August 7th 2020: DXY Hesitant at Two-Year Lows

August 7th 2020: DXY Hesitant at Two-Year Lows, 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 punched out 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.

Daily timeframe:

Partially altered from previous analysis –

After a fleeting move to lows at 1.1695, EUR/USD switched tracks and readdressed the ABCD bearish pattern at 1.1872 Wednesday, situated ahead of supply at 1.2012/1.1937. Thursday, however, wrapped up pretty much stationery, putting forward an indecisive stance.

Logically, with monthly price echoing a one-sided market to the upside, 1.1872 is unlikely to offer much downside with daily supply calling for attention.

Should sellers regain consciousness, support at 1.1553 is on the radar as the initial point of interest. This is, of course, assuming Monday’s low at 1.1695 gives way.

With respect to the RSI indicator, the value topped around 80.00 last week and remains within overbought terrain heading into Friday’s action.

H4 timeframe:

Supply at 1.1938/1.1909 remains in motion on the H4 timeframe, an area glued to the underside of daily supply at 1.2012/1.1937.

Downside from the aforesaid H4 supply, as you can see, met support at 1.1841, prompting a notable bullish candle heading into the close. Under the current support we can see trendline support (1.1254) in the firing range, closely tailed by demand plotted at 1.1682/1.1716.

H1 timeframe:

Heading into the early hours of European trading Thursday, price action delivered a notable shooting star candlestick formation, movement that drove through offers at the 1.19 level, positioned under resistance at 1.1936.

Despite Thursday bottoming at 1.1818, support is still somewhat limited on this timeframe until the 1.18 level and 100-period simple moving average, currently circling 1.1807.

Structures of Interest:

Partially altered from previous analysis –

The monthly timeframe urges traders to consider the possibility of a long-term trend change after overrunning trendline resistance. Clearing monthly supply at 1.1857/1.1352 would help confirm this. This, along with daily price pushing out a bullish tone, could see daily candles brush aside 1.1872 and reach for supply at 1.2012/1.1937.

H4 retested (and held) support at 1.1841, suggesting supply at 1.1938/1.1909 is perhaps fragile. This could indicate a 1.19 break to the upside today, with H1 resistance at 1.1936 plotted as an initial intraday target (aligns with the lower ledge of daily supply at 1.2012/1.1937).

August 7th 2020: DXY Hesitant at Two-Year Lows, 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) relinquish ground. Concluding July higher by 3.5 percent, buyers appear free to explore as far north as 0.8303/0.8082, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

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

Daily timeframe:

Partially altered from previous analysis –

The technical picture reveals price holding above support at 0.7067, with the pair currently crossing paths with supply at 0.7264/0.7224, stationed underneath another supply at 0.7346/0.7282. The latter is formed by way of a demand-turned supply.

With reference to the RSI indicator, we have been toying with overbought status since July 20, reluctant to break 60.00 to the downside.

H4 timeframe:

Wednesday’s whipsaw above local highs (July 31) and test of supply at 0.7246/0.7227 failed to offer sellers much to work with on Thursday. Price, as you can see, rebounded strongly into the US session and redirected the pair back to within the parapets of the aforesaid supply.

Breaking to higher ground today throws light on supply at 0.7300/0.7282, an area associated with daily supply at 0.7346/0.7282.

H1 timeframe:

Leaving the 100-period simple moving average untouched, intraday price on Thursday travelled back above 0.72 and threw the candles into supply at 0.7246/0.7227 (H4 zone). Removing current supply demonstrates a reasonably clear path to 0.73.

With respect to the RSI indicator, the value is seen curving to the downside ahead of overbought water.

Structures of Interest:

Partially altered from previous analysis –

Monthly price sweeping through supply and associated trendline resistance has likely aroused interest from longer-term traders. Daily price also recently held support at 0.7067 and is currently working its way through supply at 0.7264/0.7224.

