June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60

June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60, FP Markets

EUR/USD:

Monthly timeframe:

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

March, evident from the monthly chart, left behind a long-legged doji indecision candle, with its extremes crossing paths with heavyweight supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]) and demand at 1.0488/1.0912.

April spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal. May, as you can see, recovered off worst levels and wrapped up a few pips shy of monthly highs, with June taking aim at 1.1857/1.1352.

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

Daily timeframe:

Partially altered from previous analysis –

The euro continued to march northbound on Wednesday, up more than 65 pips, or 0.6%, against the US dollar.

Recording its seventh successive daily gain, motivated on the back of persistent USD weakness, price extended space north of the 200-day simple moving average at 1.1011 and secured position a few pips off supply at 1.1323/1.1268. Technicians will note this area unites with trendline resistance (1.0879), a 127.2% Fib ext. level at 1.1286 and 78.6% Fib ret level from 1.1310.

Indicator-based traders will also note the RSI entered overbought terrain.

H4 timeframe:

As you can see from the chart, the euro slipped amid European trading Wednesday, dipping to demand at 1.1189/1.1158 (prior supply). Dollar weakness prompted a bid from the aforesaid area, subsequently throwing light on stacked supply between 1.1368/1.1338 and 1.1360/1.1316.

H1 timeframe:

Early US latched onto a healthy bid, subsequently toppling the 1.12 handle and leaving behind a particularly interesting area of demand at 1.1199/1.1212. Selling pressure off 1.1250 will likely be sufficient to hurl the H1 candles to 1.1199/1.1212 today which, technically speaking, exhibits strength, enough to perhaps drive moves to supply from 1.1322/1.1286.

Structures of Interest:

Dipping to H1 demand at 1.1199/1.1212 offers a high-probability reversal zone. Upside targets here include the 1.1250 point, the daily supply at 1.1323/1.1268 and possibly H1 supply at 1.1322/1.1286 (essentially glued to the upper range of the noted H4 supply).

June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60, 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 and June’s early rally has, as you can see, landed monthly flow within the parapets of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

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

Daily timeframe:

Elevated on the back of upbeat risk sentiment, price action addressed resistance at 0.6931 yesterday, wrapping up the day off best levels at 0.6982, a touch under supply at 0.7032/0.6992.

Dips from current structure may see buyers and sellers butt heads at support from 0.6755, sited just ahead of the 200-day simple moving average at 0.6657.

It may also be worth acknowledging the RSI oscillator stepped foot in overbought terrain.

H4 timeframe:

Early trade Wednesday brought in supply from 0.7003/0.6983, pressuring the pair towards demand at 0.6827/0.6858 (prior supply) heading into the US session. Both areas remain on the hit list today, though it may be worth pencilling in demand posted at 0.6773/0.6814, an area covering ground under current demand.

H1 timeframe:

The Aussie dollar dipped a toe into sell-stop liquidity under 0.69 against the US dollar Wednesday, with buyers making their debut off demand at 0.6841/0.6867 (holds 0.6850) and reclaiming 0.69+ status by the day’s end. Additional bullish sentiment today may lean towards the widely watched round number 0.70.

Structures of Interest:

With monthly trendline resistance in motion, intersecting with monthly supply at 0.7029/0.6664, sellers are tipped to weigh on upside momentum.

0.70 on the H1 timeframe appeals as notable resistance, holding within the walls of daily supply at 0.7032/0.6992 and also H4 supply at 0.7003/0.6983.

Alternatively, intraday buyers may find use in 0.69 as support today, albeit open to a possible whipsaw back into H1 demand at 0.6841/0.6867.

June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60, 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 busy carving out a descending triangle pattern between 118.66/104.62. The month of March concluded by way of a long-legged doji candlestick pattern, ranging between 111.71/101.18, with extremes piercing the outer limits of the aforementioned descending triangle formation. April was pretty uneventful, ranging between 109.38/106.35. May also remained subdued, ranging between 108.08/105.98.

Areas outside of the noted pattern 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 registering a top from 109.38 at the beginning of April, USD/JPY moulded a falling wedge pattern, which had its upper limit breached on May 11 in strong fashion, boosted by demand at 105.70/106.66. The take-profit target out of the pattern, traditionally measured by taking the value of the base and adding this to the breakout point (purple), sets an upside objective of around 109.30.

As you can see, after dethroning the 200-day simple moving average at 108.35 on Tuesday and extending gains Wednesday, we are within touching distance of completing the falling wedge pattern.

Indicator-based technicians will also note the RSI indicator nears overbought waters.

H4 timeframe:

Risk-on flows rejuvenated USD strength against the safe-haven Japanese yen in recent movement, placing a question mark on supply at 108.87/108.48. The upper edge, as you can see, has been tested, potentially charting the way towards another layer of supply at 109.65/109.24.

H1 timeframe:

Upside refreshed weekly highs at 108.98 on Wednesday, pulling the H1 candles out of a bullish pennant configuration, established from a high of 108.84 and a low coming in from 108.42. Assuming we dethrone 109, the pennant’s take-profit target, measured by taking the preceding move and adding this value to the breakout point, will be in sight at 1.10 (blue arrows).

Structures of Interest:

A break of 109 is likely on the cards, albeit resistance may enter play around the 109.30 region off the daily falling wedge take-profit target, held within the lower range of H4 supply at 109.65/109.24.

As a result of the above analysis, breakout buyers may find use in the space above 109, though most will contemplate reducing risk to breakeven at around 109.30.

June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60, 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 remains in motion as we transition into June. Neighbouring resistance, should we see further recovery, can be found in the form of a trendline (1.7191). A violation of support, nevertheless, puts forward a 127.2% Fib ext. level at 1.1297.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.

Daily timeframe:

Brought forward from previous analysis –

GBP/USD retained its underlying bid Wednesday, latching onto its fifth successive gain, albeit in the shape of slowing momentum.

The pound’s days in the sun may be numbered, having seen price nearing supply at 1.2649/1.2799 (prior demand), an area aligning with the 200-day simple moving average at 1.2663.

H4 timeframe:

Resistance at 1.2624 had light thrown its way on Wednesday as the candles close in on the base, a level which has managed to withstand a number of upside attempts since mid-March.

Dipping from current levels could have support at 1.2520 re-join the party. Technically, this is a particularly appealing level should price test the point at which trendline support (1.2163) merges (green arrow).

H1 timeframe:

1.26 proved healthy resistance Wednesday, forming what appears to be a possible intraday double-top pattern off 1.2612 (blue arrows), with a neckline stationed at 1.2554. Breaking the aforesaid neckline could portend moves back to demand at 1.2511/1.2482 (prior supply), which holds 1.25 within.

Traders will also note the 100-period simple moving average, currently circling 1.2462, has been drifting higher since May 26 and is fast approaching the underside of current demand.

Structures of Interest:

Should we break the H1 double-top neckline at 1.2554, traders will expect an intraday dip in the direction of H1 demand at 1.2511/1.2482 (prior supply). Do note, however, price could establish support earlier than the H1 zones as H4 support enters play at 1.2520.

Breaking higher and violating H4 resistance at 1.2624, on the other hand, could have daily sellers make an entrance off the underside of daily supply at 1.2649/1.2799.

June 4th 2020: DXY Registers Seventh Successive Daily Loss; Eyes Support at 96.88/96.60, 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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