July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off

July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off, FP Markets

EUR/USD:

Monthly timeframe:

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

The month of May, as you can see, recovered off worst levels out of demand from 1.0488/1.0912 and closed firm. This prompted an extension in June to highs at 1.1422, adding 1.2% despite also running into opposition at the lower ledge of nearby supply from 1.1857/1.1352 (unites with long-term trendline resistance [1.6038]).

Interestingly, July, currently trading +5.5%, is on course to overthrow the aforesaid trendline resistance and supply.

With reference to the primary trend, the pair has exhibited lower peaks and troughs since 2008.

Daily timeframe:

Partially altered from previous analysis –

Despite Tuesday’s modest retreat out of supply at 1.1798/1.1723, EUR/USD has since gone on the offensive and toppled the aforesaid zone.

The expectation for further upside to supply at 1.2012/1.1937 is bolstered on the back of monthly supply at 1.1857/1.1352 appearing on the verge of unbolting its upper border.

With respect to the RSI indicator, traders will note the value trades north of 80.00 within overbought terrain.

H4 timeframe:

Following an early dip from a resistance area at 1.1815/1.1790, positioned on top of the recently penetrated daily supply zone, price action produced a bullish engulfing formation off lows at 1.1731. This was enough to fuel a 1.1815/1.1790 break to supply at 1.1876/1.1847, an area that’s glued to the upper boundary of monthly supply at 1.1857/1.1352.

H1 timeframe:

Mid-morning trade during London on Thursday welcomed demand at 1.1724/1.1734, an area aligning closely with the 100-period simple moving average. Broad USD weakness brought forth a wave of buying from the noted demand, moves that eventually seized the 1.18 level and resistance at 1.1840, consequently realising potential upside to a supply taken from 1.1891/1.1869 (sited on top of H4 supply at 1.1876/1.1847).

Also of interest is the RSI value recently entering overbought waters.

Structures of Interest:

Monthly price is showing signs of overtaking supply at 1.1857/1.1352, together with daily action recently dethroning supply at 1.1798/1.1723, consequently sending across a bullish vibe. This, along with H1 flow taking resistance at 1.1840, could have H4 supply at 1.1876/1.1847 and H1 supply at 1.1891/1.1869 give way to further buying today. As such, intraday traders may be watching for bullish strategies to form above 1.1840.

July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off, FP Markets

AUD/USD:

Monthly timeframe:

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

May’s extension, together with June and July’s follow-through, witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582), relinquish ground. Technically, buyers are now free to run as far north as 0.8303/0.8082, a supply zone that aligns closely with trendline resistance (prior support – 0.4776).

Despite the above, the market’s primary trend still points south, demonstrating a series of lower lows and lower highs since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

0.7197 resistance continues to steal the limelight on the daily chart, as the AUD/USD pencilled in a fifth successive advance on Thursday.

A pop above current resistance has supply plotted nearby at 0.7264/0.7224 to take aim at; a dip from current price, however, has support in view at 0.7067.

With reference to the RSI oscillator, the value is still seen producing bearish divergence around overbought levels.

H4 timeframe:

Supply from 0.7198/0.7179 appears to be losing its appeal. The reaction generated on July 22 printed a reasonably attractive move lower, though yesterday’s response failed to squeeze out a lower low, emphasising seller weakness here and potential approach to 0.7246/0.7227.

Chart pattern traders may also wish to note a possible ascending wedge pattern forming between 0.7063/0.7183.

H1 timeframe:

Confirmed by RSI bullish divergence, demand at 0.7111/0.7122 entered play going into US trade Thursday, sweeping intraday activity above the 100-period simple moving average and closing the session nearby the 0.72 level.

A spirited push above 0.72 may have supply at 0.7245/0.7225 make an entrance, extended from February 2019.

With respect to the RSI oscillator, we’re fast approaching overbought levels.

