US Dollar Index:
Renewed upside momentum, fed by daily support at 95.84, watched the US dollar index (DXY) snap a three-week losing streak to close at +0.14%. Support also benefitted from the completion of a daily AB=CD pattern at 96.16, regarded as a bullish configuration among harmonic traders.
The rebound from support, according to the AB=CD formation, may have price action extend recovery gains this week, targeting the 38.2% daily Fib ret level of legs A/D at 98.51 (common initial take-profit target out of AB=CD patterns), accommodated within daily supply at 98.18/98.65 and placed nearby the 200-day simple moving average at 98.42. Indicator-based traders will also acknowledge the RSI oscillator crossed paths with oversold territory last week, after fluctuating around its 50.00 value since the beginning of April.
The flip side to the above is recent downside also sliced through the lower limit of a bearish pennant configuration (98.27). Traders following this pattern will note the possibility of moves forming as far south as 93.97: the pennant take-profit target, measured by taking the preceding move and adding the value to the breakout point (yellow).
EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
April spent the best part of the month feasting on the top edge of demand from 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 extending gains and recently reconnecting with the lower ledge of supply at 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).
With reference to the primary trend, price has exhibited clear lower peaks and troughs since 2008.
Daily timeframe:
Partially altered from previous analysis –
Wednesday had EUR/USD address a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern (comprised of an 88.6% Fib ret level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 [red oval]), and rotate lower into the week’s end, down by 0.30%.
It’s common to see traders sell PRZs and place protective stop-loss orders above the X point, in this case at 1.1495. Common targets, which may hit this week, fall in at the 38.2% and 61.8% Fib ret levels (derived from legs A-D) at 1.1106 and 1.0926, respectively.
In addition to the bearish configuration, the RSI indicator recently exited overbought territory.
H4 timeframe:
Despite an active attempt to topple supply coming in from 1.1415/1.1376 late Wednesday, an area boasting a connection to the lower edge of the daily harmonic PRZ, the candles dipped through 1.1241 (June 9 low), running local sell-stop liquidity and testing support at 1.1226.
The question going forward is 1.1226 enough to tempt buying? Or are we heading to demand at 1.1189/1.1158 (prior supply), drawn close by neighbouring demand at 1.1115/1.1139?
H1 timeframe:
Early Friday rebounded off channel support (1.1194) and reclaimed 1.13 to the upside. Things turned sour heading into London, however, forming a shooting star Japanese candlestick pattern (considered a bearish signal) from the 100-period simple moving average. US trade welcomed an animated push back through 1.13, surpassing 1.1250 to complete an intraday ABCD pattern (where legs AB equal CD) at 1.1211 that prompted a recovery play marginally above 1.1250 by the day’s end.
RSI traders will also note the value edged into oversold territory as we finalised the ABCD pattern.
Structures of Interest:
Long term:
Monthly supply at 1.1857/1.1352 in play, as well as the daily harmonic bat pattern’s PRZ capping upside mid-week, points to a move lower going forward, at least until the 38.2% daily Fib ret level at 1.1106 enters the setting.
Short term:
Contrary to the higher timeframes, analysis based on the H4 and H1 introduce the possibility of an intraday recovery to 1.13, converging with H1 channel resistance (prior support – 1.1194).
On account of the above, a short-lived move to the upside could materialise today, test 1.13 on the H1 and turn lower to align with higher-timeframe direction, creating a reasonably appealing bearish scenario.
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 current rally has seen price test the mettle of monthly supply at 0.7029/0.6664. Technically, the area benefits from additional resistance by way of a long-term trendline formation (1.0582).
Regarding the market’s primary trend, a series of lower lows and lower highs have been present since mid-2011.
Daily timeframe:
Partially altered from previous analysis –
Buyers and sellers on the daily timeframe squared off under two trendline resistances (prior supports – 0.6744/0.6671), along with supply at 0.7059/0.7031, last week, eventually shipping price through support from 0.6931, down 1.45% on the week.
Confirmed by the RSI exiting overbought territory, the break of 0.6931 fuels the likelihood of a drop to another support pencilled in at 0.6755 this week.
It may also interest traders to note the 200-day simple moving average at 0.6663 is in the process of flattening, following months of drifting lower.
H4 timeframe:
Partially altered from previous analysis –
Thursday put forward losses of more than 2.00%, extending south of multi-month peaks at 0.7064 and eventually booking into demand at 0.6773/0.6814, accompanied alongside trendline support (0.6402) and a 38.2% Fib ret level at 0.6808.
Buyers, as you can see, have a presence off current demand, though has so far found thin air ahead of supply at 0.6962/0.6921. Owing to the higher-timeframe landscape, a dip to demand at 0.6695/0.6664 (prior supply) could shape this week.
H1 timeframe:
0.68, a psychological support housed within demand at 0.6788/0.6812, made an entrance early Friday and raised AUD/USD to 0.69 heading into London, which contained upside. The session concluded above 0.6850, following another retest from the aforesaid demand.
