May 13th 2020: Dollar Tumbles, Though Holds 100.00

May 13th 2020: Dollar Tumbles, Though Holds 100.00

EUR/USD:

Monthly timeframe:

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

March, evident from the monthly chart, left behind a long-legged die indecision candle, with its extremes crossing paths with heavyweight demand-turned supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [0.6038]) and demand at 1.0488/1.0912.

April, as you can see, spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal.

May, on the other hand, is tunnelling back into the said demand, so far disregarding April’s candlestick pattern.

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

Daily timeframe:

Partially altered from previous analysis –

Since the later stages of last week, daily movement has been consolidating ahead of the 78.6% Fib level at 1.0745.

Another constructive development is the formation of a bearish pennant pattern between 1.1147/1.0635. It is also worth pointing out the 200-day simple moving average (SMA) circles the upper portion of our pennant configuration around 1.1024.

A convincing daily close under the current pattern structure might give rise to a fresh wave of selling. Breaking lower entails tipping 1.0745 and ultimately competing with demand at 1.0526/1.0638, an area extended from March 2017.

H4 timeframe:

EUR/USD bulls went on the offensive Tuesday after bottoming a touch off trendline support (1.0637). The advance saw supply at 1.0906/1.0878 elbow its way into focus, prompting price action to respond in the form of a Japanese shooting star candlestick pattern, considered a bearish signal at peaks. This is likely enough technical evidence to interest sellers to attempt an approach to the said trendline support.

H1 timeframe:

As the US dollar index revisited levels beneath 100.00 Tuesday, intraday action gathered steam off 1.08 on EUR/USD, making short work of 1.0850. Shortly after, nonetheless, price stalled just ahead of channel resistance (1.0875) and pulled back to the 1.0850 neighbourhood by the closing stages of the day.

Structures of Interest:

1.0850 appears fragile on the H1 timeframe, pressured by H4 flow off supply from 1.0906/1.0878. In fact, a H1 close beneath 1.0850 may be a sign H4 sellers are willing to take things lower.

Intraday take-profit targets south of 1.0850 rest nearby at the 100-period simple moving average from 1.0824, with a break throwing light back on 1.08 and channel support (1.0766), and maybe even H1 demand placed at 1.0760-1.0775.

AUD/USD:

Monthly timeframe:

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

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery.

April’s 370-pip advance has, as you can see, landed May within striking distance of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

Regarding the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

Supply from 0.6618/0.6544 re-entered play Friday, responding by way of a bearish outside day formation on Monday. It should also be emphasised this area comes with a 127.2% Fib ext. level at 0.6578 and a nearby 161.8% Fib ext. level at 0.6642. Traders may include the 200-day simple moving average (SMA) here seen around 0.6667.

Tuesday extended downside, though finished the day off worst levels.

Despite sellers attempting to make a show off current supply, the fact we failed to print fresh lows out of this zone at the end of April, as well as forming a series of higher highs/lows since testing 0.5506, may fuel buyers.

H4 timeframe:

Demand at 0.6356/0.6384 along with supply formed from 0.6581/0.6545 remain dominant fixtures on the H4 timeframe. Technically, the demand is encased within 0.6351/0.6395, an area made up of 161.8% and 127.2% Fib ext. levels. Fibonacci followers will also note a 61.8% Fib level resides within the said demand at 0.6373.

H1 timeframe:

After absolutely overwhelming buy-stops above 0.65, a move that shook out sellers and trapped breakout buyers, Tuesday witnessed a run back beneath the said round number. Nudging under the 100-period simple moving average (SMA) at 0.6489, candle action appears poised to grip 0.6450 in early Asia today, with a break unmasking 0.64.

Structures of Interest:

It is likely lower prices could be on the horizon in early trade, though a recovery mounted from 0.6450 wouldn’t be a surprise given its recent history as a support/resistance since the start of May. A retest at the 100-period simple moving average at 0.6489 as resistance, or the round number 0.65, may interest sellers, with an initial target set at 0.6450.

