Weekly Technical Market Insight: 8th – 12th June 2020

Weekly Technical Market Insight: 8th – 12th June 2020, FP Markets

US Dollar Index:

The US Dollar Index (DXY), a measure of the buck’s value against a basket of six major currencies, nosedived 1.4% last week, recording its third successive weekly decline.

Recent trade, by way of eight consecutive daily bearish candles, sliced through the lower limit of a bearish pennant configuration (98.27), subsequently taking on the 200-day simple moving average at 98.47 and demand from 98.18/98.65. Clearance of these areas throws light on a 78.6% Fib ret level at 96.40 this week – Friday bottomed just ahead of this angle following upbeat non-farm payrolls – as well as support at 95.84.

Additionally, traders will note the possibility of moves forming as far south as 93.97 over the coming weeks: the bearish pennant take-profit target, measured by taking the preceding move and adding the value to the breakout point (yellow).

Indicator-based traders will also acknowledge the RSI oscillator crossed paths with oversold territory Friday, after fluctuating around its 50.00 value since the beginning of April.

Weekly Technical Market Insight: 8th – 12th June 2020, FP Markets

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 (intersects with a long-term trendline resistance [1.6038]).

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

Daily timeframe:

After eight days of one-sided traffic, sellers made a stance Friday topping a few pips ahead of 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]). It’s common to see traders sell PRZs and site protective stop-loss orders above the X point, in this case at 1.1495. Common targets 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 also entered into overbought terrain, currently fading peaks of 78.00.

H4 timeframe:

By way of a Japanese shooting star candlestick pattern, regarded as a bearish signal at peaks, upside slackened out of supply coming in at 1.1415/1.1376 and prodded lows at 1.1278, aided by a surprise US non-farm payrolls number which revealed 2.5 million jobs were added to the economy in May.

Price may continue to unwind at the beginning of the week, according to the H4 chart, as demand is not expected to make a showing until 1.1189/1.1158 (prior supply).

H1 timeframe:

Forged on the back of upbeat US job’s data, intraday candles tumbled through orders at the 1.13 level. Supported by local supply derived from 1.1344/1.1316, dips sub 1.13 early trade this week may have buyers and sellers square off at 1.1250, a level joining closely with channel resistance-turned support (1.0991). Technical studies also reveal the 100-period simple moving average approaching the underside of 1.1250.

With respect to the RSI oscillator, the value has remained healthy above the 50.00 level since late May.

Structures of Interest:

Long term:

Monthly supply at 1.1857/1.1352 coming into force, along with daily price capping gains ahead of a harmonic bearish bat pattern between 1.1462/1.1395, reflects a bearish climate heading into the new week.

Short term:

H4 appears set to sail lower levels this week after crossing paths with supply at 1.1415/1.1376, with demand at 1.1189/1.1158 in sight.

Buyers on the H1, nevertheless, may view the recent pullback as a buying opportunity, eyeing 1.1250 confluence as support. However, knowing monthly, daily and H4 timeframes exhibit scope to press lower, the reaction from 1.1250 might lack enthusiasm. As such, bearish themes under 1.13 could be the better path to explore at least until H4 demand at 1.1189/1.1158 makes a show.

Weekly Technical Market Insight: 8th – 12th June 2020, 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 impressive early rally has, as you can see, placed supply at 0.7029/0.6664 under pressure. What’s also notable here, nonetheless, is within the supply area’s walls a long-term trendline resistance (1.0582) was recently penetrated, suggesting sellers may lack energy.

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

Daily timeframe:

Despite upside momentum slowing over the past couple of days, we’re still managing to make headway above support at 0.6931, while simultaneously facing a rally-base-drop supply at 0.7032/0.6992, coupled with trendline resistance (0.6671) and RSI hidden bearish divergence.

Dips under 0.6931 this week may have buyers and sellers butt heads at support from 0.6755, placed just ahead of the 200-day simple moving average at 0.6658 which is in the process of flattening.

H4 timeframe:

Supply from 0.7003/0.6983 knocked some wind out of the Aussie’s upside attempt Friday, prompting back-to-back doji indecision candles.

Lower moves to demand at 0.6827/0.6858 (prior supply) remains a possibility this week, which could imply H4 structure may be entering into a consolidation phase.

H1 timeframe:

Intraday grasped the widely watched 0.70 figure Friday, running stops above the angle off highs at 0.7013.

While the short-term trend favours additional buying, dips to 0.69 are not out of the question, a level that currently aligns with the 100-period simple moving average. This is particularly evident after penetrating local trendline support (0.6890).

Under 0.69, familiar demand at 0.6841/0.6867 is present, holding 0.6850 within.

