October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion

October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, 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:

Sellers delivered another decisive bearish candle on Thursday, extending south of supply at 1.1872/1.1818.

Addressing lower territory, throws light on support from 1.1553 and a descending support line from 1.2011.

Traders will also note the RSI oscillator is on track to cross paths with trendline support (prior resistance).

H4 timeframe:

Thursday’s 0.6 percent dive toppled buyers out of demand at 1.1682/1.1716, with sellers now sensing a follow-through move to demand at 1.1580/1.1626 could come to fruition.

Before wrestling lower levels, nonetheless, a 1.1682/1.1716 retest might play out, potentially attracting more sellers.

H1 timeframe:

By way of a hammer candlestick pattern off 1.1650 support, demand for the euro increased into US trading Thursday, moving 1.17/1.1684 resistance (green) into sight. Traders will also note a supply at 1.1717/1.1701 sits just above the aforesaid resistance zone (this is an area where a decision was made to break through orders at 1.17 as support).

In terms of where we stand with the RSI oscillator, momentum remains circling oversold territory, coming off lows at 12.50 (levels not seen since July 2019).

Potential direction:

Seeing room for daily sellers to spread their wings, and H4 recently clearing space to approach demand at 1.1580/1.1626, a H1 retest at either the resistance zone between 1.17/1.1684 or the supply at 1.1717/1.1701 could occur.

October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, 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). With October (currently down 1.9 percent) continuing to circle the said demand, structurally speaking, 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:

Recent flow withdrew to nearby demand at 0.6964/0.7042, with Wednesday plunging more than 1.2 percent and closing at session lows. Thursday, although edging lower, offered little, with the pair settling within the parapets of the aforesaid demand area.

Note this demand is also secured a few pips above a support level coming in at 0.6931.

Clearing supports shines light on the 200-day simple moving average at 0.6799 and a neighbouring support level marked at 0.6766.

From the RSI oscillator, we are turning lower ahead of 52.00 resistance, currently scanning territory below 40.00.

H4 timeframe:

After abandoning 0.7020 (Oct 20 low), price reunited with demand at 0.6972/0.7004 (located within daily demand at 0.6964/0.7042, which itself is positioned around the upper boundary of monthly demand from 0.7029/0.6664).

Bullish follow-through from current demand, ultimately, could target resistance from 0.7096.

H1 timeframe:

Side by side with bullish RSI divergence, the H1 bottomed ahead of the widely watched 0.70 level on Thursday and shined light on 0.7050 resistance.

Aside from some mild resistance at 0.7068, the path is relatively rubble free until 0.71, a level currently intersecting with the 100-period simple moving average.

Potential direction:

Monthly, daily and H4 timeframes offer demand at the moment. This could elevate H1 above 0.7050 resistance and take on H1 resistance from 0.7068. At the same time, intraday buyers will likely be watching for breakout strategies to form north of 0.7050 to target at least 0.71.

October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, 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. Notably, October is trading lower by more than 0.7 percent.

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 –

Since August, daily price has also been in the process of shaping a descending triangle pattern between 106.94/104.18. Traders will also note the lower edge of the monthly descending triangle (green – 104.62) sits just north of the daily pattern’s lower border line.

While 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, we are seeing signs of recovery off the daily pattern’s lower base right now.

H4 timeframe:

A stronger-than-anticipated recovery emerged from the 161.8% Fib projection at 104.11 on Thursday, arranging the candles within a stone’s throw from supply at 104.92/105.09 (prior demand) and the lower side of a recently completed wedge pattern (104.34).

H1 timeframe:

Following a deep whipsaw through demand at 104.12/104.20, a move which as you can see just missed the 104 level, follow-through momentum to the upside emphasised strength, establishing adequate energy to dethrone 104.50 resistance and a trendline resistance (104.74).

The day ended modestly off session highs just ahead of resistance from 104.78, testing the 100-period simple moving average at around 104.56.

Potential direction:

Intraday, we recognise the break of H1 trendline resistance could prompt a bullish vibe today, potentially off the 100-period simple moving average as support, or the 104.50 region (and trendline confluence). This also coincides with room seen to move higher on the H4 chart until supply at 104.92/105.09, and daily price making some progress off the lower edge of its descending triangle at 104.18.

October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, 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, despite a lacklustre October, 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 –

Thursday saw price extend its recent retracement south of resistance at 1.3201, enough to shine some light on demand at 1.2645/1.2773 (and the 200-day simple moving average).

Also noteworthy on this timeframe is the RSI oscillator seen testing 47.00 support.

H4 timeframe:

Resistance at 1.3006, as well as supply from 1.3063/1.3020, as anticipated, caused buyers to lose enthusiasm on Thursday. Of particular interest was the supply, given it was within this zone a decision was made to burrow through 1.3006 support.

Familiar demand at 1.2836/1.2881, as you can see, made an entrance which has so far been well received by buyers. Yet, in case buyers lose control, dipping to support at 1.2773 is a possibility.

H1 timeframe:

As shown on the H1 chart this morning, whilst we did see some interest from sellers off 1.30, tasty resistance inhabited territory above in the form of 61.8% and 38.2% Fib levels at 1.3015, levels that joined with channel resistance (1.3176). This was a noted area in Thursday’s writing. As you can see, price declined sharply from the zone, breaking through 1.2950 support to attack channel support (1.3019).

Potential direction:

 

  • H4 welcoming demand at 1.2836/1.2881 potentially provides enough impetus for H1 buyers to overrun 1.2950 resistance.

 

  • The flip side to the above, of course, daily price reveals there is room to reach lower, therefore 1.2950 could perhaps hold and offer sellers a platform to consider.

October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, FP Markets

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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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • October 30th 2020: DXY Probes 94.00 – Lifted on Risk Aversion, FP Markets
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