Your weekly outlook of technical patterns and structure.

The FP Markets Research Team scans the financial markets for you, highlighting clear and actionable technical structures.

Forex: USD/JPY – a Reversal or Pullback?

Daily Timeframe –

Ending July down nearly -7.0% and August down -2.8% month to date, the USD/JPY (US dollar versus the Japanese yen) recently rebounded from just ahead of a support zone between ¥141.06 and ¥141.68. The question, therefore, is the rebound simply a pullback, or is it the beginning of a reversal to the upside for the currency pair?

As you can see, price action tested the underside of a resistance zone between ¥148.14 and ¥146.68, which, if held ground, sellers could take another run at recent support and perhaps target support from ¥138.47. Alternatively, if buyers consume current resistance, this could trigger a reversal and shine a light on resistances at ¥149.58, ¥150.78 and ¥151.72.

Commodities: Bearish Signals on Aluminium

Daily Timeframe –

Aluminium versus the USD (ticker: XAL/USD) has traded southbound since reaching a high of $2,800, limited between a descending channel (extended from $2,800 and $2,475).

Adding to the bearish vibe, price action manoeuvred below trendline support, taken from the low of $2,110, and retested the underside of the ascending line to form resistance. What also might interest technical analysts is the head and shoulders top pattern (head at $2,800), which was completed in mid-July (neckline breached). Price has yet to reach the pattern’s profit objective at $2,131, therefore, further underperformance could be seen for the base metal this month. In addition to this, you may acknowledge the potential for a bearish pennant pattern to form (drawn from the high of $2,321 and $2,206).

Equities: S&P 500 at Support

Daily Timeframe –

Following the Cboe VIX spiking to levels only seen during COVID and the 2008 financial crises, the S&P 500 tested an ‘alternate’ AB=CD bullish pattern between $5,097 (1.618% Fibonacci projection) and $5,196 (1.272% Fibonacci projection). Given the test of the 38.2% Fibonacci retracement at 5,331 (taken from legs A-D), a common initial upside objective for AB=CD longs, the AB=CD support could cede ground and support from 4,968 and 4,804 may welcome price.

Cryptocurrency: Vulnerable Channel Support on BTC/USD

Weekly Timeframe –

The BTC/USD pairing (Bitcoin versus the US dollar) remains within a descending channel (from the all-time high of $73,845 and low of $60,717). However, while channel support remains intact, aided by two neighbouring horizontal support levels from $51,948 and $56,796, this week’s spike to lows of $48,807 likely tripped stops and trapped breakout sellers (commonly called a ‘bear trap’). Couple this with the Relative Strength Index (RSI) on the verge of crossing under the 50.00 centreline (negative momentum), sellers could eventually take control of this market with demand from $40,114-$44,771 likely to call for attention.

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