November 17th 2021: DXY Tests Major Resistance Between 96.37-95

November 17th 2021: DXY Tests Major Resistance Between 96.37-95.80
The dollar index is on a tear right now, clocking levels not seen since July 2020. Technical resistance is seen in play between 96.37 and 95.80…
EUR/USD:
(Italics: previous analysis)

Weekly timeframe:

Down 1.0 percent on the week, and with prime support at $1.1473-1.1583 in the rear-view mirror, a 61.8% Fibonacci retracement at $1.1281 as well as a 1.618% Fibonacci projection from $1.1237 is on the verge of welcoming price.

Harmonic traders will acknowledge the 1.618% ratio represents an ‘alternate AB=CD bullish pattern’.

This, coupled with the currency pair taking out 2nd November low (2020) at $1.1603, suggests (technically) we may be transitioning to a downtrend.

Daily timeframe:

In conjunction with the weekly timeframe’s technical setting, price action on the daily chart reveals further selling could develop in the days ahead.

Quasimodo support is calling for attention at $1.1213, arranged a handful of pips south of the weekly timeframe’s Fibonacci structure.

While immediate flow has been trending lower since late May tops at $1.2266, momentum, according to the relative strength index (RSI), dropped in on oversold territory. Traders, however, are urged to make allowances for the possibility of remaining oversold for a prolonged period, having seen downside flow take root earlier this year. With that being said, though, particular emphasis is now on indicator support from 21.87.

H4 timeframe:

The dollar index is on a tear right now, clocking levels not seen since July 2020 yesterday. The combination of another solid round of US retail sales data (1.7% vs. expected 1.3%) and a bid across US Treasury yields underpinned the USD, consequently weighing on EUR/USD (down for a fifth consecutive session).

Between $1.1387 and $1.1366 formed an acceptable decision point on Tuesday, an area that witnessed price tunnel through support at $1.1349 (now resistance) to refresh 2021 lows. Quasimodo support at $1.1243 represents the next (obvious) downside objective on the H4 scale—sitting in between the weekly timeframe’s Fibonacci structure ($1.1237 and $1.1281).

H1 timeframe:

The $1.1391-1.1378 decision point (residing under $1.14) served sellers well early hours yesterday, hauling the currency pair to within striking range of $1.13.

What’s interesting from a technical perspective is that although EUR/USD bears ended Tuesday in the driving seat, short-term momentum appears to be slowing. The relative strength index (RSI) is currently pencilling in bullish divergence (positive momentum: average gains beginning to exceed average losses), following a test of indicator support at 18.00 on Monday. This is, of course, joined by the daily timeframe’s RSI shaking hands with oversold.

Observed Technical Levels:

Short term, bears remain in control according to chart studies.

However, knowing weekly Fibonacci support is nearing between $1.1237 and $1.1281, with H4 Quasimodo support seen at $1.1243, $1.13 on the H1 could stand in as support.

$1.13, nevertheless, warrants caution. A whipsaw through this number (common occurrence in psychological figures) may materialise to bring in the upper edge of weekly support ($1.1281), before buyers attempt to step in.