September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery

September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery, 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, alongside August also closing 1.3% higher, argues further moves to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next target. Also worth taking into consideration, though, is the primary downtrend (since July 2008) still remains intact, at least until 1.2555 is engulfed (Feb 1 high [2018]).

Daily timeframe:

Partially altered from previous analysis –

Efforts to extend higher in August were contained inside a rising channel pattern (1.1695/1.1909), in addition to supply at 1.2012/1.1937 making an entrance (August 18), extended from May 2018.

Tuesday put forward a robust shooting star candlestick formation, a pattern that pierced through the aforementioned channel resistance and tested the range of current supply.

Trendline support (1.0774) currently intersects with the aforesaid channel support, potentially reinforcing the area in the event of a pullback/retest. On the other hand, immersing the aforementioned supply favours moves to resistance at 1.2095.

Trend traders, however, will note that alongside the monthly trendline break, price, based on the daily timeframe, has trended higher since late March.

The RSI indicator, as you can see, is currently topping ahead of overbought terrain.

H4 timeframe:

The US dollar index (DXY) staged a dominant recovery off YTD lows yesterday, forcing EUR/USD from YTD peaks at 1.2011, aided by resistance parked at 1.1988.

The decision point to break to peaks at 1.1966, the demand at 1.1884/1.1908, made its way into view in recent hours. While this zone stands tall among the demand areas on this timeframe, there is a chance we may whipsaw to nearby demand at 1.1828/1.1868 (prior supply).

H1 timeframe:

Those who entered long based on the recently formed pennant pattern between 1.1918/1.1868, as you can see, reached take-profit around the 1.20 figure yesterday, measured by gauging the preceding move and adding the value to the breakout point (blue).

Yesterday’s precipitous decline from 1.20 tunnelled through 1.1950 support and landed things back around the 1.19 level. Traders will also note recent price chalked up a hammer candlestick pattern (bullish formation), implying sellers may look to hand over the baton today.

With respect to the RSI indicator, we are seen bottoming a touch ahead of the oversold region.

Structures of Interest:

H4 demand at 1.1884/1.1908 houses the 1.19 level within, which has price staging a modest recovery from on the H1 timeframe right now. This, together with the monthly timeframe showing promise above supply at 1.1857/1.1352, could guide price action higher today.

Contrary to the above, the daily timeframe, albeit trending higher since March, recently produced a bearish candlestick signal from supply/channel resistance. Consequently, this may work against any buy signals seen.

September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery, 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, July and August’s 3.3% follow-through, has witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582) abandon its position.

Technically, buyers now 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).

Although price has removed trendline resistance and a notable supply, the market’s primary trend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Supply at 0.7453/0.7384 remained in the frame on Tuesday – this time, though, we produced a near-shooting star pattern out of the zone, a move that snapped a five-day winning streak. The trend, according to the daily timeframe, has been higher since bottoming in late March.

Indicator-based traders will also note the RSI visibly turning within overbought terrain.

H4 timeframe:

Tuesday had the unit extend to fresh YTD peaks at 0.7413, missing supply at 0.7433/0.7414 (sheltered within current daily supply) by a pip before turning to explore lower terrain.

An extension lower has demand at 0.7339/0.7357 to target, a drop-base-rally formation, with a break uncovering channel support (prior support – 0.7241).

H1 timeframe:

Partially altered from previous analysis –

Demand at 0.7357/0.7368 (sits on top of H4 demand at 0.7339/0.7357) recently made its way into the frame, an important area given it was here a decision was made to attack 0.74.

Although the demand area could control downside pressure, a whipsaw to 0.7350 support is certainly not out of the question before buyers make a stand. Probing beyond 0.7350, nevertheless, we’re then likely looking at tackling trendline support (0.7150) and the 100-period simple moving average.

Structures of Interest:

Monthly action suggests higher moves after taking supply at 0.7029/0.6664, though the primary trend is still down. Daily price recently connected with supply at 0.7453/0.7384 and formed a bearish signal.

H4, however, recently bottomed in close proximity of demand at 0.7339/0.7357, with H1 currently engaging demand at 0.7357/0.7368, an area fastened to the upper edge of H4 demand.

