October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26

October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, 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:

Following four successive daily bull candles off ascending support (prior resistance – 1.2011), sellers made an entrance from supply at 1.1872/1.1818 Thursday, a rally-base-drop configuration.

Bearish follow-through directs technical eyes towards the aforementioned trendline support, in addition to support at 1.1553.

The RSI oscillator, for those who follow the indicator, will note the value recently flipped off trendline support (prior resistance), yet is struggling to dethrone 60.00.

H4 timeframe:

H4 channel resistance (1.1830), 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 1.618% BC Fib projection at 1.1923), stood its ground on Thursday, chucking demand at 1.1760/1.1779 on the hit list today (and a 50% retracement level at 1.1761).

H1 timeframe:

Retracement flows from H4 channel resistance, as you can see, guided H1 through steep trendline support (1.1703) and 1.1850 support on Thursday. After a fleeting pullback to 1.1866, an acceleration to the downside emerged, moves that elbowed 1.18 and a 100-period simple moving average back into line.

Note that the RSI value is seen hovering just ahead of its oversold area, gifting traders with hidden bullish divergence after penetrating trendline support on Wednesday.

Structures of Interest:

1.18 is open to attack today, under pressure from selling out of daily supply at 1.1872/1.1818 and space for H4 sellers to manoeuvre until demand 1.1760/1.1779.

What would be interesting to witness today is a whipsaw through 1.18 to test H1 demand at 1.1764/1.1776 (sheltered within H4 demand at 1.1760/1.1779). This, considering the demand confluence, offers enough fuel to perhaps persuade buying back above 1.18s.

October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, 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 still 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, with Wednesday rebounding strongly from the said zone. Sustained interest to the upside shines light on 0.7243 peaks (Oct 9) and the aforesaid supply, a rally-base-drop formation.

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:

Support at 0.7096 welcomed a retracement from 0.7136 Thursday and, following a brief consolidation, elevated to positive terrain. This shifts supply at 0.7147/0.7170 (prior demand) into the light (and neighbouring trendline resistance [0.7413]).

H1 timeframe:

As we head into Friday, the H1 chart reveals a retest at 0.71 unfolded Thursday, a psychological hurdle that aligns with H4 support at 0.7096 and neighbouring H1 trendline support (prior resistance – 0.7243). As anticipated, a mild whipsaw through 0.71 to test the aforesaid trendline support occurred before buyers made a show.

Next on tap in terms of obvious resistance on the H1 timeframe can be seen at 0.7150.

Structures of Interest:

The 0.71 retest, a hurdle that aligns with H4 support at 0.7096 (along with both weekly and daily timeframes bouncing from demand), could stimulate intraday buyers today, with 0.7150 initially targeted (lower ledge of H4 supply at 0.7147).

October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, 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:

Interestingly, since August, daily price has also been in the process of shaping a descending triangle pattern between 106.94/104.18. Supply at 106.33/105.78, as you can see, aided the recent pullback (throwback).

Note the lower edge of the monthly descending triangle (green – 104.62) sits just north of the daily pattern’s lower boundary.

Breaking beneath both the daily and monthly timeframe’s descending triangle supports shifts focus back to daily demand at 100.68/101.85, extended from September 2016.

H4 timeframe:

Partially modified from previous analysis –

Wednesday’s energetic decline blew through a head and shoulder’s top pattern neckline, drawn from 104.94 (and demand at 104.92/105.09), and crossed paths with an area of support/resistance at 104.40/104.57. Moderate buying developed Thursday, with enough fuel to retest the underside of 104.92/105.09.

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:

From the H1 timeframe, channel resistance (104.75) made an entrance on Thursday, joined by a 38.2% Fib level at 104.87 and a 127.2% Fib projection at 104.86. What’s interesting is the H1 levels align with H4 supply at 104.92/105.09.

Structures of Interest:

Longer term, we are at an interesting juncture, made up of a monthly and daily descending triangle supports from 104.62 and 104.18, respectively.

Shorter term, H1 and H4 resistances propose a moderate sell-off, though it is worth noting that a possible break to 105 resistance could occur prior to price exploring south.

October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, 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:

Partially modified from previous analysis –

Not really much to add here since Wednesday’s 1.5 percent advance.

GBP/USD recently 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 attempting to make its way above 60.00, threatening moves into overbought levels.

H4 timeframe:

Thursday’s minor slide, after discovering thin air above 1.3116/1.3160 supply (prior demand) on Wednesday, highlights a possible retreat to demand at 1.3014/1.3067 (and neighbouring support at 1.3006).

H1 timeframe:

Thanks to Thursday’s moderate deterioration, 1.3067 support and 38.2% Fib level at 1.3056, confirmed by mild RSI hidden bullish divergence, may serve buyers today.

1.3067 on the H1 also stands for the upper boundary of H4 demand.

Structures of Interest:

H1 support at 1.3067 (and 38.2% Fib level at 1.3056), knowing the support represents the upper line of H4 demand, may have intraday buyers make a stand here today.

Support levels rarely hold to the pip. For that reason, it may also be worth preparing for the possibility of a whipsaw to the 100-period simple moving average on the H1, currently trading around 1.3016.

October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, FP Markets

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  • October 23rd 2020: DXY Snaps Four-Day Losing Streak Ahead of Daily Support at 92.26, FP Markets
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