April 3rd 2020: DXY Overlooks Soaring US Jobless Claims; Eyes Resistance North of 100.00

April 3rd 2020: DXY Overlooks Soaring US Jobless Claims; Eyes Resistance North of 100.00

EUR/USD:

Monthly timeframe:

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

As we head into the early stages of April, March left behind a long-legged doji indecision candle, with extremes crossing paths with heavyweight demand-turned supply at 1.1857/1.1352 and demand at 1.0488/1.0912.

To a degree, we’re now rangebound between the two aforementioned price structures; notably, however, April’s candle is testing the top edge of 1.0488/1.0912.

The primary downtrend remains in motion, trading lower since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

Europe’s single currency recorded its fourth consecutive losing day against the greenback Thursday, consequently extending downside south of the 200-day SMA at 1.1074, as buyers lost their flavour around demand at 1.0925/1.0864.

Sustained downside lays the foundation to moves towards demand at 1.0526/1.0638, an area extended from March 2017.

H4 timeframe:

Price action on the H4 timeframe, thanks to yesterday’s decline, formed the D-leg of an AB=CD bullish configuration (orange) at 1.0815, combined with a 61.8% Fib retracement level at 1.0826, shaded closely by a 161.8% Fib ext. level at 1.0800. By and of itself, this could spark a wave of buying today, targeting the 38.2% Fib retracement at 1.0943, a traditional take-profit target out of AB=CD completions, followed by the 61.8% Fib retracement at 1.1022.

H1 timeframe:

According to the US Department of labour, in the week ending March 28, the advance figure for seasonally adjusted initial claims was 6,648,000, an increase of 3,341,000 from the previous week’s revised level. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series. Modest USD selling was felt following the release, though USD bids swiftly recovered with the benchmark US dollar index extending its weekly recovery north of 100.00.

Technical development on the H1 timeframe, similar to the H4 chart, also put in an AB=CD bullish pattern (orange) from a high of 1.1037, which, as you can see, is rebounding price, as we write. Positioned south of H1 channel support (1.0926) and the 1.08 handle, the next port of call to the upside can be seen around demand-turned supply at 1.0889/1.0937, encasing the 1.09 handle.

Structures of Interest:

The combination of two AB=CD bullish patterns is likely to excite buyers today, with the possibility of reaching the 38.2% H1 Fib retracement level at 1.0906 on the H1 timeframe, and maybe the 38.2% Fib retracement at 1.0943 on the H4.

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 move reclaimed more than 70% of the month’s losses, consequently drawing the pair to within reasonably close proximity 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 –

Demand-turned supply at 0.5926/0.6062 yielded Friday, consequently exposing another layer of demand-turned supply at 0.6330/0.6245, which holds a 50.0% retracement band at 0.6271.

Though Tuesday’s movement inked in a bearish outside day setting, and generated additional follow through Wednesday, it meant little on Thursday given we’re testing the top edge of 0.5926/0.6062 as potential demand, by way of an indecision candle formation.

With reference to the RSI indicator, the value is struggling to make headway north of 30.00, fading south of 50.00.

H4 timeframe:

Partially altered from previous analysis –

Although not quite the G10 underperformer, the pair did receive a knock in early US hours Thursday amid souring risk appetite. From a technical standpoint, we’re still grinding lower south of weekly tops at 0.6213; aside from possible support emerging from a double-bottom scenario around 0.5872, demand at 0.5737/0.5825 is on the radar.

The foundation for a climb to 0.6314/0.6235 is still also potentially in the pipeline, according to chart studies. 0.6314/0.6235 comprises of a support-turned resistance at 0.6314, a 161.8% Fib ext. level at 0.6273 and a 61.8% Fib retracement at 0.6235 (yellow oval).

H1 timeframe:

US hours on the intraday H1 chart witnessed a calming ahead of the widely watched 0.60 level and ABCD convergence (orange) Thursday, with early Asia trade to potentially grip the underside of 0.61 today, which, as you can see, is closely aligned with a 100-period SMA at 0.6115.

With reference to the RSI indicator we are coming off lows just ahead of oversold terrain, eyeing 50.00.

Structures of Interest:

The top edge of daily demand 0.5926/0.6062 is containing downside, as we write, albeit in the form of a daily indecision candle. Despite this, buying pressure from the higher-timeframe demand may provide enough impetus to bring in 0.61 today and maybe the 100-period SMA around 0.6115.

