July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74

July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74, FP Markets

EUR/USD:

Monthly timeframe:

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

May, as you can see, recovered off worst levels out of demand from 1.0488/1.0912.

June extended gains to highs at 1.1422, though mid-month ran into opposition at the lower ledge of supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

With reference to the primary trend, the pair has exhibited clear lower peaks and troughs since 2008.

Daily timeframe:

Brought forward from previous analysis –

The month of June observed EUR/USD address a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern. The base is comprised of an 88.6% Fib level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 (red oval).

It’s typical, in the case of bearish formations, to see traders sell PRZs and place protective stop-loss orders above the X point (1.1495). Common take-profit targets fall in at the 38.2% and 61.8% Fib levels (of legs A/D) at 1.1106 and 1.0926, respectively.

As you can see, the aforesaid Fib targets have yet to be met.

H4 timeframe:

Partially altered from previous analysis –

Demand fixed from 1.1189/1.1158 (prior supply) continues to derail downside attempts on the H4 timeframe. Channel resistance is in sight as the next available upside target (1.1422), followed by resistance at 1.1348.

Failure to uphold current demand could result in another layer of demand making a show at 1.1115/1.1139, an area closely sharing space with channel support (1.1168).

H1 timeframe:

Heading into the early stages of Asia Tuesday, candle action crossed paths with 1.1250 resistance and the 100-period simple moving average. This was enough to unleash a decline towards familiar demand at 1.1181/1.1202 (glued to the upper edge of H4 demand at 1.1189/1.1158), which threw candles back towards 1.1250 into the closing hours.

Above 1.1250, a rally-base-drop supply can be viewed at 1.1288/1.1278, an area boasting strong downside momentum out of its base.

Structures of Interest:

Partially altered from previous analysis –

Monthly supply at 1.1857/1.1352 emphasises a bearish tone in this market, while the daily chart reminds traders there’s also scope for a drop to the 38.2% Fib level at 1.1106.

The H4 timeframe continues to dance with demand at 1.1189/1.1158, though H1 is rebounding from 1.1250 resistance and testing the 100-period simple moving average at 1.1232.

A break of the aforesaid 100-period simple moving average, in line with higher-timeframe direction, may direct intraday action back to H1 demand at 1.1181/1.1202.

July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74, 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, as well as June’s follow-through, has supply at 0.7029/0.6664 echoing a vulnerable tone at the moment, despite benefitting from additional resistance by way of a long-term trendline formation (1.0582).

Regarding the market’s primary trend, a series of lower lows and lower highs have been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

After June 11 overpowered support at 0.6931, the base has proved itself as a resistance throughout June.

Following a period of hesitation, AUD/USD bulls made an entrance yesterday, swinging the aforesaid resistance back within touching distance.

In case of a break to the upside, two trendline resistances inhabit territory close by (prior supports – 0.6744/0.6671). Support at 0.6755 also remains in position to the downside, with a break throwing light on the 200-day simple moving average at 0.6666, a dynamic value in the process of flattening, following months of drifting lower.

H4 timeframe:

Brought forward from previous analysis –

Last Wednesday’s tumble proposes the prospect of a double-top pattern forming off 0.6977, with a neckline at 0.6807 (blue arrows). This pattern still remains a possibility despite yesterday’s move higher.

However, breaking the neckline, albeit a bearish signal, entails overriding demand at 0.6773/0.6814, a familiar area boasting a connection with a 38.2% Fib level at 0.6808. The next demand area available south of here rests at 0.6695/0.6664 (prior supply).

H1 timeframe:

Following a dip under 0.6850, US trading had buyers latch onto a firm bid, a move that dethroned the 100-period simple moving average and tested/mildly surpassed the 0.69 level.

Aside from an area of rather ugly supply around 0.6922/0.6897, the path above 0.69 appears clear of resistance until hitting supply drawn from 0.6948/0.6935 and the 0.6950 resistance.

Indicator-based traders will also note the RSI value is seen fast approaching overbought levels.

Structures of Interest:

As aired in Monday’s weekly analysis, monthly supply at 0.7029/0.6664 and its associated trendline resistance, in conjunction with daily resistance at 0.6931, may eventually exert downside pressure. Due to the above, daily support at 0.6755 could make a show.