Given the above, as underscored in recent analysis, H1 demand at 0.7357/0.7368 puedan provide fuel to lift higher, though be aware a whipsaw into H4 demand at 0.7339/0.7357 could be seen.

September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery, 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. July sunk nearly 2 percent, testing the lower boundary of the descending triangle, while August ended off best levels, effectively unmoved.

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:

Brought forward from previous analysis –

Supply from 107.58/106.85 has proved a tough nut to crack (an area sharing space with trendline resistance from 111.71 and also located just under the 200-day simple moving average at 107.92) in August.

Despite the week’s advance so far, trading to the downside is a possible scenario to be aware of. Should sellers take on 104.62 (monthly support), this would then likely shift interest to daily demand at 100.68/101.85, drawn from 2016.

H4 timeframe:

Partially altered from previous analysis –

Following Friday’s completion of a three-drive bearish formation at the 127.2% Fib ext. level from 106.86, H4 candles greeted demand at 105.06/105.30 (prior supply). Monday recovered in strong form to end the day testing a trendline resistance (prior support 105.10), with Tuesday modestly extending upside movement.

Supply at 106.46/106.16 also recently had light thrown its way, a stable base offering confluence by way of an intersecting trendline resistance. Additionally, harmonic traders will note a possible ABCD bearish formation, completing around the upper boundary of the supply at 106.46, along with a 61.8% Fib level at 106.27.

H1 timeframe:

In Tuesday’s analysis, the report pointed to the possibility of an approach to an area of demand from 105.55/105.73, with particular interest in 105.66. As you can see, this played out on Tuesday, as expected, and generated a local ABCD approach.

Traders long from 105.55/105.73 have likely reduced position size at 106, in light of the back-to-back indecisive candles produced amid US trading yesterday.

Climbing to higher terrain above 106 today is likely to have traders target 106.50 resistance.

Structures of Interest:

Intraday, the H4 chart implies possible selling pressure around supply at 106.46/106.16, therefore breakout moves above 106 on the H1 could form a bull trap today. With this being the case, intraday sell signals within the aforesaid H4 supply could be an idea worth exploring.

September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery, 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 2.2 percent in August, leading to an extension north of a recently penetrated long-term trendline resistance (1.7191).

Despite the primary trend facing lower since early 2008 (unbroken until 1.4376 gives way – April 2 high [2018]), the break of current trendline resistance has September likely targeting trendline resistance (2.1161).

Daily timeframe:

Partially altered from previous analysis –

After mustering enough strength to outdo resistance at 1.3201 last week, Tuesday eventually crossed paths with a 161.8% Fib ext. level at 1.3408 and produced a strong selling wick, essentially a shooting star pattern. 1.3021/1.2844 remains stationed as demand (prior supply), should 1.3201 support give way.

The 200-day simple moving average at 1.2731 is seen mildly turning higher after flattening in early April. Also notable is the current trend, facing north since March, and the RSI indicator recently engaging overbought levels.

H4 timeframe:

Sterling punched to fresh YTD peaks yesterday, landing highs at 1.3483 against the buck, and taking on supply from 1.3480/1.3447, as well as a 161.8% Fib ext. level at 1.3440.

The reaction out of supply, as well as daily price rejecting a 161.8% Fib ext. level at 1.3408, may feed H4 candles to demand at 1.3301/1.3273, prior supply.

H1 timeframe:

The US morning session observed H1 action drill through 1.34 support on Tuesday, probing lows at 1.3369. Leaving 1.3350 support unopposed, H1 action is on track to retest 1.34 in early Asia Wednesday. A reaction here could be enough to turn things back towards 1.3350 today, with the possibility of whipsawing to fresh demand at 1.3309/1.3337 and the 100-period simple moving average.

Structures of Interest:

With room to push lower from the daily 161.8% Fib ext. level at 1.3408, and the H4 supply at 1.3480/1.3447, a retest from 1.34 may draw in sellers on the H1 timeframe today. However, do remain aware that this goes against the current trend on the daily timeframe and also direction on the monthly chart, targeting trendline resistance.

September 2nd 2020: Upbeat ISM Manufacturing Survey Supports Modest DXY Recovery, FP Markets

EXENCIÓN DE RESPONSABILIDAD:

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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