June 24th 2020: DXY Below 97.00 Throws Light on Daily Support at 95.84

June 24th 2020: DXY Below 97.00 Throws Light on Daily Support at 95.84

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 and wrapped up a few pips shy of monthly highs out of demand from 1.0488/1.0912.

June extended gains, though ran into opposition at the lower ledge of supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]) – the month currently trades marginally off best levels.

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

Daily timeframe:

Partially altered from previous analysis –

EUR/USD recently addressed a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern, 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 to see traders sell PRZs and place protective stop-loss orders above the X point, in this case at 1.1495. Common take-profit targets fall in at the 38.2% and 61.8% Fib levels (legs A/D) at 1.1106 and 1.0926, respectively.

Recently, though, thanks to a surge of USD weakness, price has staged a spirited recovery, likely causing concern for those short the harmonic pattern.

H4 timeframe:

Partially altered from previous analysis –

Demand at 1.1189/1.1158 (prior supply), albeit putting forward a fragile tone Friday, rejuvenated euro bidding at the beginning of the week, with Tuesday following through with additional upside.

Trade made quick work of trendline resistance (1.1422) and entered the US session tagging resistance at 1.1348, which held into the close. Supply at 1.1415/1.1376 is located a few pips above the aforementioned resistance, whereas the recently penetrated trendline resistance could serve as support should price extend lower from 1.1348.

H1 timeframe:

Intraday action settled a few pips ahead of 1.13 Tuesday, following a mild breach of channel resistance (1.1269) and near-test of 1.1350 resistance.

Indicator-based traders will also note the RSI oscillator recently split trendline support, signalling a move to 50.00 could be in store.

Structures of Interest:

A break of 1.13 on the H1 and associated channel support (1.1168) may trigger a wave of selling towards 1.1250 today. This is sponsored by monthly supply at 1.1857/1.1352 and H4 resistance at 1.1348.

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, despite the base 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:

Since June 11 smothered support at 0.6931, the base has proved reasonably worthy resistance. Above, however, two trendline resistances inhabit territory close by (prior supports – 0.6744/0.6671).

Support at 0.6755 remains in position, with a break throwing light on the 200-day simple moving average at 0.6664, a dynamic value in the process of flattening, following months of drifting lower.

H4 timeframe:

Demand at 0.6773/0.6814, an area boasting a connection with a 38.2% Fib level at 0.6808, limited downside in recent trading.

Support at 0.6908 did a superb job holding back sellers Tuesday, suggesting scope for an approach to trendline resistance (prior support – 0.6856) and supply around 0.7058/0.7029.

H1 timeframe:

In recent analysis, research highlighted a falling wedge pattern (0.6976/0.6833).

The take-profit target derived from the falling wedge pattern can be found just ahead of the 0.7050 region, measured by taking the base value and adding this to the breakout point (yellow).

After failing to regain a footing above 0.6950 yesterday, action is poised to retest 0.69, uniting closely with trendline support (0.6807).

Structures of Interest:

In Tuesday’s analysis we recorded the following:

For the H1 falling wedge to complete, price has to overcome a number of potentially troublesome hurdles, including daily resistance at 0.6931 and the widely watched round number 0.70 seen on the H1. A daily close above the aforementioned daily resistance, therefore, will likely serve as a cue to reduce risk to breakeven for those long the pattern. 

With H1 pointing to a test of 0.69, nevertheless, this could open up the possibility for an additional long, particularly at the point the round number merges with H1 trendline support (red arrow).

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 was pretty uneventful, ranging between 109.38/106.35. May also remained subdued, ranging between 108.08/105.98, with June currently off best levels, down 1.2%.

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:

Underlying bids remain soft at demand from 105.70/106.66, threatening further penetration into the aforementioned area this week.

Dethroning current demand possibly leads price action to nearby support at 105.01, with a break uncovering demand at 100.68/101.85.

The 200-day simple moving average at 108.38 has been flattening since mid-March, and represents achievable resistance should a rotation to the upside come to fruition.

H4 timeframe:

Demand at 106.49/106.66 had its lower base aggressively taken Tuesday, spiking to lows not seen since early May. The move, as you can see, missed support at 105.99 (May 6 low) by a hair.

Heading into Asia Pac hours, we can see the candles nibbling the lower base of the aforementioned demand. Above here, traders will also be watching resistance at 106.91 and supply at 107.22/107.03, a rally-base-drop supply.

H1 timeframe:

Tuesday’s precipitous decline brought the currency pair through 107 to lows just ahead of 106. The rebound, as you can see, throws trendline resistance (prior support – 106.59) in the frame, with a break pushing for the 100-period simple moving average and 107/H1 supply at 107.12/107.02 (essentially the decision point to break 107).

Structures of Interest:

H4 resistance at 106.91 is likely to call for attention today, joined closely with the 107 level on the H1 timeframe, as well as H1 supply from 107.12/107.02.

With the above levels expected to act as a magnet to price, along with remaining buyers out of daily demand at 105.70/106.66 likely to attempt to push higher, intraday bullish signals could be the way forward today until reaching 107.

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 in view, with the latter so far prompting a reasonably attractive upper shadow this month.

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

Daily timeframe:

GBP/USD bulls extended recovery gains Tuesday, following Monday’s stronger-than-expected rotation off demand at 1.2192/1.2361. 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).

Should the pair retain its underlying bid, the 200-day simple moving average at 1.2684 will likely surface as resistance. Lifting beyond here, nonetheless, could take things to supply drawn from 1.3021/1.2844.

H4 timeframe:

Recent upside has lifted H4 to within touching distance of supply coming in from 1.2652/1.2544. This area holds a large range which captures resistance at 1.2629 within its upper boundary.

H1 timeframe:

After entering a phase of consolidation between 1.25 (trendline resistance) and 1.2450, buyers stepped in early US Tuesday and toppled the upper edge of the aforesaid range.

To the left of price action above 1.25, research has noted limited active supply (purple), suggesting the likelihood of an approach towards 1.26.

Interestingly, indicator-based traders will note the RSI printing regular bearish divergence.

Structures of Interest:

Having noted room for buyers to march higher on the daily timeframe until 1.2684, this could send H1 candles to 1.26 today which will see H4 action explore higher levels within supply at 1.2652/1.2544.

On account of the analysis, a retest at 1.25 may materialise today, albeit with the possibility of a whipsaw to trendline support (prior resistance – 1.2813), taking aim at 1.26.

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