August 18th 2020: Additional USD Softness Throws DXY Under 93.00

August 18th 2020: Additional USD Softness Throws DXY Under 93.00, FP Markets

EUR/USD:

Monthly timeframe:

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

The euro nudged to a third successive monthly gain against the US dollar in July, adding nearly 5 percent. The move toppled long-term trendline resistance (1.6038) and made contact with the upper border of supply from 1.1857/1.1352. This argues a trend change to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next upside target. Also worth pointing out, though, is the primary trend remains intact, underlining a southerly course since July 2008.

August currently trades modestly higher, up by 0.80 percent.

Daily timeframe:

Since closing out July, buyers and sellers have been squaring off at the underside of an ABCD bearish pattern at 1.1872 (a simple harmonic configuration), while simultaneously feeding off local support around 1.1695 (Aug 3 low).

Swarming 1.1695 unmasks trendline support (1.0774) as well as support at 1.1553. In the event sellers fail to hold 1.1872, nevertheless, supply at 1.2012/1.1937 is positioned close by.

In reference to the RSI indicator, we are nearing overbought territory once again after a fleeting move to the 60.00 region.

H4 timeframe:

Monday finished higher for a fifth successive day, testing the resolve of sellers inhabiting supply from 1.1895/1.1862, a rally-base-drop formation. This follows Friday’s recovery out of demand at 1.1771/1.1794, a decision point to topple the 1.1808 high (August 11).

If the US dollar index, or more commonly referred to as the DXY, continues navigating terrain under 93.00, EUR/USD pushing for supply at 1.1938/1.1909 is an achievable feat today.

H1 timeframe:

Monday’s direction hauled intraday candles above resistance at 1.1863 heading into US trading, testing a rally-base-drop supply zone at 1.1883/1.1875.

The 1.19 level lies in wait above current supply, whilst a break unearths an ABCD pattern at 1.1925. It should also be noted the 100-period simple moving average firmly points to the upside, currently trading around 1.1810.

The RSI value, despite Monday’s move to higher levels, remains depressed beneath its overbought structure.

Structures of Interest:

Monthly price remains on reasonably firm footing as the pair wrestles the upper boundary of fragile supply at 1.1857/1.1352. Conversely, until the daily ABCD resistance at 1.1872 and neighbouring daily supply at 1.2012/1.1937 relinquishes position, buying is likely to be hindered.

Daily ABCD structure at 1.1872 is placed within H4 supply at 1.1895/1.1862 and three pips south of H1 supply at 1.1883/1.1875. Collectively, this may guide H1 action back under 1.1863 support today.

The 1.19 level could also offer a possible ceiling, fuelled on the back of buy-stop liquidity taken from above the current H4 supply’s upper edge at 1.1895 (and possible test of H4 supply nearby at 1.1938/1.1909 to draw in fresh selling).

August 18th 2020: Additional USD Softness Throws DXY Under 93.00, FP Markets

AUD/USD:

Monthly timeframe:

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

May’s extension, together with June and July’s follow-through, witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582) abandon its position. Concluding July higher by 3.5 percent, buyers appear free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

Despite removing trendline resistance, the market’s primary trend still points south, demonstrating a series of lower lows and lower highs since mid-2011.

Daily timeframe:

The August 7 response from supply at 0.7264/0.7224, by way of a bearish outside day reversal (stationed underneath another supply at 0.7346/0.7282), proved insignificant last week as candle movement entered a stationary phase. Monday, nonetheless, had buyers strive for higher territory and re-join supply at 0.7264/0.7224.

As a result, the technical landscape on the daily timeframe remains concentrated around the aforesaid supply today, echoing the possibility of a pop to 0.7346/0.7282. Yet, sellers entering the frame could reignite interest in support at 0.7067.

With reference to the RSI indicator, the value has been toying with the 60.00 level since August 7, though yesterday observed a peak at 64.00, edging closer to 70.00 overbought status.

H4 timeframe:

An early rejection off the lower base of supply at 0.7222/0.7192 proved fruitless, with price soon after crossing paths with an ABCD bearish pattern at 0.7210 and surpassing the upper edge of the noted supply, consequently connecting with nearby supply at 0.7246/0.7227.

The collective structure could see a downswing unfold today, with trendline support (0.6832) positioned as an initial target.

H1 timeframe:

H4 supply at 0.7246/0.7227 also deserves notice on the H1 timeframe Monday, addressed as trade made its way into the US session. The move pulled the RSI indicator back up to overbought, currently coming off mild bearish divergence.

Technical elements also reveal 0.72 psychological support sited close by, arranged just ahead of demand at 0.7181/0.7191, an area where buyers made the decision to topple 0.72 to the upside.

Structures of Interest:

Monthly price sweeping through supply and associated trendline resistance has likely aroused interest from longer-term buyers.

Buyers are set to test the mettle of supply at 0.7264/0.7224 on the daily timeframe, with a break throwing light on supply at 0.7346/0.7282.

The ABCD bearish pattern on the H4 at 0.7210, along with supply at 0.7246/0.7227, sends across a bearish vibe today. This may curve H1 candle action into 0.72, although possibly bringing with it a whipsaw to collect fresh bids out of H1 demand at 0.7181/0.7191. Moves out of the aforesaid demand, back above 0.72, may promote a bullish cue in light of where we’re trading from on the monthly timeframe.