Higher timeframe impetus could swing H4 above supply at 0.7246/0.7227 today, with intraday buyers potentially taking aim at the lower ledge of H4/daily supply from 0.7282 and 0.73 on the H1.

August 7th 2020: DXY Hesitant at Two-Year Lows, 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 current descending triangle.

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:

Brought forward from previous analysis –

Having monthly support at 104.62 make a show, daily price recently engaged with supply from 105.70/106.66, with Monday settling by way of a reasonably attractive shooting star candlestick pattern, considered a bearish signal at peaks. The remainder of the week thus far has been relatively lacklustre – Wednesday and Thursday essentially ended unmoved.

Eliminating 105.70/106.66, therefore, may be in store, pulling in the next available supply close by at 107.58/106.85.

H4 timeframe:

Since 105.68 support let go, the level has served well as an intraday resistance. Equally, demand at 105.06/105.30 (prior supply), together with median line support (Andrew’s Pitchfork – 108.16), caps downside.

Outside of the aforesaid area, resistance derived from the Andrew’s Pitchfork (107.54) is on the radar, while under 105.06/105.30 points the market back to monthly support at 104.62.

H1 timeframe:

The H1 chart offers a clearer view of the ranging action on the H4 timeframe, sandwiched between supply at 105.80/105.63 and a demand coming in from 105.37/105.21 (prior supply). Merged in between these two areas, we also have the 105.50 level, with the 100-period simple moving average circling the upper border of current supply.

Outside of the aforesaid areas, technical eyes are likely on 105 and 106.

Structures of Interest:

With monthly support at 104.62 making a show in recent days, coupled with a lack of selling interest being seen from daily supply at 105.70/106.66, this puts forth a possible break higher. Unfortunately, scope for manoeuvre beyond H1 supply at 105.80/105.63 is limited at 106 and resistance derived from the Andrew’s Pitchfork (107.54) on the H4.

Beyond 106, however, price is tipped to press for at least H1 supply at 106.49/106.35, glued to the underside of H4 supply at 106.39/106.64.

August 7th 2020: DXY Hesitant at Two-Year Lows, 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) being absorbed. This follows support at 1.1904/1.2235 withstanding downside attempts during April and May.

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

Daily timeframe:

Brought forward from previous analysis –

After squeezing through the 200-day simple moving average and toppling supply at 1.3021/1.2844, price action revisited the latter as a demand and fuelled modest upside Wednesday and Thursday.

Resistance at 1.3201, sited ahead of the 161.8% Fib ext. level at 1.3264, therefore, could welcome price movement today.

The RSI oscillator, for those who follow momentum indicators, will note the value continues to toy with the 80.00 overbought level.

H4 timeframe:

Partially altered from previous analysis –

Following Tuesday’s impressive recovery from demand at 1.2945/1.2989 (part of a stacked demand [1.2948/1.2910]), and recent follow-through buying, daily resistance at 1.3201 is, as underscored above, now in sight.

H1 timeframe:

Having seen H1 unwind back through 1.3150 in recent hours, focus shifts to the 1.31 level. Traders will note this barrier shares space with a 38.2% Fib level at 1.3108 and the 100-period simple moving average, currently trading at 1.31.

Conquering 1.3150 today moves the 1.32 level into the setting, which, as we already know, represents daily resistance parked at 1.3201.

Structures of Interest:

Monthly breaking trendline resistance leads an optimistic tone for GBP this month.

A moderately positive stance also recently took shape following a retest at daily demand from 1.3021/1.2844, though resistance nears at 1.3201.

Moves to 1.31 today may spark interest to the upside on the H1, owing to surrounding confluence. A H1 close above 1.3150 is likely to be equally interesting.

Those considering longs at 1.31 (assuming a retest materialises), a break of 1.3150 is likely to serve as a breakeven trigger. Fresh intraday buyers may also make a show north of 1.3150. Regardless of the entry, 1.32 serves as an initial target.

August 7th 2020: DXY Hesitant at Two-Year Lows, 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 - database | Page ID - 22348

Get instant Updates in Telegram