November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision

November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, 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, although this argues additional upside may be on the horizon, targeting ascending resistance (prior support – 1.1641), September and October fashioning negative months also proposes a dip to retest the recently penetrated trendline resistance (support).

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

Daily timeframe:

Partially modified from previous analysis –

Leaving support from 1.1553 and a descending support line from 1.2011 behind, EUR/USD shifted to a bullish phase on Tuesday and ended Wednesday indecisively by way of a long-legged doji candle, essentially projecting uncertainty.

Supply from 1.1872/1.1818 also demands attention, an area secured just beneath another supply extended from May 2018 at 1.2012/1.1937.

Traders will also note the RSI oscillator is seen turning higher from within a stone’s throw from trendline support (prior resistance), and is now, thanks to yesterday’s spike to lows at 1.1602, producing bullish divergence.

H4 timeframe:

Election uncertainty offered turbulent price action Wednesday, spiking to highs at 1.1770 and crossing paths with supply at 1.1760/1.1779 (prior demand). A spike to lows at 1.1602 also graced the chart, tapping into the range of demand at 1.1580/1.1626, an area extended from July of this year.

Areas to be mindful of beyond the aforesaid zones are supply at 1.1803/1.1827 and a support level from 1.1570.

H1 timeframe:

Early trading Wednesday rejected a tight area of confluence (resistance), made up of 1.1750 resistance, supply at 1.1764/1.1776 and a trendline resistance (prior support – 1.1612). Although bears surpassed 1.1650 support, European and US sessions witnessed a recovery form that took the currency pair above 1.17, a level which was also retested as support.

Observed levels:

Discovering demand ahead of daily support from 1.1553 may provide enough impetus for H1 buyers to consider bullish strategies off 1.17 today, with the 1.1750 region (initially) targeted. However, traders are urged to consider the possibility of additional volatility today/Friday as ballots continue to be counted.
November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, FP Markets

AUD/USD:

Monthly timeframe:

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

The months of September and October recorded losses, with the latter down by nearly 2 percent. Developing a mild correction, longer-term action is addressing the upper border of demand at 0.7029/0.6664 (prior supply).

Structurally speaking, buyers still have a strong advantage from current demand, 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:

Buyers managed to modestly build on recent gains out of demand at 0.6964/0.7042, ending the session a few pips above trendline resistance (0.7413). The break throws light on supply at 0.7345/0.7287, a rally-base-drop formation.

Also of note, the pair recently crossed above RSI resistance at 52.00.

H4 timeframe:

Following a decisive spike to resistance at 0.7210, yesterday visited demand at 0.7027/0.7061 and rebounded from the zone with enough force to take up position just under the aforesaid resistance.

Above resistance, supply at 0.7253/0.7237 is visible, whereas beneath current demand another demand is seen 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).

H1 timeframe:

Heading into the London session on Wednesday, traffic was somewhat one-sided off trendline support (0.6993), an ascending base that aligned with the 100-period simple moving average, 0.7068 support and 0.7050 support.

After dethroning 0.7150 resistance amid US movement, bulls elevated the currency pair to within close proximity of 0.72 before modestly correcting into the closing bell.

Observed levels:

Monthly price bouncing from demand at 0.7029/0.6664 and daily price taking on trendline resistance positions a 0.7150 retest on the H1 in a relatively positive light today. Traders may also wish to note 0.7150 aligns closely with the daily trendline (support).

A 0.7150 bullish reaction could target 0.72/0.7210 (H4 resistance). Of course, additional bullish sentiment may develop beyond 0.7210 to at least H4 supply at 0.7253/0.7237.

November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, 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, both September and October traded south, with the latter finishing lower by 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:

Brought forward from previous analysis –

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

While breaking beneath 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.

The RSI, since October 22, has essentially been motionless a touch ahead of oversold terrain.

H4 timeframe:

Early trade observed a rigorous spike to 105.35, a move which addressed trendline resistance (106.10) and sparked a considerable decline heading into the session. The pair closed out Wednesday bottoming just ahead of the 161.8% Fib projection level at 104.11 (blue), a level that’s offered support since September.

H1 timeframe:

After reclaiming territory below 105 and retesting the figure as resistance Wednesday, sellers governed control and blew through trendline support (104.02) and 104.50 support.

Demand at 104.12/104.20 (located above the H4 Fib at 104.11) provided enough energy to stir a recovery, yet follow-through buying has struggled, hindered by trendline resistance/104.50 resistance, positioned nearby the 100-period simple moving average around 104.63.

Observed levels:

Monthly and daily price continue to engage with their respective descending triangle supports, implying bulls could eventually take control.

As a result of the above, a H1 close above 104.50, or even a dip to the 161.8% H4 Fib projection level at 104.11 (and maybe 104 level on the H1), could interest buyers.

November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, 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:

Things went sour ahead of resistance at 1.3201 on Wednesday, stripping a portion of Tuesday’s 1 percent gain.

Demand at 1.2645/1.2773, and a corresponding 200-day simple moving average, is an obvious target if sellers maintain power.

The RSI oscillator is seen holding from 47.00 support.

H4 timeframe:

Sterling paid supply at 1.3116/1.3160 (prior demand) a fleeting visit on Wednesday before sinking through support at 1.3006, a level which, as you can see, was swiftly retested as resistance.

Familiar demand at 1.2836/1.2881, a drop-base-rally area, is now in the light, with a break uncovering support at 1.2773.

H1 timeframe:

Supply at 1.3144/1.3126 (located inside H4 supply at 1.3116/1.3160) held firm yesterday, possibly fired on the back of traders selling into buy-stops above the round number 1.31.

Downside eventually collided with the widely watched 1.30 level and, in recent trading, toppled the 100-period simple moving average at 1.2957. Are we looking at continuation selling into 1.29/support at 1.2862 and possible test of RSI trendline support today?

Observed levels:

Support at 1.2862/1.29 on the H1, seeing as how the area exists around the upper zone of H4 demand at 1.2836/1.2881, may activate an intraday bullish response. Still, how much of a reaction is difficult to estimate as daily price reveals room to move to the top of daily demand at 1.2773. Due to this, bearish signals unearthed underneath 1.2862 may represent an early sign we’re likely to overwhelm H4 demand and discover deeper ground.

November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, FP MarketsAVISO LEGAL:

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.

  • November 5th 2020: Election Uncertainty Throws Financial Markets into Indecision, FP Markets
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