July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities

July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities, FP Markets

EUR/USD:

Monthly timeframe:

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

The month of May, as you can see, recovered off worst levels out of demand from 1.0488/1.0912 and closed firm. This prompted an extension in June to highs at 1.1422, adding 1.2% despite also running into opposition at the lower ledge of nearby supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

Interestingly, July, currently trading +5%, is on course to overthrow the aforesaid trendline resistance and supply.

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

Daily timeframe:

Despite Tuesday’s modest retreat out of supply at 1.1798/1.1723, EUR/USD bulls went on the offensive yesterday and marginally nudged above the upper boundary of the aforesaid supply.

Additional upside, moves that overrun current supply, throws light on another supply from 1.2012/1.1937. With respect to the RSI indicator, traders will note the value trades within overbought terrain.

H4 timeframe:

Buyers established a bottom out of demand from 1.1682/1.1716 Wednesday on the back of the US dollar index swerving below 93.50 and underlining 93.00. The EUR/USD rally, as you can see, elevated the pair to a resistance area coming in from 1.1815/1.1790, positioned on top of the current daily supply zone.

H1 timeframe:

Early US trade observed buyers make an entrance, dominating a local trendline resistance (1.1781), and retesting the latter following a 1.18 rejection.

Dethroning 1.18 today has 1.1840 resistance to target.

What’s also interesting from a technical viewpoint is the RSI value producing bearish divergence.

Structures of Interest:

Partially altered from previous analysis –

Monthly price trades FIRMLY above trendline resistance, albeit still sheltered within the upper parapets of supply.

Daily action displays signs the pair may be tipped for more outperformance above supply at 1.1798/1.1723, while H4 is crossing paths with a resistance area at 1.1815/1.1790 after defending nearby demand at 1.1682/1.1716. H1, on the other hand, is sandwiched between 1.18 resistance and trendline support (prior resistance).

On account of the above analysis, based on daily price taking on supply and monthly trading above trendline resistance, a H1 break of 1.18 could be on the menu, with intraday buyers targeting 1.1840 H1 resistance as an initial base. This implies a break of the H4 resistance zone.

July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities, 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), relinquish ground in recent trading. Technically, buyers are now potentially free to run as far north as 0.8303/0.8082, a supply zone that aligns closely with trendline resistance (prior support – 0.4776).

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

Daily timeframe:

0.7197 resistance made its way into the fold Wednesday, as the Australian dollar pencilled in a fourth successive advance vs. the greenback.

A pop above current resistance has supply plotted nearby at 0.7264/0.7224 to take aim at; a dip from current price, however, has support in view at 0.7067.

With reference to the RSI oscillator, the value is still seen producing bearish divergence around overbought levels.

H4 timeframe:

Supply from 0.7198/0.7179 is currently under threat, an area which houses daily resistance underlined above at 0.7197. A healthy bid here could see the current supply overrun and supply at 0.7246/0.7227 make a show. Interestingly, this area is positioned within the walls of daily supply underscored above at 0.7264/0.7224.

H1 timeframe:

Heading into Wednesday’s London session, the H1 candles entered into a consolidation phase in between the 0.72 level and trendline support (0.7063).

Seeking levels under the aforesaid trendline today spins demand at 0.7111/0.7122 into view, located under the 100-period simple moving average. A spirited push above 0.72, nevertheless, may have 0.7245/0.7225 enter play, extended from February 2019.

With respect to the RSI oscillator, we’re still holding above 50.00 though remain reluctant to enter overbought terrain.

Structures of Interest:

Monthly price sweeping through supply and associated trendline resistance, may feed a 0.7197 resistance breach on the daily timeframe towards supply 0.7264/0.7224. Note a move higher is in line with the immediate trend.

The above implies intraday bullish strategies are possible north of the 0.72 region. In addition, it also implies current H4 supply may be fragile.

July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities, 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 and May were pretty uneventful, with June also wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, currently trades lower by 2.8%.

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:

Partially altered from previous analysis –

After clearing demand at 105.70/106.66, support coming in from 105.01 made its way into the fight.

However, current support is seemingly hanging on by a thread, after the pair printed a fifth successive daily decline. Does this indicate we may be headed for demand at 100.68/101.85, extended from October 2016?

Also noteworthy is the RSI indicator recently bottomed within the oversold boundary.

H4 timeframe:

Brought forward from previous analysis –

Large demand at 104.50/105.29 made a showing in recent trade, with early Tuesday also challenging the lower boundary of a newly formed supply from 106.16/105.68. It should also be noted 104.50/105.29 houses daily support at 105.01 and the lower base of the monthly descending triangle pattern at 104.62.

H1 timeframe:

Featured as a possibility in yesterday’s analysis, Wednesday’s activity dipped through the 105 level and met 104.82 support. The initial test elevated the pair back above 105 and was likely enough to persuade intraday buyers to take action. Upside, as you can see though, was short lived, perhaps threatened by supply at 105.37/105.12, with 105 losing grip and 104.82 welcoming price once more.

104.50 support is seen as the next downside base.

Structures of Interest:

While daily buyers are nursing losses under support at 105.01, monthly trades within close proximity of 104.62, the lower edge of the descending triangle. Does this imply we’re looking at a 104.50 test on the H1 timeframe before buyers step in?

July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities, 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 trades higher by 4.8% in July, with long-term trendline resistance (1.7191) displaying signs of giving way after support at 1.1904/1.2235 withstood downside attempts in April and May.

Despite the primary trend facing lower since early 2008, rupturing current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161).

Daily timeframe:

Partially altered from previous analysis –

After squeezing above the 200-day simple moving average, the pair is on course to topple supply from 1.3021/1.2844 following Wednesday’s ninth consecutive daily advance. Channel resistance (1.2813) is likely next in the firing range.

The RSI oscillator is also seen toying with the 80.00 overbought value.

H4 timeframe:

As you can see, last Friday kicked through the upper borderline of a bullish pennant formation between 1.2768/1.2644 and, after overturning supply at 1.2851/1.2805, followed through to the pattern’s take-profit target at 1.3008 yesterday (measured by calculating the preceding move and adding this value to the breakout point – pink).

Further buying brings light to supply at 1.3094/1.3042.

H1 timeframe:

The additional outperformance witnessed Wednesday had price movement address the widely watched 1.30 level and also retest 1.2950 support. Traders will also note the noted support line is situated north of a rather interesting demand drawn from 1.2914/1.2936. Additional areas to pencil in are demand at 1.2860/1.2880 and trendline support (1.2518).

With reference to the RSI oscillator, the value is currently producing mild bearish divergence.

Structures of Interest:

Under 1.30, traders may observe additional selling materialise having noted the recent bullish pennant pattern completing at 1.3008 (buyers may look to cover positions). Whether this will be enough to bring in H1 demand at 1.2914/1.2936 for potential dip-buying, however, is a tough call.

Failure to pull lower, 1.30 opening its doors is also likely to please breakout buyers. Upside targets above 1.30 can be set at 1.3050, as well as the daily channel resistance, currently positioned around 1.3060.

July 30th 2020: Greenback Resumes Downside Accompanied by Upside in US Equities, 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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