October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP

October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, FP Markets

EUR/USD:

Monthly timeframe:

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

August, as you can see, toppled supply from 1.1857/1.1352 and extended space north of long-term trendline resistance (1.6038), arguing additional upside may eventually be on the horizon, targeting trendline resistance (prior support – 1.1641).

Before seeking higher territory, a dip to the recently penetrated trendline resistance (support) could materialise, backed by September’s monthly outside bearish reversal candle that snapped a four-month winning streak.

The primary downtrend (since July 2008) remains intact until 1.2555 is engulfed (Feb 1 high [2018]).

Daily timeframe:

Partially modified from previous analysis –

Following four successive daily bull candles off ascending support (prior resistance – 1.2011), supply at 1.1872/1.1818, a rally-base-drop configuration, recently came under fire. This throws light on another layer of supply at 1.2012/1.1937.

The trend on the daily timeframe has demonstrated a reasonably consistent bias to the upside since March and only began levelling off in August. The RSI oscillator, on the other hand, recently flipped off trendline support (prior resistance), now firm north of the 50.0 centreline.

H4 timeframe:

Although daily price appears to be on the brink of taking out the upper base of 1.1872/1.1818, H4 greeted channel resistance (1.1830) on Wednesday, a level established a handful of pips beneath a 127.2% Fib projection at 1.1893 and a supply from 1.1928/1.1902 that joins with an AB=CD bearish correction (and a 1.618% BC Fib projection at 1.1923).

As of writing, you’ll note bears are coming in strong, trading at current candle lows.

H1 timeframe:

Retracement flows off H4 channel resistance is, as you can see, directing a H1 throwback to 1.1850 support, a level that shares space with a steep trendline support (1.1703).

Violating the aforesaid levels today shines light on 1.18 support.

Note that the RSI value recently broke trendline support, perhaps signalling a bearish theme is on the horizon.

Structures of Interest:

Penetrating 1.1850 support on the H1 timeframe is likely to provoke a bearish intraday focus today, with 1.18 targeted as well as H1 demand at 1.1764/1.1776 (sheltered within H4 demand at 1.1760/1.1779). This, considering the demand confluence here, also potentially offers enough fuel to persuade buying.

October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, FP Markets

AUD/USD:

Monthly timeframe:

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

The month of September (lower by 2.9 percent) shattered a five-month winning streak and tested the upper border of demand at 0.7029/0.6664 (prior supply). Structurally speaking then, buyers have a strong advantage, free to explore as far north as 0.8303/0.8082 in the coming months, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In terms of trend, though, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partially modified from previous analysis –

Leaving supply at 0.7345/0.7287 (a rally-base-drop supply) untested, recent flow withdrew to deeper waters and cast light on nearby demand at 0.6964/0.7042, an area secured above support at 0.6931. With the DXY burrowing through demand at 92.71/93.14 (off trendline resistance [102.99]), AUD/USD rebounded strongly from 0.6964/0.7042 Wednesday.

In terms of the RSI oscillator, 52.00 resistance remains a key watch with a break likely to persuade the indicator to head for overbought terrain.

H4 timeframe:

Extending recovery gains out of demand at 0.7014/0.7035 (located above another demand at 0.6972/0.7004) fuelled an advance above resistance at 0.7096 Wednesday, shifting supply at 0.7147/0.7170 (prior demand) into the light (and neighbouring trendline resistance [0.7413]).

H1 timeframe:

Following the retest of demand at 0.7033/0.7045, yesterday accepted a bullish theme, as anticipated. Several technical resistances were submerged, including trendline resistance (0.7243) and the 0.71 level, with price action recently spiking the upper edge of a resistance area at 0.7105/0.7134 (and pulling RSI action into the overbought area). This may have cleared enough space to approach 0.7150 today, a level joining with the underside of H4 supply at 0.7147.

Structures of Interest:

Should a retest at 0.71 unfold, a psychological hurdle that aligns with H4 support at 0.7096 (along with both weekly and daily timeframes bouncing from demand), buyers could make a show. Yet, a whipsaw to H1 trendline support (prior resistance – 0.7243) may be seen beforehand.

October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, 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. July 2020 onwards, as you can see though, has had price toying with the lower boundary of the aforesaid pattern.

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

Daily timeframe:

Supply at 106.33/105.78, encouraged by the RSI oscillator also fading resistance at 57.00, proved a tough nut to crack. USD/JPY dropping nearly 1 percent yesterday saw daily dip a toe in waters under monthly support at 104.62 and shift focus back to a daily demand area at 100.68/101.85, extended from September 2016.

H4 timeframe:

Yesterday’s precipitous decline, as you can see, blew through a head and shoulder’s top pattern neckline, drawn from 104.94 (and demand at 104.92/105.09), to cross paths with an area of support/resistance at 104.40/104.57.

The head and shoulder’s take-profit target, as per the pattern’s rules of engagement, is set around 103.95 (red), arranged just south of a 161.8% Fib projection at 104.07.

H1 timeframe:

Reaching RSI lows at 10.00, levels not seen since January 2019 (this is all the data we have at this time), H1 surpassed 104.50 support and addressed a demand area at 104.26/104.37 (prior supply). With the session ending above 104.50, this places supply at 104.72/104.82 and the 105 level in sight.

Structures of Interest:

Technically, monthly price testing support at 104.62 deserves notice, as does H4 modestly rebounding from demand at 104.40/104.57 (albeit clipping its lower edge). This, alongside H1 holding above 104.50, advertises an intraday bullish picture to at least H1 supply at 104.72/104.82.

October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, FP Markets

GBP/USD:

Monthly timeframe:

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

Leaving trendline resistance (2.1161) unopposed, the month of September fell 3.4 percent by way of a bearish outside reversal candle and snapped a three-month winning streak. This advertises a possible dip to retest trendline support (prior resistance – 1.7191).

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April 2 high 2018.

Daily timeframe:

Up 1.5 percent Wednesday, GBP/USD sailed to fresh weekly pinnacles at 1.3176, surfacing a few pips below resistance at 1.3201. Also noteworthy on this timeframe is the RSI oscillator making its way above 60.00, threatening moves into overbought levels.

H4 timeframe:

1.3116/1.3160 supply (prior demand) came under pressure yesterday, likely troubling sellers (note this area is positioned just beneath daily resistance at 1.3201). With selling pressure potentially light here, retreating to demand at 1.3014/1.3067 (and neighbouring support at 1.3006) unearths a possible bullish tone.

H1 timeframe:

RSI resistance at 82.50 made its way into the limelight on Wednesday, a level that’s capped upside in August and September. This, together with price resistance at 1.3170 and a 61.8% Fib level from 1.3175 (green horizontal line), saw GBP/USD level off heading into US trading and highlight a potential retracement back to 1.3067 support.

Structures of Interest:

1.3201 resistance on the daily timeframe has proven a significant level in history (early 2020 representing a prime example). As resistance levels are not (by most traders) considered definite levels in the market – more an area surrounding the barrier – daily sellers may already be short which could weigh on the H1 reaction from resistance at 1.3170, to drop things back to H1 support at 1.3067 (also denotes the upper edge of H4 demand).

October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, FP Markets

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  • October 22nd 2020: UK/EU Agree to Resume Trade Talks, Boosting GBP, FP Markets
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