Prime support on the weekly timeframe resides at $1.1473-1.1583–sharing space with a 100% Fib projection at $1.1613 as well as a 1.27% Fib extension at $1.1550. Interestingly, long-term stops likely rest south of the $1.1640ish lows and perhaps accommodate enough energy to fill $1.1473-1.1583 bids. To the upside, the spotlight is on supply at $1.2412-1.2214. With respect to trend, we can see the market has largely been higher since the early months of 2020.
Monday kicked off establishing what many candlestick enthusiasts refer to as a hammer pattern on the daily timeframe–a bullish signal–yet Tuesday retaliated with a bearish shooting star pattern. Given the lacklustre price change, the following analysis still applies (italics):
The daily chart remains languishing beneath late July tops at $1.1909. North of here, buy-stops could fuel moves to prime resistance at $1.2115-1.1990, a place active sellers may reside. The flip side, of course, is a run south back to Quasimodo support at $1.1689. The relative strength index (RSI) recently retested the upper side of the 50.00 centreline. Rebounding from here underpins upside momentum, whereas slipping lower echoes a bearish cue.
Across the page on the H4 timeframe, the currency pair witnessed an acceleration to the upside in early US hours on Tuesday, bolstered by a lower-than-anticipated rise in inflation in the month of August. This elevated movement to prime resistance at $1.1851-1.1840, an area highlighted in Tuesday’s technical briefing as a platform sellers may be drawn to. As you can see, this was indeed the case.
Technical observations on the H4 suggest sellers are uninterested in taking things lower from current price levels, though if a downside move materialises, H4 prime support might be of interest again at $1.1764-1.1776. Nudging north of $1.1851-1.1840 has a reasonably large-scale supply to target at $1.1939-1.1902. You will see this area houses the July tops underlined on the daily timeframe (above).
In line with H4 prime resistance, of course, was H1 Quasimodo resistance at $1.1841 (and associated Fibonacci structure), which also made a show on Tuesday. With $1.1841 sellers perhaps weakened, the absence of resistance above $1.1841 shines the spotlight on the $1.19 figure. However, a return to $1.18 to seek additional buyers beforehand is not out of the question.
Research based on four time periods (weekly, daily, H4 and H1) signals a bullish atmosphere at the moment. A H1 break of Quasimodo resistance at $1.1841 would help validate this, with short-term bulls likely to zero in on $1.19 on the H1 which aligns with the lower edge of H4 supply at $1.1939-1.1902.