Structures of Interest:

Partially altered from previous analysis –

Monthly price sweeping through supply and associated trendline resistance, may feed a 0.7197 resistance breach on the daily timeframe towards supply at 0.7264/0.7224. Note a move higher is in line with the current uptrend.

This implies intraday bullish strategies are possible north of the 0.72 region today, with upside perhaps free to at least 0.7225. In addition, it also implies current H4 supply may be fragile.

July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off, 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.

April and May were pretty uneventful, with June also wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, currently trades lower by 2.9%.

Areas outside of the noted triangle can be seen at supply from 126.10/122.66 and demand coming in at 96.41/100.81.

Daily timeframe:

Partially altered from previous analysis –

After clearing demand at 105.70/106.66, recent trading swallowed nearby support coming in from 105.01 and recorded a sixth successive daily decline. It is also worth noting price movement retested the underside of the broken support yesterday.

Does this indicate we’re headed as far south as demand at 100.68/101.85, extended from October 2016?

Also noteworthy is the RSI indicator diving into its oversold boundary, currently circling the 27.00 level.

H4 timeframe:

Partially altered from previous analysis –

Large demand at 104.50/105.29 made a show in recent trade.

Buyers, so far have shown little enthusiasm, leading to fresh monthly lows forming at 104.68. It should also be noted 104.50/105.29 houses daily support at 105.01 and the lower base of the monthly descending triangle pattern at 104.62. In the event buyers regain consciousness from within the aforesaid demand, supply at 106.16/105.68 offers a realistic upside target.

H1 timeframe:

Upside attempts off the 105 level, as well as support at 104.82, were, as you can see, contained by supply coming in at 105.37/105.21, with H1 candles recently overrunning the noted levels. Although we clocked fresh monthly lows yesterday, indicator-based traders will acknowledge the RSI producing bullish divergence.

104.50 support is seen as the next downside base on the H1 timeframe.

Structures of Interest:

While daily price is tipped for additional underperformance, along with little indication of bullish activity from within H4 demand, H1 resistance at 104.82 could serve as a base in which sellers make an entrance from today.

Sellers, however, face potential opposition on the monthly timeframe as price trades within close proximity of 104.62, the lower edge of the descending triangle. Does this imply we’re looking at a 104.50 test on the H1 timeframe before buyers try and step in?

July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off, FP Markets

GBP/USD:

Monthly timeframe:

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

GBP/USD trades higher by 5.6% in July, with long-term trendline resistance (1.7191) displaying strong signs of giving way after support at 1.1904/1.2235 withstood downside attempts in April and May.

Despite the primary trend facing lower since early 2008, rupturing current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161).

Daily timeframe:

Partially altered from previous analysis –

After squeezing above the 200-day simple moving average, Thursday had the pair topple supply from 1.3021/1.2844 and yield a tenth consecutive daily advance.

Brushing aside the aforesaid supply throws light on resistance at 1.3201 and nearby 161.8% Fib ext. level at 1.3264.

The RSI oscillator remains toying with the 80.00 overbought value.

H4 timeframe:

Following an early rebound off demand priced at 1.2948/1.2910, GBP/USD sailed to fresh monthly pinnacles at 1.3102 yesterday and crossed paths with supply at 1.3150/1.3064.

H1 timeframe:

Following the formation of a local demand at 1.3020/1.3045, we penetrated 1.3050 resistance and engaged 1.31 psychological resistance. For now, as you can see, intraday selling has capped upside off the noted level.

Traders will note the aforesaid demand is positioned north of the widely watched 1.30 figure and trendline support (1.2673).

With reference to the RSI oscillator, the value is currently exploring overbought terrain.

Structures of Interest:

Both monthly and daily timeframes exhibit scope to discover higher levels, while H4 and H1 timeframes feature resistance/supply.

Higher timeframes often take precedence over lower timeframe structure, therefore a break of 1.31 is likely today with price to tackle the inside of H4 supply at 1.3150/1.3064.

July 31st 2020: DXY Continues to Explore Lower Terrain Despite Risk-Off, 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.

 

 

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