October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline

October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, FP Markets

EUR/USD:

Monthly timeframe:

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

Following the break of long-term trendline resistance (1.6038) in July, buyers and sellers have since been squaring off around the upper section of supply from 1.1857/1.1352. Technically, this argues additional upside may be on the horizon, targeting ascending resistance (prior support – 1.1641).

Before seeking higher territory, though, a dip to retest the recently penetrated trendline resistance (support) could materialise.

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

Daily timeframe:

Brought forward from previous analysis –

After four successive daily bull candles formed off descending support (prior resistance – 1.2011), buyers and sellers are now seen trading blows around supply at 1.1872/1.1818, a rally-base-drop configuration.

Supply at 1.2012/1.1937, extended from May 2018, lies directly above current supply. Addressing lower territory, however, throws light on support from 1.1553.

The RSI oscillator, for those who follow this particular indicator, will note the value recently flipped off trendline support (prior resistance) and is in the process of testing another trendline support from 33.60.

H4 timeframe:

Partially modified from previous analysis –

EUR/USD H4 is, as you can see, now stationed within close proximity of demand at 1.1760/1.1779 and a corresponding 61.8% Fib level at 1.1763. Traders will also note channel support (1.1612) hovers just beneath the demand area, in case a whipsaw through the aforesaid demand presents itself.

A reaction from the noted demand area, although yesterday’s high 1.1838 and Friday’s peak at 1.1864 could pose a problem for buyers, shines light on channel resistance (1.1830) as an upside target. The aforesaid line also shares a bond with a supply from 1.1928/1.1902, as well as an AB=CD bearish pattern and 1.618% BC projection at 1.1923 (in addition to a 78.6% Fib level at 1.1926 and a 127.2% Fib projection at 1.1933).

H1 timeframe:

Recent weakness took the currency pair through 1.18 to within a stone’s throw from demand at 1.1764/1.1776 (and dragged the RSI value to nearby oversold levels), fixed together with channel support (1.1786) and a 127.2% Fib projection at 1.1763. This, in addition to 1.1750 support, as well as the H1 demand conveniently sitting within the limits of H4 demand at 1.1760/1.1779, screams confluence.

Although price action on the monthly and daily timeframes continue to represent an indecisive tone at the moment, the combination of H4 and H1 demand (together with additional confluence) could prove appealing today.

October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, 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, therefore, 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:

Brought forward from previous analysis –

Recent flow withdrew to deeper waters and cast light on nearby demand at 0.6964/0.7042, with last Wednesday rebounding strongly from the said zone and highlighting the 0.7243 peak (Oct 9) and supply at 0.7345/0.7287 (a rally-base-drop supply). The week so far, however, has presented little in terms of volatility.

From the RSI oscillator, 52.00 resistance remains a key watch, with a break likely to persuade the indicator to approach overbought terrain.

H4 timeframe:

Brought forward from previous analysis –

Support at 0.7096 and supply at 0.7147/0.7170 (prior demand) remain central structure on the H4 chart right now, with the latter intersecting with trendline resistance (0.7413).

Additional areas to be mindful of are demand at 0.7014/0.7035 and 0.7210 resistance.

H1 timeframe:

Partially modified from previous analysis –

Intraday, we recently crossed through dynamic support, shaped by way of the 100-period simple moving average, and directed the headlights towards the 0.71 level. A rotation higher, on the other hand, throws light on 0.7150 resistance and neighbouring supply from 0.7170/0.7157 (mild rally-base-drop structure).

Levels likely monitored beyond the aforesaid areas are demand at 0.7033/0.7045 and 0.7050 support, in addition to 0.72 resistance.

Potential direction:

Partially modified from previous analysis –

As reported in Monday’s analysis, room to extend gains out of daily demand at 0.6964/0.7042, and monthly price testing the upper rim of demand from 0.7029/0.6664, enhances the possibility of a bullish theme from a longer-term perspective.

