April 9th 2020: Modest Dollar Recovery Attempts to Hold North of 100.00

April 9th 2020: Modest Dollar Recovery Attempts to Hold 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)

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.

In the early stages of April, the technical foundation has price rangebound between the two aforementioned price structures; notably, however, April’s candle is currently nearly 2% lower, testing the upper boundary of 1.0488/1.0912.

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

Daily timeframe:

Tuesday observed a stronger-than-expected rebound from 1.0745/1.0830, a 78.6%/61.8% Fib retracement zone (pink), but failed to generate follow through on Wednesday. Sited beneath the aforementioned zone we have demand at 1.0526/1.0638, which held price action higher on March 23.

With respect to structure north of the noted Fib base, the 200-day SMA at 1.1064 offers a layer of resistance, while a breakout north of here shines the flashlight on supply at 1.1239/1.1179, along with trendline resistance (1.0879).

H4 timeframe:

Leaving supply from 1.1044/1.0966 unopposed Wednesday, EUR/USD dipped and tested support coming in from 1.0831.

The response from 1.0831 was initially well-grounded, though faltered off intraday resistance at 1.0887, with the H4 candles poised to possibly revisit the said support today. Beneath the current support, aside from Monday’s session low at 1.0768, active demand appears limited until testing 1.0602/1.0630.

H1 timeframe:

FOMC minutes sparked limited reaction in the markets Wednesday. Policy makers viewed the near-term US economic outlook as having deteriorated in recent weeks, noting an extremely large degree of uncertainty on the outlook. The committee also expressed concern regarding the economic impact of Covid-19.

In the early stages of Europe, candle action greeted the 1.0850 region, bolstered by the 100-period SMA currently in the process of flattening. This followed an earlier retest at 1.09 by way of a shooting star Japanese candlestick pattern, located a few points beneath supply at 1.0949/1.0915. Neighbouring support to the south of 1.0850 can be found at the 1.08 region, combined with demand drawn from 1.0790/1.0803.

Technical studies also show the RSI indicator navigating ground beneath 50.00, with eyes possibly on oversold territory.

Structures of Interest:

H4 support at 1.0831, albeit putting up a lacklustre performance thus far, remains a contender in this market, due to monthly price engaging with demand at 1.0488/1.0912, daily price rebounding from a 78.6%/61.8% Fib retracement zone at 1.0745/1.0830 and H1 holding 1.0850.

Although a mild fakeout beneath 1.0850 to the 100-period SMA is likely to be seen, buyers may, once again, step in and attempt to revisit 1.09 today.

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 reclaimed more than 60% of the month’s losses, 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:

In parallel with the RSI indicator addressing 50.00, currently trading around 53.00, AUD/USD registered its third successive daily gain Wednesday and clocked three-week tops at 0.6245. Notably, though, the pair faces a demand-turned supply at 0.6330/0.6245, joined with a 50% retracement level at 0.6271, after recovering from 0.5926/0.6062.

H4 timeframe:

Monday observed a healthy recovery emerge from a supply-turned demand area at 0.6029/0.5964, with Wednesday dipping to lows just ahead of demand at 0.6065/0.6106. This led the pair into 0.6314/0.6235, comprised 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:

Against the backdrop of higher-timeframe flow, intraday movement voyaged through 0.62 on Wednesday, which may see price action embrace supply at 0.6325/0.6275. Another important feature on this timeframe is the forming AB=CD bearish pattern that completes a few points north of the said supply (orange).

Structures of Interest:

As buyers and sellers feast on the underside of a daily demand-turned supply at 0.6330/0.6245, and H4 action welcomed 0.6314/0.6235 into the picture, the completion of the H1 AB=CD bearish pattern is likely on the watchlist of many sellers today.

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 base coming in at 96.41/100.81.

Daily timeframe:

Partially altered from previous analysis –

Closing by way of an indecision candlestick configuration, albeit the real body was a touch bigger than traditional interpretation, price action is seen floating ahead of the 200-day SMA value, currently mixing around the 108.33ish region.

Active supply, according to chart studies, appears limited until nearing the 111.30 region, along with familiar supply at 112.64/112.10. Yet, a break to the downside, potentially charts the way to demand coming in from 105.70/106.66.

RSI momentum holds above 50.00, though lacks enthusiasm.

H4 timeframe:

Supply at 109.71/109.20, coupled with a 50.0% retracement level at 109.30, continues to remain a reasonably dominant fixture on this timeframe. However, sellers are struggling to latch onto anything concrete, hindered by local support from 108.53, which happens to merge closely with a trendline support (101.18).

Based on candlestick analysis, sellers appear to have the upper hand, with price action printing little to the upside.

H1 timeframe:

Wednesday witnessed USD/JPY establish support off demand at 108.34/108.50 in early trade, which, as you can see, aligned with channel support (108.67). 109 made a showing into Europe, with price aggressively fading the level amid US hours, drawing the H1 candles to the 100-period SMA at 108.72.

As of writing, we are seeing price test channel resistance (109.38), with a break to draw 109 back into the frame. The RSI indicator, for those who follow momentum oscillators, will note the value trades above 50.00 after bottoming at 38.00.

Structures of Interest:

An intraday pullback off H1 channel resistance/109 could take shape today, though whether it would contain enough oomph to dethrone the 100-period SMA is difficult to judge given the dynamic value offered support in US trade yesterday.

The 200-day SMA around 108.33 is worth keeping an eye on as this could help facilitate a fakeout scenario beneath H4 support at 108.53, before staging another attack at supply from 109.71/109.20. As such, 108.33 is considered feasible medium-term support in this market.

GBP/USD:

Monthly timeframe:

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

Although March saw lows 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 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 –

Supply at 1.2509/1.2372 and demand coming in from 1.2212/1.2075 remain dominant fixtures on this timeframe, with the former handling price action yesterday.

Outside of this reasonably narrow formation, we have a demand-turned supply formed at 1.2649/1.2799 which has its lower edge aligning with a 200-day SMA value at 1.2648, whereas a breach to the downside could have candles test the 1.15 neighbourhood: trendline supports.

The RSI indicator continues to hover around its mid-way point at 50.00.

H4 timeframe:

Brought forward from previous analysis –

Following the formation of a hammer candlestick pattern, price staged a reasonably impressive recovery out of familiar demand at 1.2147/1.2257, set on top of a supply-turned demand at 1.2136/1.2049. Additional bullish sentiment could haul price to supply fixed at 1.2622/1.2517, which merges with a 61.8% Fib retracement level at 1.2499.

H1 timeframe:

Heading into the London session Wednesday, price retesting 1.23 and the 100-period SMA rejuvenated GBP bidding, ultimately led by a retreat in USD flow, visible on the US dollar index, or DXY. 1.24 welcomed price action amid US movement, tapping into buy-stop liquidity around highs at 1.2420 and wrapping up the session a touch beneath the said psychological level.

Stepping above 1.24 today could pave the way north for GBP/USD to tackle supply seen at 1.2520/1.2455, which houses the 1.25 handle.

Structures of Interest:

Breakout buying above 1.24 is likely to be hindered by supply at 1.2509/1.2372, based on the daily timeframe. In addition, upside north of 1.24 faces potential resistance from the underside of H1 supply at 1.2520/1.2455. Although this could suggest sellers may strengthen their grip, eyeing a dip to 1.23, this could be overruled by the fact we’re coming off monthly support at 1.1904/1.2235.

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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