August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00

August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00, FP Markets

EUR/USD:

Monthly timeframe:

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

The euro nudged to a third successive monthly gain against the US dollar in July, adding nearly 5 percent. The move toppled long-term trendline resistance (1.6038) and made contact with the upper border of supply from 1.1857/1.1352.

This argues a move to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next upside target. Also worth pointing out, though, is the primary trend still remains intact, underlining a southerly course since July 2008.

August currently trades up by 0.7 percent.

Daily timeframe:

Wednesday’s relatively powerful correction from channel resistance (1.1909) and fusing supply at 1.2012/1.1937 failed to deliver much follow-through momentum on Thursday.

Channel support (1.1695) is in place as the next downside base, with a breach perhaps firing things to trendline support (1.0774).

The RSI indicator, as you can see, continues to fade overbought terrain.

H4 timeframe:

Rally-base-rally demand at 1.1828/1.1868 failed to put up much fight Thursday, with its lower border suffering a handful of downside attempts.

Another layer of demand is seen close by, priced in at 1.1771/1.1794. Also of note, the recently closed H4 candle ended by way of a strong bullish candle, engulfing the entire range of the previous range.

H1 timeframe:

As we transitioned into US trading Thursday, 1.18 came within a couple of pips of making a show Thursday, a move that motivated a healthy recovery into the close.

Fresh supply inhabits area nearby at 1.1894/1.1876, sharing its range with a 100-period simple moving average. Also notable is the 1.19 handle and supply from 1.1896/1.1910 (prior demand), as well as the RSI value recently crossing above its 50.00 centreline.

Structures of Interest:

Monthly price breaching supply and a major trendline resistance, along with the immediate trend pointing north on the daily timeframe, may see longer-term buying attempt to penetrate daily channel resistance/supply.

Against the backdrop of higher timeframe activity, H1 supply at 1.1894/1.1876 may surface today and entice selling, having noted H4 demand at 1.1828/1.1868 gave up its lower border. A whipsaw to 1.19 on the H1, however, is certainly not out of the question before sellers make an entrance.

August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00, 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, together with June and July’s follow-through, witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582) abandon its position. Concluding July higher by 3.5 percent, buyers appear free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

Despite removing trendline resistance, the market’s primary trend still points south, demonstrating a series of lower lows and lower highs since mid-2011.

Daily timeframe:

Since mid-June, the pair has been compressing north between two converging trendlines (0.6832/0.7064), in what appears to be a rising wedge. Of late, price tumbled just ahead of supply at 0.7346/0.7282, leading to a test of the rising wedge base yesterday.

A break out of the aforesaid rising wedge, may have dips find initial support around the 0.7067 region.

H4 timeframe:

Thursday had buyers cheer a reasonably healthy recovery from trendline support (0.7076), consequently reclaiming earlier losses.

Looking ahead, the recent rebound from the trendline support may underpin further upside today, paving the way to resistance parked at 0.7237. Should buying prove unsustainable, nonetheless, probing to trendline support (0.6776) may emerge, an ascending line displaying a close connection with another local trendline support (prior resistance – 0.7243).

H1 timeframe:

European trading had buyers and sellers feast on 0.7150 support. Unable to breach the latter, a strong upward move emerged into US trade, sending H1 candles to the 0.72 handle, a psychological level located just south of the 100-period simple moving average at 0.7209.

With the RSI making its way above 50.00, supply at 0.7236/0.7222, a clear-cut drop-base-drop zone, may take the limelight should a 0.72 breach come to fruition.

Structures of Interest:

Sellers fading the underside of 0.72 face potentially strong headwinds – not only is monthly price navigating waters above supply, daily price recently bounced off its rising wedge support and H4 currently works with trendline support. As such, price is tipped for more outperformance, likely breaching 0.72 and heading for H1 supply at 0.7236/0.7222. Intraday buyers, therefore, may seek bullish signals upon H1 action closing above 0.72.

August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00, 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 carving out a descending triangle pattern between 118.66/104.62.

April, May and June were pretty uneventful, with the latter wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, sunk nearly 2 percent, testing the lower boundary of the descending triangle, while August currently trades higher by 0.10 percent.

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

Daily timeframe:

Buyers and sellers are currently squaring off mid-range between supply from 107.58/106.85 and support at 104.62, taken from the monthly timeframe (descending triangle support).

A push north may take on the 200-day simple moving average at 108.02, though beyond the monthly level we see limited support until reaching demand at 100.68/101.85, drawn from 2016.

H4 timeframe:

Supply at 105.92/106.16 (prior demand) welcomed price action in recent trading. Despite a mild breach to the upside, sellers headed for lower levels, erasing a portion of Wednesday’s relatively impressive comeback.

With sellers appearing soft, and room for manoeuvre to higher levels on the bigger picture, supply at 106.65/106.43 could make a show.

H1 timeframe:

Breakout buyers struggled above 106 on Thursday, hindered by the 109.19 resistance level. This led to a clearance of 106 and test of demand at 105.64/105.79. Not only does this area rest on top of another demand at 105.55/105.73, it is a zone where a decision was initially made to take things above 106, therefore the response seen thus far is not a surprise.

Structures of Interest:

With higher timeframes showing room to climb, and H4 supply at 105.92/106.16 proving soft so far, as well as H1 action recently meeting with stacked demand between 105.55/105.73 and 105.64/105.79, this could guide candle action to higher terrain today, potentially retaking 106 (H1) to the upside.

August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00, FP Markets

GBP/USD:

Monthly timeframe:

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

GBP/USD finished higher by 5.5 percent in July, leading to long-term trendline resistance (1.7191) abandoning its position.

Despite the primary trend facing lower since early 2008 (unbroken until 1.4376 gives way), the break of current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.

August currently trades higher by 1.10 percent.

Daily timeframe:

Resistance at 1.3201 remains a somewhat dominant fixture at the moment, set just under a 161.8% Fib ext. level at 1.3264, which welcomed price action on Wednesday and delivered a notable bearish candle. Sellers, however, appear somewhat feeble right now, opposing the current uptrend which is clearly visible on the daily chart from March.

1.3021/1.2844 is stationed nearby as demand, with a violation uncovering the 200-day simple moving average at 1.2718.

H4 timeframe:

Demand at 1.3074/1.3118, albeit following a dip to lows at 1.3064, rejuvenated buyers yesterday, clocking peaks at 1.3224. This throws light on supply at 1.3301/1.3273, an area situated north of the 161.8% Fib ext. level at 1.3264 on the daily timeframe.

H1 timeframe:

Following a sharp rotation from supply at 1.3150/1.3127 and aligning 100-period simple moving average, price action surpassed 1.31 and came within a pip of testing familiar demand at 1.3062/1.3079, before pushing for higher levels.

With 1.32 cleared amid US trading Thursday, 1.3250 resistance is now on show, and the RSI value also fast approaching overbought status.

Structures of Interest:

Engulfing 1.32 unearths potential bullish signals to 1.3250 on the H1, with a breach targeting the daily 161.8% Fib ext. level at 1.3264 and then the lower border of H4 supply at 1.3273. A retest at 1.32, therefore, may be in the offing today, providing buyers a platform to work with.

August 21st 2020: DXY Pares Post-FOMC Advance and Retakes 93.00, FP Markets

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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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