H1 establishing a position above 0.69 could motivate additional intraday bullish sentiment today, with daily resistance in view at 0.6931, followed by the lower base of H1 supply at 0.6948/0.6935.

July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74, 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. April and May were pretty uneventful, with June also recently wrapping up indecisively in the shape of a doji candlestick pattern.

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

Daily timeframe:

Partially altered from previous analysis –

USD/JPY came out swinging from demand at 105.70/106.66 last week, putting forward a bullish inside candle pattern. Monday and Tuesday extended gains, taking aim at the 200-day simple moving average around 108.37.

Should we dethrone current demand, on the other hand, this may lead price to nearby support at 105.01, with a break uncovering demand at 100.68/101.85.

H4 timeframe:

After two trendline supports (106.58/107.62) made a show Friday, with price action chalking up a relatively spirited recovery, this week’s extension has toppled supply at 107.51/107.76 (prior demand) and shined light on resistance at 108.09.

Price action traders may also wish to acknowledge demand exists at 107.03/107.28.

H1 timeframe:

Leaving 107.50 unopposed as support Tuesday, upside gained speed heading into US trading and eventually delivered intraday flow to highs just under 108. In addition to this, RSI traders will note bearish divergence forming.

Should buyers catch another tailwind today and overrun 108, the 108.50 resistance may make its way into view.

Structures of Interest:

Round numbers commonly come under fire.

As a result of the above, a whipsaw above 108 may come to fruition today, breaking into H4 resistance at 108.09, or even the 200-day simple moving average at 108.37.

A close back under 108, either off 108.09 or 108.37, would likely be viewed as a bearish indication we’re heading back to the 107.50 neighbourhood.

July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74, FP Markets

GBP/USD:

Monthly timeframe:

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

Support at 1.1904/1.2235 and long-term trendline resistance (1.7191) remain clear structure on the monthly timeframe, with the latter prompting a notable upper shadow in June, shaped by way of a shooting star candlestick pattern.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008, placing 1.1904/1.2235 in a vulnerable position.

Daily timeframe:

Partially altered from previous analysis –

Thanks to Wednesday’s bearish outside day, and additional downside on Friday and Monday, demand at 1.2192/1.2361 re-entered play. This, as underscored in recent analysis, is an area not only fastened to the top edge of monthly support, it is also considered the decision point to break 1.2647 (April 14 high).

1.2235 (black level), the top edge of monthly support, was a noted level to keep tabs on as a possible reversal base from within the aforesaid demand. As you can see, active buyers chose to ignore 1.2235 and climb, consequently closing nearby session highs at 1.2401.

H4 timeframe:

Partially altered from previous analysis –

Since topping at supply from 1.2851/1.2805 early June, the pair has been in the process of constructing a bullish three-drive pattern that completes within the parapets of demand from 1.2231/1.2279, at a 127.2% Fib ext. level marked at 1.2239.

Out of demand at 1.2231/1.2279, as you can see, price regained some lost ground against the dollar yesterday, though unfortunately left 1.2239 unchallenged. Looking ahead, trendline resistance (1.2813) now represents a potential headwind for the pair.

H1 timeframe:

A number of key technical resistances were overrun Tuesday, including the 1.23 level and the 100-period simple moving average. The day’s close, however, landed within the parapets of a supply zone at 1.2415/1.2386, housing the 1.24 level and intersecting with the H4 trendline resistance underscored above.

Also of interest is the RSI oscillator recently drilled into overbought territory, but appears to be in the process of flattening.

Structures of Interest:

Monthly price, despite Tuesday’s rally, still appears to have eyes for the top edge of support at 1.2235, located within the lower section of daily demand at 1.2192/1.2361.1.2235 will likely make an entrance in the event we fail to build on the recent recovery.

Against the backdrop of the higher-timeframe position, H1 and H4 traders are perhaps expecting a pullback to emerge, due to H1 supply at 1.2415/1.2386, along with the 1.24 level and H4 trendline resistance.

July 1st 2020: DXY off Best Levels as Price Struggles to Overcome 97.74, FP Markets

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