August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole

August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole, 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 move to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next target. Also worth noting, though, is the primary downtrend (since July 2008) remains intact until 1.2555 is engulfed (Feb 1 high [2018]).

August, as you can see, has been relatively lacklustre, currently up by only 0.5 percent.

Daily timeframe:

Brought forward from previous analysis –

Efforts to extend July’s advance have so far been contained within a rising channel pattern (1.1695/1.1909), in addition to supply at 1.2012/1.1937 also recently making an entrance, extended from May 2018. Trendline support (1.0774) is likely to welcome price movement should a break lower come to pass, while immersing the aforesaid supply favours moves to resistance at 1.2095.

The RSI indicator, since the beginning of August, has drifted lower and exited overbought space, currently circling the 60.00 neighbourhood.

H4 timeframe:

Partially altered from previous analysis –

EUR/USD finished unmoved Wednesday, albeit significantly off worst levels as the DXY tunnelled through 93.00.

Supply at 1.1828/1.1868, while delivering a reasonably solid bearish candle on Monday, has found it difficult to entice any form of conclusive selling. An extension to the upside, moves that topple current supply, tips price for more outperformance to another supply coming in from 1.1953/1.1929.

H1 timeframe:

Upside attempts derived from 1.18 in early European trading Wednesday were capped by the 100-period simple moving average, leading to a whipsaw through the round number to lows at 1.1772.

Heading into the London close, bulls took a swing at moving things higher and eventually came into contact with channel resistance (1.1849). Since then, a retest at the 100-period simple moving average has been seen, with bulls so far displaying intent.

1.1850 resistance is seen to the north of current structure. Brushing aside the latter, throws light on an area of stacked supply between 1.1896/1.1910 and 1.1894/1.1876 – traders will note the upper base houses 1.19.

In terms of the RSI indicator, the value is seen topping under the 60.00 point, an area of intraday resistance.

Structures of Interest:

All in all, this market continues to echo a mild bullish tone at the moment, which could lead to +1.1850 moves today. The rationale behind this thinking is due to monthly price recently penetrating supply, daily action showing room to nudge higher and current H4 supply failing to tempt serious selling.

Moves higher could pull things to the 1.19 vicinity, and with some enthusiasm, maybe even the underside of daily supply at 1.2012/1.1937.

August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole, 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).

Although price has removed trendline resistance, the market’s primary trend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partially altered from previous analysis –

Since mid-June, the pair has been compressing north between two converging trendlines (0.6832/0.7064), in what appears to be a rising wedge.

Price, as you can see, recently tumbled just ahead of supply at 0.7346/0.7282, leading to a test of the rising wedge base. Buyers have responded reasonably well, enough to prompt a mild bullish revival to possibly re-join the aforementioned supply.

A break below the rising wedge, nonetheless, may have dips find initial support around the 0.7067 region.

H4 timeframe:

Partially altered from previous analysis –

Trendline support (0.7076), as you can see, has maintained position, with yesterday lifting to resistance at 0.7237. Should sellers welcome the resistance level today, this could be the early stages of a right shoulder from a head and shoulder’s top formation (0.7241/0.7275).

H1 timeframe:

Despite facing opposition by way of the 0.72 level, intraday bullish pressure from trendline support (prior resistance – 0.7215) elevated AUD/USD above the round number on Wednesday to test supply at 0.7236/0.7222, a clear-cut drop-base-drop zone that unites with channel resistance (0.7207).

H4 resistance at 0.7237 is also positioned a pip above the current supply.

Structures of Interest:

Wednesday’s outlook forecasted a 0.72 break, targeting H1 supply at 0.7236/0.7222. This was a reasonably straightforward setup, having seen the number of times H1 trendline support was retested.

Moving forward, the monthly and daily timeframes exhibit scope to travel higher, while H4 and H1 charts display forms of resistance. Higher timeframes usually take precedence over the lower timeframes, therefore traders should prepare for the possibility of H4/H1 resistance breaks.