A H1 close sub 0.6450 might also be sufficient to lure breakout sellers towards 0.64.

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 currently trades flat, as of writing.

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

Daily timeframe:

Snapping a three-day winning streak, The US dollar pulled back from near-three-week tops at 107.76 against the Japanese yen Tuesday, closing at session lows. This may see price action embrace demand at 105.70/106.66 again this week, though we cannot rule out the possibility of an upside attempt to the 200-day simple moving average (SMA) at 108.22. Directly above here, traders will also note April 6 high at 109.38.

H4 timeframe:

Partially altered from previous analysis –

Supply at 108.10/107.79, an area that’s capped upside since mid-April, came within a few pips of making an entrance Monday, formed by means of a reasonably well-built shooting star candlestick pattern. As you can see, this was enough to knock the wind out of the dollar’s run yesterday, settling within touching distance of support carved in at 106.91 and a 50.0% ret level at 106.86, levels enclosed within demand at 106.78/107.00. Note this area was the decision point to run through the April 30 high at 107.49.

H1 timeframe:

Tuesday’s retreat sees buyers and sellers square off within the walls of demand at 106.99/107.16 as we head into Asia Wednesday, an area boasting a connection with a 38.2% Fib level at 107.08 and the 107 handle. In addition, we have a trendline support (105.99) located close by.

Traders may also be interested to know the current H1 demand is glued to the upper edge of H4 demand underlined above at 106.78/107.00.

Structures of Interest:

Ultimately, we could see a dive deeper into the current H1 demand from 106.99/107.16, testing 107, or even slightly surpassing the number, to bring in buyers out of the H4 demand at 106.78/107.00.

Traders may want to pencil in the possibility of a whipsaw to H1 trendline support (105.99) before serious buyers step in.

GBP/USD:

Monthly timeframe:

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

Although March clocked levels not seen since the 1980s, ahead of a 127.2% Fib ext. level at 1.1297, price staged an impressive recovery and regained approximately 80% of the month’s losses.

Support at 1.1904/1.2235 remains in motion in May, with price action trading a short walking distance from its upper boundary. Neighbouring resistance can be seen in the form of a trendline (1.7191).

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.

Daily timeframe:

Partially altered from previous analysis –

pside momentum diminished as the pair crossed paths with the 200-day simple moving average (SMA) at 1.2649, a value that boasts a close connection to a demand-turned supply at 1.2649/1.2799.

Squeezing out its second successive daily loss, sterling now faces demand coming in from 1.2212/1.2075, an area that successfully capped downside at the beginning of April.

H4 timeframe:

Recent downside delivered the H4 candles into the parapets of demand at 1.2147/1.2257. This area has held price action higher on a number of occasions since the start of April.

What’s also notable from a technical viewpoint here is the candles trade within a descending channel formation (1.26421.2266), and the current demand area contains a 38.2% Fib level at 1.2176.

As you can see, a violation of the current demand area could lay the basis for additional downside towards fresh demand found at 1.1771/1.1886.

H1 timeframe:

Tuesday observed H1 action test the mettle of the 100-period simple moving average (SMA) at 1.2354, along with a demand-turned supply at 1.2374/1.2346. Buyers lost their flavour at this point, sinking to lows south of the 1.23 handle and breaking a trendline support (1.2247) in the process.

Structures of Interest:

A retest at the H1 trendline support-turned resistance could be in the offing today, though a retest at the underside of 1.23 is equally possible. With respect to downside targets, sellers will likely have their crosshairs fixed on the 1.22 handle on the H1. This, however, assumes price is free to move lower within the current H4 demand area at 1.2147/1.2257.

Other support levels to consider ahead of 1.22 on the H1 timeframe are Monthly’s support area (the top edge) at 1.2235 and the upper edge of daily demand at 1.2212.

DISCLAIMER:

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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