May 15th 2020: Greenback Challenges 100.50 Ahead of Retail Sales Data.

May 15th 2020: Greenback Challenges 100.50 Ahead of Retail Sales Data.

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 doji 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:

Brought forward from previous analysis –

Since the later stages of last week, daily price, by way of a bearish flag pattern between 1.0784/1.0875, has been seesawing between gains/losses ahead of a 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 1.1020.

A convincing daily close out of the current bearish flag and pennant 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:

Thanks to the US dollar index, or ‘DXY’, voyaging above 100.50, EUR/USD modestly extended losses for a second straight session Thursday and greeted trendline support (1.0635) into the closing stages of the day.

Thursday’s descent came after Wednesday’s decisive rebound out of supply at 1.0906/1.0878, which aligns with a 50.0% level at 1.0892.

H1 timeframe:

Intraday action Thursday saw price action nosedive through 1.08, ripping through sell-stops and challenging demand posted at 1.0760-1.0775. This was a noted demand in recent analysis owing to the zone intersecting with H4 trendline support (1.0635).

Structures of Interest:

1.08 is proving problematic resistance on the H1 timeframe; should we break through local trendline resistance (1.0824), though, buyers above 1.08 will be watching the 100-period simple moving average (SMA) at 1.0827 as the next resistance target. Below 1.0760-1.0775, nonetheless, re-opens the risk of a return to 1.0750.

Longer-term technical action, however, indicates interest to the downside, particularly if we break through the daily bearish flag.

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:

Brought forward from previous analysis –

Since addressing supply at 0.6618/0.6544 last Friday, the daily candles have been languishing south of the said zone. It should also be emphasised the current supply 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) seen around 0.6665.

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 price action forming a series of higher highs/lows since testing 0.5506, may fuel buyers.

H4 timeframe:

Having seen the US dollar index put in a late retreat from session highs at 100.56, AUD/USD pencilled in a spirited recovery ahead of demand at 0.6356/0.6384. Buyers face resistance nearby in the form of a trendline (prior support), with a violation throwing light on supply at 0.6581/0.6545, an area that’s capped upside since early March.

Technically, the aforementioned demand is encased within 0.6351/0.6395, a zone 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:

Recent trade witnessed a dynamic push through 0.6450, following an earlier whipsaw through demand at 0.6411/0.6423, a move that came within touching distance of 0.64. This has likely drawn attention to the 100-period simple moving average (SMA) at 0.6477, along with trendline resistance (0.6561) and the round number 0.65.

Structures of Interest:

Shifting above 0.6450 on the H1 timeframe may excite intraday traders, looking for continuation moves to the H4 trendline resistance and 0.65 neighbourhood.

Other traders perhaps feel the pair is exposed to the possibility of a pullback/retest at 0.6450, before rotating higher.

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 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:

Partially altered from previous analysis –

The US dollar snapped a two-day losing streak against the Japanese yen Thursday, bottoming ahead of demand at 105.70/106.66.

Further upside could be in the offing, targeting the 200-day simple moving average (SMA) at 108.23.

Directly above here, traders will also note the April 6 high at 109.38 as feasible resistance.

H4 timeframe:

Partially altered from previous analysis –

Support at 106.91, a level converging with a 50.0% ret level at 106.86 and trendline support (106.35), limited downside on Thursday.

Having seen 106.91 offer a ‘floor’, Friday will have traders watching supply at 108.10/107.79 to re-enter the fold. Note this area capped upside on a number of occasions since mid-April.

H1 timeframe:

Local supply at 107.18/107.11 hampered upside on a number of occasions over the past 24 hours, though gave in to upside pressure amid US trade on Thursday, also overturning the 100-period simple moving average at 107.17.

Research stated in recent analysis that a H1 close above supply at 107.18/107.11 could be enough to spark interest off H4 support at 106.91 and target H1 supply at 107.67/107.57.

Structures of Interest:

H1 demand at 107.18/107.11 (prior supply), as well as the converging 100-period SMA, may provide support if retested today, which could, technically speaking, be enough to entice further buying.

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 currently testing 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 –

Despite the British pound pencilling in its fourth successive losing day on Thursday, we remain toying with demand coming in from 1.2212/1.2075, an area successfully capping downside at the beginning of April. What’s also appealing from a technical perspective is Thursday closed in the form of a hammer candlestick configuration, commonly regarded as a bullish signal.

The 200-day simple moving average (SMA) at 1.2650, a value that boasts a connection to demand-turned supply at 1.2649/1.2799, positions itself as a logical upside target out of the aforementioned demand area.

With respect to the RSI indicator, we are still trekking under 50.00 right now, suggesting a bearish tone on this timeframe.

H4 timeframe:

Partially altered from previous analysis –

Demand at 1.2147/1.2257 is having a hard time of late as price tunnelled into its range Thursday. However, price did find the 38.2% Fib level at 1.2176 situated within the lower limits of the said area, which, as you can see, is currently providing support.

What’s also notable from a technical point of view is the candlesticks trade within a descending channel formation (1.26421.2266).

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:

Thursday observed a tepid dip sub 1.22 heading into US movement, bottoming a few pips ahead of 1.2150. 1.22 capped upside for the majority of the US session, though yielded ground in later hours, drawing price to highs of 1.2230 and throwing light on 1.2250 as possible resistance.

Interestingly, the RSI indicator made its way above 50.00.

Structures of Interest:

Longer term, we could eventually see a recovery take shape, as both monthly support at 1.1904/1.2235 and daily demand at 1.2212/1.2075 are in motion. Note daily price also closed Thursday in the shape of a hammer candlestick pattern (bullish signal).

Shorter term, buyers echo a nervous tone within the current H4 demand at 1.2147/1.2257 and are likely seeking at least a H1 close above 1.2250 before committing. Upside targets north of 1.2250 fall in around the 1.23 region on the H1.

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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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