July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone

July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone, FP Markets

EUR/USD:

Monthly timeframe:

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

The month of May, as you can see, recovered off worst levels out of demand from 1.0488/1.0912 and closed firm. This prompted an extension in June to highs at 1.1422, adding 1.2%, despite running into opposition at the lower ledge of nearby supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

July is currently toying with the aforesaid supply, albeit trading higher by 1%.

With reference to the primary trend, the pair has exhibited lower peaks and troughs since 2008.

Daily timeframe:

Partially altered from previous analysis –

The month of June observed EUR/USD address a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern. The base is comprised of an 88.6% Fib level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 (red oval).

It’s typical, in the case of bearish formations, to see traders sell PRZs and place protective stop-loss orders above the X point (1.1495). Common take-profit targets fall in at the 38.2% and 61.8% Fib levels (of legs A/D) at 1.1106 and 1.0926, respectively.

A mild bid has been observed since June 19 after reaching 1.1168, suggesting a second retest at the aforesaid PRZ.

H4 timeframe:

Monday fed price to resistance at 1.1348, a level that appears to be slacking given the near test of supply at 1.1415/1.1376 (closely joined by channel resistance [1.1348]).

Softening under 1.1348 today calls for a potential test at trendline support (1.1185).

H1 timeframe:

It was an overall positive day for EUR/USD Monday as the DXY pounced on lows at 96.27.

We reached highs at 1.1374, though tailed off into the second half of US trade and crossed paths with 1.1350.

We have demand nearby at 1.1323/1.1338, a particularly interesting area as this is where an important decision was made to break 1.1350 to the upside. As such, this zone could call for some control today and bait buyers back into the fight.

Indicator-based traders may also wish to acknowledge the RSI oscillator is currently producing bearish divergence out of overbought territory.

Structures of Interest:

Monthly supply at 1.1857/1.1352, neighbouring long-term trendline resistance and the daily PRZ between 1.1462/1.1395 presents a formidable ceiling.

H4 also engages with levels just ahead of supply at 1.1415/1.1376. On the contrary, however, we have H1 approaching demand under 1.1350 at 1.1323/1.1338.

Going on the above, it would appear sellers have the advantage and the aforesaid H1 demand may struggle. As such, a break of the demand today could draw in intraday sellers to the 1.13 level.

July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone, 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’s follow-through, has supply at 0.7029/0.6664 echoing a vulnerable tone in July, particularly as intersecting long-term trendline resistance (1.0582) demonstrates signs of weakening.

Regarding the market’s primary trend, however, a series of lower lows and lower highs have been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

AUD/USD ousted resistance at 0.6931 at the beginning of last week, with the latter now featured as support.

Despite the lack of buyer intent so far, the break to the upside shifts focus towards two nearby trendline resistances (prior supports – 0.6744/0.6671); a violation here unmasks another resistance at 0.7197.

With respect to support under 0.6931, 0.6755 is on the radar, as well as the 200-day simple moving average, currently circulating the 0.6675 region.

H4 timeframe:

Partially altered from previous analysis –

The DXY recovered off lows amid late trade Monday, directing AUD/USD lower.

In terms of technical areas, however, we remain pretty much unchanged.

Formed from June 10 to July 1, H4 established a (bullish) pennant pattern between 0.7064/0.6776, considered a continuation pattern among chart pattern enthusiasts. The breakout witnessed at the beginning of July unearthed a buy signal, though heading into mid-month price has entered a ranging phase (blue) between 0.6925/0.6999.

If we remain above 0.6931 on the daily timeframe, breaking above the aforesaid range is a possibility, bound for nearby supply at 0.7058/0.7029.

H1 timeframe:

Partially altered from previous analysis –

The H4 range underlined above at 0.6925/0.6999 is contained by supply at 0.7003/0.6987 (and 0.70), and demand from 0.6914/0.6926.

As such, these areas are worth keeping a tab on for potential reversal trades as long as the aforesaid H4 range remains intact.

