday delivered a solid bearish candle after confronting the descending wedge pattern’s (1.2011/1.1612) take-profit target at 1.2318 (yellow), with Friday extending losses and throwing light on 1.2095 support.

Trend on this timeframe remains decisively north, establishing a series of higher highs and higher lows since March 2020 (some will consider this a secondary trend).

In terms of the RSI indicator, following the formation of bearish divergence, the value is seen fast approaching the upper side of 50.00.

H4 timeframe:

From the March 2018 supply at 1.2385/1.2346, mid-week witnessed sellers make a show and eventually bring down trendline support (1.1602). After retesting the lower side of the aforesaid trendline (common viewing after a trendline breach), Friday slipped to a 1.2193 low.

This brings notable S/R at 1.2164 into focus this week, derived from January 2018. Traders will also note the support level joins forces with a number of Fib levels between 1.2154/1.2167.

H1 timeframe:

Heading into Friday’s US session, H1 sellers greeted the lower side of the 100-period simple moving average at 1.2283. This directed moves beneath 1.2250 support to the 1.22 level.

While an end-of-day rebound from 1.22 emerged, resistance at 1.2235 poses a potential problem for buyers, as may 1.2250 resistance. Downstream, south of 1.22, demand appears vacant until around the 1.21 vicinity.

RSI enthusiasts may acknowledge the indicator dipped a toe in oversold territory in the latter part of the week, and is in the process of chalking up a triple-bottom pattern (neckline can be found at 53.94 [black arrow]).

Observed levels:

Long term:

Monthly price is poised to reach for higher levels, though a 1.2095 support retest on the daily timeframe may unfold beforehand.

Short term:

H4 support at 1.2164 (and associated Fib levels) is likely to make an entrance early this week. Though given the daily timeframe suggesting a 1.2095 test, this implies upside attempts off 1.2164 could be fragile.

Therefore, another possible scenario to be watchful of this week is a H1 close under 1.22, which might be viewed as a bearish cue, with 1.21 ultimately targeted (set just ahead of 1.2095 daily support).


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