 August 18th 2020: Additional USD Softness Throws DXY Under 93.00, FP Markets

USD/JPY:

Monthly timeframe:

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

Since kicking off 2017, USD/JPY has been carving out a descending triangle pattern between 118.66/104.62.

April, May and June were pretty uneventful, with the latter wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, sunk nearly 2 percent, consequently testing the lower boundary of the descending triangle, while August currently trades higher by 0.10 percent.

Areas outside of the noted triangle can be seen at supply from 126.10/122.66 and demand coming in at 96.41/100.81.

Daily timeframe:

Friday’s response out of supply from 107.58/106.85 invited additional bearish sentiment Monday, erasing more than 0.5% on the day.

A drop-base-rally demand area at 105.25/105.71 is perhaps in the crosshairs today, whereas further downside could have sellers pursue support at 104.62, from the monthly timeframe.

The RSI value also recently gave up its 50.00 centreline to the downside.

H4 timeframe:

USD/JPY sweeping to lower levels established a clear drop-base-drop supply zone at 106.65/106.43, and addressed the lower boundary of demand coming in from 105.92/106.16. Further declines today shines light on demand at 105.06/105.30 (prior supply), an area which contained downside at the beginning of August and fashioned a near-200 pip advance.

H1 timeframe:

Early US trading nosedived into 106 support Monday, after dethroning demand at 106.49/106.35 and support at 109.19. Consequently, this also dragged the RSI value into deep oversold terrain.

Buying has so far proven lacklustre off 106, indicating buyers and sellers may butt heads at demand from 105.80/105.63 today.

Structures of Interest:

Coming from monthly support at 104.62, the reaction from daily supply at 107.58/106.85 is surprising.

The next daily demand at 105.25/105.71 is located under H4 demand at 105.92/106.16. Notably, H1 demand at 105.80/105.63 resides around the upper edge of the current daily demand. This, therefore, points to a run of stops beneath the 106 level and H4 demand at 105.92/106.16 for a potential rotation out of H1 demand, fuelled by sell-stops and daily buying.

August 18th 2020: Additional USD Softness Throws DXY Under 93.00, FP Markets

GBP/USD:

Monthly timeframe:

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

GBP/USD finished higher by 5.5 percent in July, leading to long-term trendline resistance (1.7191) abandoning its position.

Despite the primary trend facing lower since early 2008, the break of current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.

August has so far offered little movement, trading higher by 0.20% as of current price.

Daily timeframe:

Brought forward from previous analysis –

After squeezing through the 200-day simple moving average (July 21), currently fluctuating around 1.2712, and toppling supply at 1.3021/1.2844, price action has spent the majority of August attempting to find support off the latter as a demand. As you can see, action was somewhat muted last week finishing most sessions off best levels. To the upside, resistance at 1.3201 is seen as the next point of interest, located south of a 161.8% Fib ext. level at 1.3264.

The RSI oscillator seems unwilling to commit to the downside, despite marginally exiting overbought levels in recent trading.

H4 timeframe:

Brought forward from previous analysis –

Since making contact with demand at 1.2945/1.2989 around the beginning of August, formed as part of a stacked demand area with 1.2948/1.2910 (and aligning trendline support [1.2259]), price action has emphasised a somewhat choppy tone.

Recently, however, a small rising wedge has emerged between 1.3005 and 1.3124, a chart formation that may remain in motion until we cross paths with daily resistance at 1.3201.

H1 timeframe:

Demand at 1.3062/1.3079 proved itself Monday (an area where buyers made the decision to initially brush through 1.31 resistance), withstanding a number of downside attempts during European trading. Technicians will also note the 100-period simple moving average joining current demand.

Anyone caught trading around the 1.31 level yesterday suffered. Supply at 1.3150/1.3127 also remains a prominent force on the H1 timeframe.

Structures of Interest:

Largely brought forward from previous analysis –

Monthly breaking trendline resistance emphasises an optimistic tone for GBP. Daily price, on the other hand, reveals buyers are lacking at demand from 1.3021/1.2844 (prior supply).

The rising wedge forming on the H4 timeframe could eventually trigger a mild reversal south, should its lower limit give way. Defending the lower boundary of the rising wedge, however, is demand on the H1 at 1.3062/1.3079.

On account of monthly price suggesting higher levels, daily price trading at demand (albeit echoing a fragile tone), H4 fading the lower base of a rising wedge (which in itself is a trendline support) and H1 testing demand at 1.3062/1.3079, buyers could continue to hold off the aforesaid H1 demand today and attempt to penetrate H1 supply at 1.3150/1.312, to approach the 1.32 level on the H1 (and daily resistance at 1.3201).

August 18th 2020: Additional USD Softness Throws DXY Under 93.00, FP Markets

DISCLAIMER:

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.




Start Trading
in Minutes

bullet Access 10,000+ financial instruments
bullet Auto open & close positions
bullet News & economic calendar
bullet Technical indicators & charts
bullet Many more tools included

By supplying your email you agree to FP Markets privacy policy and receive future marketing materials from FP Markets. You can unsubscribe at any time.




Source - cache | Page ID - 22336

Get instant Updates in Telegram