Structures of Interest:

Monthly price appears to be squeezing sellers out of the market. Despite this, daily buyers stress a brittle tone around support at 0.6931.

All the while daily price respects 0.6931, the lower edge of the current H4 range will continue to hold at 0.6925, bolstered by H1 demand at 0.6914/0.6926.

As a consequence, thanks to recent selling, buyers may hone in on the H1 demand today. Prudent traders, nevertheless, will also prepare for the possibility of a whipsaw forming to the 0.69 level.

July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone, 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 and May were pretty uneventful, with June also wrapping up indecisively in the shape of a neutral doji candlestick pattern.

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 –

Having observed a mild downbeat tone over the course of last week, price, as you can see, eventually made its way back to demand at 105.70/106.66 on Friday. This helped entice buyers into the market Monday and snap a three-day losing streak.

Assuming an extension to the upside, the 200-day simple moving average at 108.36, as well as the 108.16 high (July 1), are watched resistances.

H4 timeframe:

Partially altered from previous analysis –

Friday’s decline threw light on demand at 106.39/106.64, an area joined closely with channel support (107.36) and a 161.8% Fib ext. level at 106.67. The aforesaid demand encouraged a round of buying into the second half of Friday’s session, generating a bullish engulfing candle.

Follow-through buying took hold Monday, funding a move into supply at 107.39/107.20 that intersects with channel resistance (108.16). Breaking here will likely lead us to peaks at 107.78.

H1 timeframe:

Despite demand at 106.71/106.80 having its lower extreme penetrated early US Friday, buyers were unfazed Monday. 107 resistance put up little fight, consequently handing traders a supply from 107.36/107.18 (as well as the 100-period simple moving average) and pulling the RSI value into overbought territory (bearish divergence).

So far, sellers have not really warmed to the aforesaid supply, with buyers attempting to establish a base above the 100-period simple moving average. The next available resistance is set around the 107.50 point.

Structures of Interest:

Daily demand at 105.70/106.66 recently re-joined the fight, placing buyers in a brighter light.

H1 supply at 107.36/107.18 appears to be weakening, despite H4 supply also in play at 107.39/107.20.

Buyers are gaining confidence, thanks to daily demand. In addition to this, H1 holds above its 100-period simple moving average. This may see intraday upside unfold off the noted SMA today, targeting at least 107.50.

July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone, FP Markets

GBP/USD:

Monthly timeframe:

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

Support at 1.1904/1.2235 and long-term trendline resistance (1.7191) offers clear structure on the monthly timeframe, with the latter prompting a notable upper shadow in June.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008, placing 1.1904/1.2235 support in a vulnerable position.

Daily timeframe:

Heading into the second half of last week, buyers and sellers clashed just south of the 200-day simple moving average at 1.2690, with Monday coming forward and chalking up a bearish outside day.

This throws light back on demand at 1.2192/1.2361, whereas a push above the aforesaid SMA could land things at supply from 1.3021/1.2844.

H4 timeframe:

Partially altered from previous analysis –

Leaving supply at 1.2720/1.2682 behind, traders observed Monday dethrone channel support (1.2257) and retest the broken level as resistance. The next available demand rests at 1.2462/1.2506, standing just ahead of support at 1.2453.

H1 timeframe:

1.26 and the 100-period simple moving average, despite an early push to highs at 1.2638 in early US trade Monday, failed to provide much impetus. This, in the shape of three dominant bearish candles, led price back to 1.2550, which, as you can see, holds as we write. The move also dragged the RSI into oversold terrain.

Should 1.2550 hold, intraday traders will be watching local trendline resistance (1.2666). Below 1.2550 we do not see much stopping the pair from crossing paths with 1.25.

Structures of Interest:

Candlestick action on the daily timeframe emphasises a potential bearish tone under the 200-day simple moving average at 1.2690. This could weigh on bullish attempts off 1.2550. Alternatively, it may support bearish strategies from local H1 trendline resistance (1.2666).

July 14th 2020: DXY Considerably off Worst Levels Amid Downbeat Risk Tone, 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.




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