August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole, 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, 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:

Partially altered from previous analysis –

Since early last week, buyers and sellers have been squaring off mid-range between supply from 107.58/106.85 and support at 104.62, taken from the monthly timeframe (descending triangle support).

A push north may take on trendline resistance (111.71) and the 200-day simple moving average at 107.97, whereas moves to the downside throws interest on demand at 100.68/101.85, drawn from 2016.

H4 timeframe:

Supply at 106.65/106.43, joined with an ABCD pattern at 106.57 and a 127.2% Fib ext. level at 106.47, sealed upside on Wednesday. Moves lower drove candles back into the range of demand at 105.92/106.16. Clearance of this area may release things to a 61.8% Fib level at 105.67, a common take-profit target out of ABCD configurations. Slipping further will have sellers likely meet with demand at 105.06/105.30 (prior supply).

H1 timeframe:

Yesterday’s sell-off from H4 supply, despite finding support off 106.19, modestly surpassed the 106 level in recent trading. Technicians will also note here we’re taking on trendline support (105.10) and the 100-period simple moving average.

Territory below here points to 105.50 support, though the 61.8% Fib level on the H4 timeframe at 105.67 could hinder downside (marked as local support on the H1 in yellow).

With respect to the RSI value, the indicator is seen bottoming ahead of oversold space.

Structures of Interest:

Intraday, technical evidence suggests sellers may look to strengthen their grip today, particularly if we clear H1 trendline support. Intraday sellers have the 61.8% Fib level on the H4 timeframe at 105.67 to target, with an elbow lower potentially pushing for 105.50 on the H1.

However, do remain aware of where we’re trading from on the bigger picture: monthly descending triangle support at 104.62, with room to move higher on the daily timeframe.

August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole, 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) vacating its position.

Despite the primary trend facing lower since early 2008 (unbroken until 1.4376 gives way – April 2 high [2018]), the break of current trendline resistance could still have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.

August currently trades higher by 1 percent.

Daily timeframe:

Brought forward from previous analysis –

Resistance at 1.3201, along with a 161.8% Fib ext. level at 1.3264, remains in play on the daily timeframe, welcoming price action last week. Note we also have another 161.8% Fib ext. level at 1.3408 to work with in the event of moves higher.

1.3021/1.2844 is stationed nearby as demand, with a violation uncovering the 200-day simple moving average at 1.2722.

As you can see, although we’ve recorded back-to-back gains in recent trading, buyers and sellers still emphasise an indecisive tone right now. On one side, sellers are defending the aforesaid structures, while on the other side of the field buyers appear eager to extend the immediate trend, set in March.

H4 timeframe:

Tuesday scored gains after bottoming ahead of channel support (1.3064), filtered closely with a trendline support (1.2981), with Wednesday extending to the upside and closing within close proximity of channel resistance (1.3267), arranged just ahead of supply at 1.3301/1.3273, taken from December 2019.

H1 timeframe:

Following a brief phase of consolidation off 1.3150 resistance and the 100-period simple moving average, GBP/USD bulls swung to the upside and recently passed through 1.32 resistance.

As 1.32 holds as support, we have trendline resistance (1.3267) visible nearby, followed by 1.3250 resistance. Breaking lower, on the other hand, positions trendline support (1.3053) in view, as well as demand coming in from 1.3125/1.3158 and the 1.3150 support.

Indicator-based traders will also note the RSI is circling just south of its overbought level.

Structures of Interest:

With monthly price suggesting the immediate trend (seen on the daily timeframe) still has gas left in the tank, along with H4 and H1 timeframes posting space to marginally push higher, intraday bullish strategies off 1.32 could be seen today. The caveat, of course, are the daily resistances.

August 27th 2020: DXY Dives Under 93.00 Ahead of Jackson Hole, FP Markets

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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.




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