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April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite

April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, 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 demand-turned supply at 1.1857/1.1352 and demand at 1.0488/1.0912.

The technical foundation has April rangebound between the two aforementioned price structures; notably, however, the current monthly candle is seen tunnelling into the upper boundary of 1.0488/1.0912.

The primary downtrend has remained in motion since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

Partially altered from previous analysis –

The 78.6%/61.8% Fib zone at 1.0745/1.0830 (pink) remains a focal point on the daily timeframe, capping downside early April and again at the tail end of last week. Monday, on the other hand, wrapped up by way of a doji indecision candle.

Last Wednesday’s high at 1.0990 may provide resistance this week, with a nudge above this point bringing on the 200-day simple moving average (SMA) at 1.1050. The inability to sustain upside out of 1.0745/1.0830, however, suggests demand at 1.0526/1.0638, an area extended from March 2017, may elbow its way back into the spotlight.

H4 timeframe:

Not much really happening on this timeframe Monday, consequently pencilling in back-to-back indecisive candles ahead of support from 1.0831 (closely linked with the top edge of the 78.6%/61.8% Fib zone at 1.0745/1.0830, based on the daily chart).

The path of least resistance, as of current price, appears to be northbound. Limited (obvious) supply is evident until crossing paths with 1.1044/1.0966, yet slipping beneath 1.0831 will expose a small demand area plotted at 1.0782/1.0807.

H1 timeframe:

Amid the early hours of Europe Monday, technicians will note price action retested 1.0850 in the form of a Japanese hammer candlestick pattern (considered a bullish signal among candlestick enthusiasts) and latched onto a modest bid. Advancing a little more than 40 points, things levelled off just ahead of 1.09 mid-way through London before revisiting 1.0850 into US hours.

Technical action has the 100-period SMA lurking around 1.0888, closely shadowed by 1.09, with a break likely seeing traders take aim at supply coming in from 1.0940/1.0920 which holds a 61.8% Fib retracement at 1.0922. Beneath 1.0850, although we have lows around 1.0815, the 1.08 handle is an obvious downside objective.

Structures of Interest:

In light of the week’s dreary start, the research team’s outlook remains mostly unchanged.

Monthly price is having a hard time printing anything of meaning out of demand at 1.0488/1.0912. It appears, from a technical perspective, the 78.6%/61.8% Fib zone at 1.0745/1.0830 on the daily timeframe is its last line of defence before attempting an approach toward its lower limit.

H4 support at 1.0831 is in view, threatening the possibility we could explore higher ground. This could lead to a run above 1.09 on the H1 timeframe, potentially drawing in supply at 1.0940/1.0920.

Despite monthly, daily and H4 timeframes showing supportive structure, a fakeout above 1.09, one which tests the H1 supply at 1.0940/1.0920, could spark a wave of intraday selling today, given buy-stop liquidity above 1.09.

April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, FP Markets

AUD/USD:

Monthly timeframe:

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

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery. The recovery move, alongside April’s advance so far, has landed the unit within striking distance of supply fixed at 0.7029/0.6664, intersecting with a long-term trendline resistance (1.0582).

With reference to the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

AUD/USD price action, based on the daily timeframe, can be found loitering south of a 61.8% Fib level at 0.6449, accompanied closely by a trendline resistance (0.7031).

It may be worth noting that a break above the said structures shines the spotlight on a nearby supply at 0.6618/0.6544, sited just south of a 161.8% Fib ext. level at 0.6642. To the downside, demand at 0.5926/0.6062 remains the next support target on this timeframe.

H4 timeframe:

Partially altered from previous analysis –

The harmonic Gartley formation, boasting its defining limit at the 78.6% Fib level from 0.6433, continues to make its presence known. Technicians will also note additional Fibonacci studies are present around this area in the form of a 127.2% Fib ext. level at 0.6421 and a 161.8% Fib ext. level at 0.6420.

Price action, despite Friday’s advance, continues to respect the harmonic Gartley pattern. As stated in previous analysis, where traders place their profit target using this formation is subjective. One method may entail reducing risk to breakeven once/if demand at 0.6192/0.6247 makes an entrance; others could hold for the 38.2% Fib retracement of legs A-D, standing within the lower boundary of demand from 0.6065/0.6106 at 0.6075.

H1 timeframe:

In recent hours, a break of the 0.6350 level and 100-period SMA to the downside was observed after retesting trendline support-turned resistance (0.6271). The 0.63 handle is likely viewed as a potential downside target, with a break perhaps calling for demand at 0.6216/0.6246.

Structures of Interest:

Supply at 0.7029/0.6664 remains an obvious ceiling on the monthly timeframe to be aware of should we continue pursuing higher ground. Though before reaching this base, the noted daily resistances must be overthrown.

In light of recent movement crossing beneath 0.6350 on the H1 timeframe, coupled with the current H4 Gartley pattern off 0.6433 and the 61.8% Fib retracement on the daily timeframe at 0.6449, sellers likely have the upper hand right now.

