Short-term FX Technical Strategy (26 Apr 2022)

EUR/USD – Coming close to key medium-term support, risk of minor corrective bounce

The EUR/USD has shaped the expected decline and hit the 1.0720 support as per highlighted in our previous report dated on 21 April (printed an intraday low of 1.0695 on 25 April US session). Right now, price actions are just hovering right above the 1.0665/0640 key medium-term pivotal support defined by a confluence of elements (such as the lower boundary of the major descending channel from May 2021 high & the lower boundary of the minor descending channel from 31 March 2022 high).

In addition, the hourly RSI oscillator has flashed a bullish divergence signal at its oversold region which indicates that the recent short-term downside momentum of price actions has started to abate. Watch the 1.0640 key medium-term pivotal support for a potential minor mean reversion corrective bounce towards 1.0770 intermediate resistance and a break above it may see an extension towards 1.0850 next.  

On the other hand, a break with a 4-hour close below 1.0640 invalidates the minor corrective bounce scenario for a continuation of the impulsive down move towards the next supports at 1.0570 and 1.0500.

GBP/USD – Overextended decline condition, risk of minor corrective bounce

The GBP/USD has declined as expected and hit the 1.2930/2910 support as per highlighted in our previous report dated on 21 April. Thereafter, it plummeted further to print a low of 1.2695 on 25 April US session, a total decline of -359 pips from 21 April 2022 high, the steepest pace of decline recorded since the recent minor downtrend phase that started from 23 March 2022 high of 1.3293.

The hourly RSI oscillator has just staged an exit from its oversold region after it printed an extreme oversold level of 19% on 25 April. Flip to a bullish bias above 1.2930/2910 key short-term pivotal support for a potential minor mean reversion corrective bounce towards the 1.2840/2860 intermediate resistance.

However, a break with an hourly close below 1.2910 invalidates the minor corrective bounce scenario for a continuation of the impulsive down move towards the next supports 1.2550 and 1.2485 (61.8% Fibonacci retracement of the up move from 20 March 2020 low to 1 June 2021 high).

USD/JPY – 126.30/125.80 remains the key support to watch

The USD/JPY has trade sideways between 129.40 and 127.60. No change, watch the 126.30/125.80 key short-term pivotal support to maintain the bullish bias and a break above 129.40 reinforces another potential impulsive move towards the next resistance at 130.65 with a possible maximum limit at 132.00.  

On the other hand, an hourly close below 125.80 opens up scope for a medium-term (multi-week) corrective decline scenario towards the next supports at 124.70 and 124.15 in the first step.

AUD/USD – Overextended decline condition, risk of minor corrective bounce

The AUD/USD has declined as expected and hit the 0.7330 support as per highlighted in our previous report dated on 21 April. Thereafter, it plummeted further and broke below the medium-term ascending channel support in place since 28 January 2022 to print a low of 0.7132 on 25 April US session.

The hourly RSI oscillator has exited from its oversold region and managed to surpass above its corresponding descending resistance which indicates that the recent short-term downside momentum of price actions has started to abate. Flip to a bullish bias above 0.7095 key short-term pivotal support for a potential minor mean reversion corrective bounce towards the 0.7345 intermediate resistance and a break above it sees an extension towards 0.7340 next.

On the flipside, a break with an hourly close below 0.7095 invalidates the minor corrective bounce scenario for a continuation of the impulsive down move towards the major support of 0.7000 (major swing lows area of November/December 2021 & January/February 2022).

Time stamped: 26 Apr 2022 at 7.30am SGT

Source: TradingView