0.71 on the H1, on top of H4 support at 0.7096, is potentially watched support. H4 supply at 0.7147/0.7170 and trendline resistance, nonetheless, is clearly problematic for buyers, yet knowing higher timeframes trade from demand could surpass any H4 arrangement.

October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, 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:

Partially modified from previous analysis –

Interestingly, since August, daily price has also been in the process of shaping a descending triangle pattern between 106.94/104.18. Traders will note supply at 106.33/105.78 aligns with the upper perimeter of the descending triangle, while the lower edge of the monthly descending triangle (green – 104.62) sits just north of the daily pattern’s lower border line.

Breaking beneath both the daily and monthly timeframe’s descending triangle supports (monthly currently under pressure) shifts focus back to daily demand at 100.68/101.85, fastened to the upper edge of monthly demand at 96.41/100.81.

H4 timeframe:

Partially modified from previous analysis –

Last Wednesday’s energetic sell-off 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 demand at 104.40/104.57. Moderate buying developed thereafter, building a rising wedge (104.34/104.92) into the base of 104.92/105.09.

We have since breached the lower limit of the rising wedge and re-entered demand at 104.40/104.57. The take-profit target out of the rising wedge (pink) is seen fixed just ahead of a 161.8% Fib projection at 104.11 and the head and shoulder’s take-profit target, as per the pattern’s rules of engagement, around 103.95 (red).

H1 timeframe:

Yesterday’s decline took on a number of technical supports on the H1 chart, eventually cruising through 104.50 support and bottoming just ahead of a demand area from 104.26/104.37. This also drove the RSI value into oversold terrain, albeit only for a brief spell.

104.50, as you can see, is now being retested as resistance.

Potential direction:

Partially modified from previous analysis –

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

Shorter term, assuming sellers take over from 104.50, we could witness moves through H1 demand at 104.26/104.37 to the H4 rising wedge take-profit target at 104.16 and then the 161.8% Fib projection at 104.11, followed ultimately by the 104 level on the H1 and the H4 head and shoulder’s take-profit target around 103.95.

October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, 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, in spite of October trading higher by 0.9 percent right now, 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:

Brought forward from previous analysis –

GBP/USD recently sailed to fresh pinnacles at 1.3176, surfacing a few pips below resistance at 1.3201.

Following this, we have seen a mild correction, though nothing to really get excited about and not yet enough to shine light on demand at 1.2645/1.2773 (and the 200-day simple moving average). Also noteworthy on this timeframe is the RSI oscillator attempting to make its way above 60.00, balancing off 47.00 support.

H4 timeframe:

The support (green) between 1.2973/1.3006 (formed from a collection of Fib studies and a support at 1.3006) remains active on the H4 chart. Also worthy of mention is the nearby trendline support (1.2687).

As you can see, the aforesaid support zone made an entrance on Monday, with Tuesday extending gains to 1.3079. Optimism waned, however, with recent flow dipping back to 1.3030. Should buyers change gears, supply at 1.3116/1.3160 (prior demand) could make a show.

H1 timeframe:

Resistance at 1.3067 has proven a tough nut to crack, with Tuesday’s US session recoiling from the level, aided by the 100-period simple moving average.

As we head into Asia Pac hours, you will note H1 addressing trendline support (1.2862), with a break uncovering familiar support at the widely watched 1.30 level (and demand at 1.2970/1.2983 along with trendline support [1.3082]).

Potential direction:

Brought forward from previous analysis –

There are still no immediate higher timeframe areas in play right now, due to the lack of movement witnessed this week. Keeping an eye on the 1.3201 daily resistance, however, is recommended and also daily demand at 1.2645/1.2773, should further selling occur.

The combination of H4 support at 1.2973/1.3006 and H1 support at 1.2970/1.30 may remain supportive as we head into Wednesday. Breaking below the zones, nevertheless, will likely see immediate support at 1.2950 develop.

October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, FP Markets

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • October 28th 2020: DXY Testing Lower Edge of Daily H&S Neckline, FP Markets
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