A test of 0.60 (and potential rebound) is also not out of the question, with the majority of protective stop-loss orders likely sited beneath the 161.8% Fib ext. level at 0.5989.

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 long-term pattern can be seen at supply from 126.10/122.66 and a demand base coming in at 96.41/100.81.

Daily timeframe:

Leaving demand at 105.70/106.66 unopposed Thursday, price action established a healthy bullish recovery, potentially inviting an approach to the 200-day SMA at 108.31 sometime today.

Should a close higher transpire, active supply is limited according to local price action until we near the 111.30 region along with familiar supply at 112.64/112.10.

H4 timeframe:

Initial weakness emerged on the back of soaring US weekly unemployment claims Thursday, though downside in the USD echoed a lacklustre tone with resurgent demand lifting the US dollar index to highs beyond the 100.00 handle. This, as evident from the H4 chart on USD/JPY, placed the candles within reasonably close proximity of 108.88/108.49, an area of supply that contained upside earlier in the week.

To the downside, nonetheless, it’s still worth pencilling in supply-turned demand at 105.75/105.17 as the next obvious platform (positioned a few points south of a 127.2% Fib ext. level at 105.99), assuming we breach Wednesday’s low at 106.92.

H1 timeframe:

US trade watched price action produce a spirited recovery, after bottoming a few points off 107. The move powered through the 100-period SMA and grasped 108. Though traders witnessed a calming around the underside of the psychological band, recent hours saw price latch on to a fresh bid and take 108 to the upside.

Further buying here could see tops around 108.70 emerge, a previous double-top pattern, followed by a demand-turned supply zone at 108.84/109.23 which holds the 109 RN.

Structures of Interest:

The break of 108 will likely trigger breakout buy stops, perhaps bolstering intraday flow north of the number today. The concern, however, is seen on the higher timeframes – daily price could find resistance off the 200-day SMA around 108.31 and H4 price off supply at 108.88/108.49. Therefore, it could be an idea to factor the two said areas into the trade plan should a long position be taken above 108.

GBP/USD:

Monthly timeframe:

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

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

Support at 1.1904/1.2235 remains relevant, despite recent moves to 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:

Brought forward from previous analysis –

Trendline supports drawn from 1.2373 and 1.2041 continue to serve as the technical ‘floor’ in this market right now, with price recently engulfing supply from 1.2212/1.2075 and gripping supply at 1.2509/1.2372. With the week forming hesitant candles out of 1.2509/1.2372, buyers may have the upper hand here, emphasising the possibility of moves towards demand-turned supply at 1.2649/1.2799, which holds the 200-day SMA at 1.2655.

The RSI indicator continues to hold off lows at 17.00, though struggling to register gains north of 50.00.

H4 timeframe:

Partially altered from previous analysis –

Amid a lack of fundamental updates, the H4 candlesticks continue to meander between demand at 1.2147/1.2257, set on top of a supply-turned demand at 1.2136/1.2049, and supply at 1.2622/1.2517, close by a 61.8% Fib retracement value at 1.2499.

Another supply worthy of note, in the event we nudge higher, is 1.2854/1.2808, effectively representing the decision point that broke the 1.2725 28th February low.

H1 timeframe:

Recent sessions witnessed intraday action challenge the underside of well-known supply at 1.2520/1.2455, capping upside for a third time in the space of a week. The key observation here is each time the area is tested price fails to break prior lows, suggesting seller weakness, despite retaking 1.24 to the downside.

Supply posted at 1.2610/1.2549 is next in the firing range, should the current base of supply give way, whereas should sellers maintain a presence sub 1.24 today, 1.23 offers feasible support, given its recent history.

The RSI indicator remains sub 50.00, as we write.

Structures of Interest:

Although H1 supply at 1.2520/1.2455 is glued to the underside of H4 supply at 1.2622/1.2517, a fakeout to H1 supply at 1.2610/1.2549 (resides within the walls of said H4 supply) could be in store, with intraday moves out of the zone possible.

Shorts on the back of H1 price testing under 1.24 is likely to appeal to some intraday traders this morning, though given the lack of commitment from sellers out of daily supply at 1.2509/1.2372, downside potential could be weak at this point.

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