Another spirited rebound from 0.69 this week throws the H1 candles into a possible ranging environment.
Clearing 0.69, nonetheless, may have buyers take aim at the 100-period simple moving average; a decline through current demand, nonetheless, draws out another demand at 0.6719/0.6741.
Structures of Interest:
Long term:
Monthly supply at 0.7029/0.6664 and trendline resistance, coupled with daily price journeying through support at 0.6931, deserves notice as an indication of potential selling this week.
Daily support at 0.6755 is set as the next target to the downside on the higher timeframes.
Short term:
Owing to the higher timeframe’s position, dipping through H4 demand at 0.6773/0.6814, an area that’s already depicting a fragile tone, could be seen today/tomorrow. Before pressing lower, though, 0.69 on the H1 timeframe might welcome a retest, serving as a possible platform for sellers.
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, with June currently off best levels, down 0.4%.
Areas outside of the noted triangle 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 –
Recording its fourth successive decline Thursday, demand at 105.70/106.66 welcomed price action and, as you can see, put forth a bullish phase Friday. Despite this, the week still ended 2% in the red.
Although the rebound from the aforesaid demand snapped a four-day losing streak, it’s questionable whether buyers have enough oomph from here to retest the 200-day simple moving average at 108.40.
H4 timeframe:
Friday established a floor off demand at 106.49/106.66, sidestepping resistance at 106.91, and unearthing supply at 107.51/107.76 (prior demand) into the close. Candlestick traders will note the supply generated a reasonable bearish response, enough to perhaps renew a relationship with 106.91 early week.
Moves higher this week, however, movement that engulfs current supply, throws light on resistance at 108.09, with a violation highlighting supply at 108.87/108.48.
H1 timeframe:
Partially altered from previous analysis –
Since Tuesday, H1 has been compressing within the walls of a falling wedge pattern (108.52107.92). 107.32 (green) gave way as support Wednesday, with 107 also giving up ground Thursday.
Friday decisively broke out of the H1 falling wedge and regained footing above 107 and 107.32, easily reaching the wedge take-profit target (measured by taking the value of the base and adding this to the breakout point). Upside also led to a connection with the 100-period simple moving average, located just under supply at 107.86/107.67.
Structures of Interest:
Long term:
Daily demand at 105.70/106.66 re-entering vision is an encouraging sign for buyers this week. Whether this is enough to rejuvenate additional upside, however, is difficult to judge.
Short term:
H4 supply at 107.51/107.76 (prior demand) could weigh on attempts at a retest from H1 support at 107.32 in early trade, though the force derived from current daily demand underlined above may override this. As such, watch for an intraday rebound off 107.32 potentially drawing in H1 supply at 107.86/107.67 and, maybe with a little enthusiasm, the 108 level.
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 in June, with the month currently recording gains of more than 1.5% despite facing long-term trendline resistance (1.7191).
Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.
Daily timeframe:
Off best levels, Wednesday topped ahead of supply from 1.3021/1.2844, prompting a dive through the 200-day simple moving average at 1.2678 on Thursday.
Down 1% on the week, Friday extended to lows at 1.2473, pulling the RSI indicator from overbought status and shining light on demand at 1.2192/1.2361 (essentially representing the decision point to crack 1.2647 [April 14 high]).
H4 timeframe:
Demand made up from 1.2525/1.2575, an area aligning with trendline support (1.2163), had its range tested early Friday. The combination observed buyers latch onto a bid, travelling to highs at 1.2653, before plunging through the aforesaid area and retesting the underside of the base into the close.
This brings light to a possible decline towards demand priced in at 1.2374/1.2427, merged together with trendline support (1.2075).
H1 timeframe:
US trade Friday, led by USD upside, sent GBP/USD through 1.26 and concluded the session whipsawing beneath 1.25 to lows at 1.2473. This likely tripped protective stop-loss orders from buyers attempting to fade the round number and filled sell-stop entry orders from breakout sellers – a bear trap.
The recovery above 1.25 may have buyers and sellers butt heads at supply from 1.2606/1.2584 early trade, an area holding the 1.26 level and joining closely with H1 trend line resistance (1.2813).
Structures of Interest:
Long term:
Monthly trendline resistance recently made an entrance, which, owing to the long-term downtrend, is currently capping upside. Breaking through the 200-day SMA on the daily timeframe certainly adds weight to additional losses this week, with daily demand at 1.2192/1.2361 now in view (glued to the top edge of monthly support at 1.1904/1.2235).
Short term:
The break of H4 demand at 1.2525/1.2575 helps confirm downside on the higher timeframes. The H1 supply at 1.2606/1.2584, particularly at the point it aligns with H1 trendline resistance, may, therefore, be an area of interest for sellers this week.
Turning lower from the H1 supply, albeit involving a pop above H4 supply at 1.2525/1.2575, places traders in line with higher-timeframe direction.
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