July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside

July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside, 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 also running into opposition at the lower ledge of nearby supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

Interestingly, July, currently trading +3%, is attempting to overthrow the aforesaid trendline resistance.

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

Daily timeframe:

Thanks to yesterday’s bullish extension, a move that crossed above resistance at 1.1553, market participants are now likely eyeing a 5-wave completion around 1.1669 (where wave 1 equals wave 5). This, therefore, puts forward a bullish presence until reaching the aforesaid level.

Indicator-based traders will also want to note the RSI oscillator recently entered overbought territory.

H4 timeframe:

With the US dollar index dipping through 95.00 Wednesday, EUR/USD run into a resistance area from 1.1628/1.1600 and is, as you can see, currently unwinding lower, indicating a test of demand (prior supply) at 1.1545/1.1518 could come to fruition.

H1 timeframe:

Price embraced 1.16 heading into US trade yesterday, following an earlier push off channel support (prior resistance – 1.1467) during London which delivered enough upside to also haul the RSI into overbought territory.

With 1.16 currently featured as resistance, and the RSI exiting overbought waters, 1.1550 support is located close by, with a breach here unmasking channel support (1.1467) and 1.15.

Structures of Interest:

Noting monthly price trading above trendline resistance, albeit within the parapets of supply, daily price dethroning resistance at 1.1553 and the current trend indicating a northerly course, 1.1550 support on the H1 could be on the watchlist for many traders today for bullish signals.

July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside, 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 has witnessed supply at 0.7029/0.6664, and intersecting long-term trendline resistance (1.0582), give way in recent trading. Technically, this could liberate buyers to as far north as 0.8303/0.8082, a supply zone that aligns closely with trendline resistance (prior support – 0.4776).

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

Daily timeframe:

Since ousting resistance at 0.6931, the level has been featured as support with Wednesday’s price action coming within a stone’s throw away from reaching 0.7197 resistance. Candlestick traders will also note yesterday finished by way of a shooting star candle pattern, considered a bearish signal at peaks.

In terms of the RSI oscillator, the value recently entered overbought territory.

H4 timeframe:

Wednesday saw supply at 0.7158/0.7137 accept a whipsaw through its upper boundary, taking in the lower ledge of supply from 0.7198/0.7179. Technicians will acknowledge the latter also holds daily resistance at 0.7197 within its upper boundary.

Dropping to lower ground today throws light on 0.7102/0.7084, a supply-turned demand area.

H1 timeframe:

Entering US trade on Wednesday, following a shooting star candlestick formation (bearish signal), AUD/USD found its way through 0.7150 into local demand at 0.7118/0.7146. Buyers and sellers, therefore, are seen squaring off between the noted demand and 0.7150 resistance.

Sliding under current demand lands things within close proximity to 0.71 psychological support, whereas toppling 0.7150 resistance, aside from yesterday’s high at 0.7182, could lift the currency pair to as far north as 0.72.

Structures of Interest:

Having noted monthly price climbing through supply at 0.7029/0.6664/trendline resistance, along with the current trend facing northbound, H1 rallying out of demand at 0.7118/0.7146 could be in store today.

Contrary to the above, however, daily price dented the surface of resistance at 0.7197 yesterday and formed a bearish candle signal. This, along with H4 suggesting moves to 0.7102/0.7084, may weigh on bullish strategies above 0.7150 resistance on the H1 and potentially head for 0.71 (also represents the top edge of H4 demand).

July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside, 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:

Brought forward from previous analysis –

Demand at 105.70/106.66 remains in focus on the daily timeframe. Although a reasonably hardwearing zone since early May, buyers appear to be lacking spirit. The previous reaction on June 23, as you can see, failed to reach the 200-day simple moving average at 108.33 before rotating lower, emphasising buyer weakness.

Moves below current demand re-opens the risk of a return to support at 105.01.

H4 timeframe:

Brought forward from previous analysis –

Recent developments on the H4 timeframe reveal price movement to be carving out a consolidation between supply at 107.60/107.42 and demand coming in from 106.39/106.64.

Traders will also note the latter comes with a 161.8% Fib ext. level at 106.67 and is situated within the upper boundary of daily demand from 105.70/106.66.

Outside of the aforesaid range, peaks around 107.77 and the 108.09 level represent resistance, while through demand we can see support at 105.99.

H1 timeframe:

Supply at 107.32/107.24 recently made an entrance, which happens to align closely with trendline resistance (prior support – 106.66) and 61.8% Fib resistance at 107.21.

Recent trade, however, is defending the 100-period simple moving average at 107.12 – a breach of here could see buyers and sellers butt heads at 107 support.

In terms of the RSI momentum oscillator, the value tested levels ahead of overbought territory yesterday and has since turned marginally lower.

Structures of Interest:

Local supply on the H1 at 107.32/107.24, in light of its connecting confluence, is likely to hold price lower and overrun the 100-period simple moving average to approach 107.

Beyond 107, 106.70 support is on the radar. Traders will note the level shares nearby space with H4 demand at 106.39/106.64, which, as underlined above, is plotted inside daily demand at 105.70/106.66.

July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside, 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 durable structure to work with on the monthly timeframe, with the latter recently receiving price action.

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:

Partially altered from previous analysis –

After mingling below the 200-day simple moving average at 1.2698 since July 9, Tuesday squeezed above the aforesaid value and finished considerably off worst levels Wednesday. As a result, price action could work its way back to supply coming in from 1.3021/1.2844.

The RSI is seen closing in on overbought levels.

H4 timeframe:

Wednesday, as you can see, whipsawed to lows at 1.2644, missing two nearby trendline supports (1.2666/1.2259) by a few pips before recovering to unchanged levels.

A pound revival today has the 127.2% Fib ext. level at 1.2783 to target, followed by supply at 1.2851/1.2805.

H1 timeframe:

Despite a brief flicker of activity north of 1.2750 resistance Tuesday, buyers stepped aside Wednesday and allowed price through 1.27, dropping as far south as 1.2650 support into early European trade. US action, however, rejuvenated buyer interest, reclaiming 1.27 and shining light on 1.2750 resistance.

Clearing 1.2750 today brings light to 1.28 resistance, a barrier uniting closely with the underside of H4 supply at 1.2851/1.2805.

Structures of Interest:

Partially altered from previous analysis –

With trade recently nudging into monthly trendline resistance, upside attempts may waver.

On the other hand, crossing the 200-day simple moving average on the daily timeframe is likely to lift the pair to supply at 1.3021/1.2844, a potential location active sellers reside. With this being the case, a 1.2750 breach on the H1 sends across an intraday bullish signal to attempt to reach at least the 127.2% Fib ext. level at 1.2783 on the H4, noted nearby the H4 supply at 1.2851/1.2805 (and 1.28 on the H1).

July 23rd 2020: Euro Tests 1.16 Against the Buck as Recovery Fund Agreement Continues to Fuel Upside, 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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