RSI action has remained healthy above its 50.00 region since late May.

Structures of Interest:

Long term:

Monthly supply at 0.7029/0.6664 remains in the fight, though the break of the associated trendline resistance indicates possible bullish follow-through this week. Lower on the curve, daily price tests supply at 0.7032/0.6992 and trendline resistance, which could, given a daily close under support at 0.6931, witness sellers re-enter the frame.

Short term:

H4 supply at 0.7003/0.6983, while holding, exhibits a fragile tone right now. What might keep this area alive, however, is daily supply at 0.7032/0.6992 essentially shadowing the zone.

Intraday countertrend traders may already be short the local H1 trendline support break, in favour of a decline to 0.69, which not only represents a downside target but also a possible support to consider given the current uptrend, albeit open to a whipsaw into H1 demand at 0.6841/0.6867.

Weekly Technical Market Insight: 8th – 12th June 2020, 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, though June puts forward a reasonably optimistic theme, currently up 1.6%.

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:

Brought forward 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), set an upside objective of around 109.30.

After dethroning the 200-day simple moving average at 108.37, we completed (hit take-profit) the falling wedge pattern last week and made headway above 109.38.

Tops around 111.70 are next in line as potential resistance on this timeframe this week, followed with supply at 112.64/112.10, an area capping upside since March 2019.

Indicator-based technicians will also note the RSI indicator is seen making its way into overbought territory.

H4 timeframe:

Friday had the US dollar strongly bid against the yen following optimistic non-farm US payrolls.

Recent movement forged a fresh demand at 109.03/109.23, considered the decision point to break the 109.38 April 6 high. Not only does this area unite with channel support (prior resistance – 108.08) and offer a platform to work with this week, upside appears reasonably free until the 78.6% Fib ret level at 110.48.

H1 timeframe:

Thursday observed a retest form off the upper edge of a bullish pennant configuration, established from a high of 108.84 and a low coming in from 108.42.

Maintaining a strong bid above 109 has moved the pennant’s take-profit target, measured by taking the preceding move and adding this value to the breakout point, into view at 1.10 (blue arrows).

Before reaching 1.10, a drop to demand at 109.08/109.21 (housed within H4 demand at 109.03/109.23) may be viewed, with the possibility of a whipsaw to 109 also occurring.

Structures of Interest:

Long term:

The market, according to technical studies, reflects a bullish climate heading into the new week, with both monthly and daily price displaying scope to climb.

Short term:

Before buyers engage, though, it’s likely a dip to H4 demand at 109.03/109.23/channel support may transpire, with 1.10, given the number representing a H1 bullish pennant take-profit target, putting forward an initial upside target.

Weekly Technical Market Insight: 8th – 12th June 2020, 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, with the month currently recording gains of more than 2.5%. Neighbouring resistance 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:

Partially altered from previous analysis –

GBP/USD retained its underlying bid Friday, latching onto its seventh successive gain.

As stated in recent analysis, the pound’s days in the sun may be numbered, having seen price engage with supply at 1.2649/1.2799 (prior demand), an area aligning with the 200-day simple moving average at 1.2665. Also note the RSI indicator hovers within shouting distance of testing overbought terrain.

H4 timeframe:

Supply at 1.2699/1.2605 (prior demand) came under fire Friday, with price penetrating its upper boundary and running stops. Although a close above the base has yet to develop, Friday’s activity positions supply at 1.2851/1.2805 on the radar, an area boasting mouth-watering momentum out of its base and essentially representing a decision point to break the 1.2725 low (Feb 28).

Should sellers make a stand, demand at 1.2478/1.2527 could be seen, sited nearby a trendline formation (1.2163).

H1 timeframe:

Thanks to upside over the past couple of weeks, a 5-wave impulse structure formed, with wave 3 extended and waves 1-5 equalling. Together with a local trendline support (1.2514) experiencing a mild penetration Friday, this could guide an intraday correction back to 1.26 in early trade this week, closely bolstered by the 100-period simple moving average seen fast approaching the underside of the round number.

Technicians may also wish to note resistance resides above 1.27 at 1.2740 (blue).

Structures of Interest:

Long term:

Daily price crossing paths with supply at 1.2649/1.2799 and the 200-day SMA (1.2665), along with the RSI approaching overbought conditions, may have sellers make a showing this week.

Short term:

The break of local H1 trendline support after forming an impulse wave, a term used to describe a specific pattern found in Elliott Wave theory, may encourage selling in early trade this week, with 1.26 set as a possible support target.

Weekly Technical Market Insight: 8th – 12th June 2020, 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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