April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, 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.

Areas outside of the noted pattern can be seen at supply from 126.10/122.66 and a demand coming in at 96.41/100.81.

Daily timeframe:

Brought forward from previous analysis –

Leaving demand from 105.70/106.66 unopposed, USD/JPY seems to be in the process of forming a double-bottom support from 106.87 (black line). Although the 200-day simple moving average (SMA), currently circulating around 108.30, could hamper upside, pattern traders will still be watching/hoping for a break above the 109.38 April 6 high (red arrow) to confirm the double-bottom pattern. This potentially preps the ground for moves to 111.30ish based on the double-bottom’s take-profit target (usually measured from the lowest trough to the peak and then adding this value to the breakout point).

H4 timeframe:

Partially altered from previous analysis –

Demand at 106.75/107.22 remains a feature on the H4 timeframe, capping downside since the beginning of the month and sited just ahead of daily demand underlined above at 105.70/106.66.

Interestingly, since the beginning of last week the candles have been compressing within what appears to be a bearish pennant pattern between 106.92/108.08. Monday, as you can see, spent the session crawling along the lower boundary of this pattern. A decisive move south will likely overwhelm buyers from H4 demand and potentially make a run for demand at 105.75/105.17.

H1 timeframe:

Price action on the H1 timeframe is seen rangebound between supply at 108.16/107.99 (holds 108 within) and demand coming in at 106.99/107.16 (holds 107 within).

Heading into Europe Monday found the H1 candles shaping an intraday descending triangle between 107.94/107.59 within the walls of the current range.  The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns.

A breakout of the descending triangle, one that tackles 107.50 to the downside, could trigger a wave of selling to the lower edge of the said consolidation.

Structures of Interest:

Long-term direction is difficult right now. Monthly price could effectively pop either way, while daily price, although showing signs of a potential double-bottom pattern at 106.87, may be hindered by the 200-day SMA at 108.30.

A decisive H4 close beneath the current bearish pennant pattern suggests we may be heading lower, though most traders will want to see H4 demand at 106.75/107.22 cleared before taking action. A H1 close out of the descending triangle formation could act as a forerunner to a breakout of the H4 bearish pennant formation. A H1 close sub 107.50, therefore, may be interesting for sellers.

April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, FP Markets

GBP/USD:

Monthly timeframe:

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

Although March clocked levels not seen since the 1980s, ahead of a 127.2% Fib ext. level at 1.1297, price staged an impressive recovery and regained approximately 80% of the month’s losses.

Support at 1.1904/1.2235 remains relevant in April, despite recent moves to said lows. Nearby resistance can be seen in the form of a trendline formation (1.7191).

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

Daily timeframe:

Partially altered from previous analysis –

Demand-turned supply at 1.2649/1.2799, an area that aligns with a 200-day simple moving average (SMA) at 1.2647, remains a dominant fixture to the upside on this timeframe.

Demand at 1.2509/1.2372 currently houses price as GBP/USD struggles to pencil in anything of meaning to the upside. Dropping beneath the said demand shifts focus to 1.2212/1.2075.

H4 timeframe:

Brought forward from previous analysis –

Orders around supply at 1.2622/1.2517 remain fragile, following last Tuesday’s breach to a high of 1.2647. In spite of the recent pullback to lows at 1.2407, the break of 1.2622/1.2517 potentially builds a foundation to explore higher levels. Limited supply, according to chart studies, is evident on this timeframe until reaching 1.2854/1.2804, bringing with it a 78.6% Fib retracement level at 1.2809 (blue) and a 127.2% Fib ext. level at 1.2799.

H1 timeframe:

Since last Thursday, price action on the H1 timeframe has been busy carving out a consolidation between 1.2407/1.2510 (yellow). Note, the lower boundary of the consolidation is closely reinforced by the 1.24 handle, whereas crawling along the top edge we have the 100-period SMA as well as the 1.25 handle.

Traders may also wish to acknowledge that the current consolidation is glued to the underside of the noted H4 supply. Areas of interest outside of the said consolidation can be seen at 1.26 and 1.23, assuming we are able to conquer the 61.8% Fib retracement at 1.2348.

Structures of Interest:

Monthly price is seen holding north of support at 1.1904/1.2235, albeit in the shape of a doji candlestick pattern. Daily price remains within the parapets of demand at 1.2509/1.2372, though buyers appear fragile.

Intraday flow may see range traders attempt to fade the lower boundary of the current H1 range (1.2407) today. Do, however, remain cognisant of the 1.24 handle. Psychological levels are prone to fakeouts, therefore a dip to lower levels may be seen before buyers step in.

A breakout to the downside, nevertheless, may unlock the door for bearish scenarios towards 1.2350ish and then on to 1.23.

April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, 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.

 

 

 

 

  • April 21st 2020: Crude Oil Collapse Feeds Through to Broader Risk Appetite, FP Markets
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