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Weekly Technical Market Insight: 9th – 13th March 2020

Weekly Technical Market Insight: 9th – 13th March 2020, FP Markets

US Dollar Index:

Weekly Technical Market Insight: 9th – 13th March 2020, FP Markets

Over the course of last week, traders sold the dollar index en masse. as the US Federal Reserve cut its benchmark interest rate by 50 basis points, fearing the US economy may fall into a recession due to the coronavirus. Benchmark 10-year US Treasury yields hit all-time lows at 0.65%, while upbeat US non-farm payrolls offered little respite.

Down more than 2.00%, technical traders face supply-turned demand at 96.00/95.63, an area that’s contained downside since February 2019. With reference to the RSI, the value recently tunnelled through oversold ground and ended the week at around 26.00. Also notable is the 200-day SMA beginning to flatten around 97.81.

Dollar revival this week has demand-turned supply at 96.88/96.60 in the crosshairs; additional selling, however, leaves the index vulnerable to supply-turned demand coming in at 95.00/94.56.

 

EUR/USD:
Monthly timeframe:

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

The month of February witnessed EUR/USD revisit the upper limit of demand at 1.0488/1.0912 – a noteworthy area given the momentum derived from its base – and pencil in an appealing (bullish) hammer candlestick pattern.

Upside this month, currently trades +2.33%, manoeuvred the pair into demand-turned supply at 1.1857/1.1352 which intersects with long-term trendline resistance (1.6038). Moves higher came largely on the back of the dollar’s demise (see above).

The primary downtrend has remained lower since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

The 200-day SMA limited downside from 1.1159/1.1233 mid-week, eventually generating sizeable moves to the upside heading into the close. Trendline resistance (1.1179) fell victim to euro strength, culminating in moves to nearby supply at 1.1394/1.1342. Extended downside is a consideration this week, with sights fixed on 1.1159/1.1233 to offer possible support.

What’s also notable from a technical perspective is the RSI indicator piercing overbought levels, and joining hands with an RSI trendline support-turned resistance.

H4 timeframe:

Supply at 1.1361/1.1329 made its debut in the later hours of US trade Friday, capping price at 1.1354, a handful of points south of channel resistance (1.1184). Supply-turned demand entered view at 1.1294/1.1271 into the close, with a break of this area potentially exposing demand from 1.1218/1.1245. This zone, while overlapping with channel support (1.0855), effectively denotes the decision point to sustain upside north of the 1.1239 December 31st high.

H1 timeframe:

EUR/USD lost oomph after refreshing multi-month highs at 1.1354 Friday, capped by 1.1350, with price marginally overthrowing 1.13 to the downside by the close.

Hotter-than-expected US nonfarm payrolls data was largely ignored, while 1.1268/1.1255 resides as the next port of call, a supply-turned demand. Traders will also note this area carries with it a 161.8%/127.2% Fib ext. combination between 1.1248/1.1272. Beyond this base, though, downside appears unrestricted – consumed demand to the left of price shines the spotlight firmly on 1.12 as the next available area of support.

Structures of Interest:

Longer term:

Monthly action likely has longer-term players anticipating a pullback after closing in on 1.1857/1.1352; some, however, will watch trendline resistance, sited higher up on the curve. Alongside monthly action, daily price rebounded from supply at 1.1394/1.1342 with room to approach 1.1159/1.1233.

Downside, going on the above, is possible until reaching 1.1159/1.1233.

Shorter term:

H4 supply-turned demand at 1.1294/1.1271 is fragile, thanks to higher-timeframe positioning. A break of the said zone leads H1 candles into a Fib ext. combination between 1.1248/1.1272.

Traders considering buying opportunities from 1.1248/1.1272 must contend with the likelihood of a fakeout occurring to H4 demand at 1.1218/1.1245, which is glued to the top edge of daily supply-turned demand at 1.1159/1.1233.

A break beneath 1.1248/1.1272, though facing H4 and daily demand, could unlock the door for intraday bearish themes to 1.12, based on monthly price potentially weighing on overall price movement.

Weekly Technical Market Insight: 9th – 13th March 2020, FP Markets

AUD/USD:

 

Monthly timeframe:

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

Demand at 0.6358/0.6839 remains in the fight, with price attempting to bottom within its lower boundary. An eventual break of the said demand zone has another layer of demand close by at 0.6094/0.5866, while a recovery could eventually lead to trendline support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.

The primary trend in this market continues to face a southerly trajectory.

Daily timeframe:

Partially altered outlook from previous analysis –

Supply at 1.6585/1.6625 succumbed to higher prices over the course of last week, with some traders betting on an increase to 0.6680ish (red oval). Proven supply also resides at 0.6778/0.6731, aligning with trendline resistance (0.7393).

The RSI recently exited oversold territory, hovering south of 50.00.

H4 timeframe:

Supply at 0.6655/0.6629 continues to offer a ceiling on the H4 timeframe, but emphasises a fragile tone after price displayed resilience off trendline resistance-turned support (0.7031) and tagged the upper limit of the said supply.

Supply at 0.6695/0.6677 stands as the next upside target, in the event of higher prices this week.

H1 timeframe:

Early Europe Friday observed the Australian dollar enter into a relatively spirited advance against the greenback, in which 0.6650 and an aligning 161.8% Fibonacci ext. at 0.6648 made an appearance and capped upside.

Despite the shooting star candlestick formation (blue arrow), sellers appear frail, unable to sustain downside through local trendline resistance-turned support (0.6644). This, alongside buy-stop liquidity potentially filled amid the formation of the aforementioned shooting star configuration and Friday’s H1 candle closing in strong fashion, suggests buyers have the upper hand here and 0.6650’s days may be numbered.

Supply at 0.6695/0.6686 is viewed as the next upside hurdle in this market.

Structures of Interest:

Longer term:

Despite a pronounced drive into the confines of monthly demand at 0.6358/0.6839, a recovery is not out of the question, from a technical standpoint. This is particularly true on the daily timeframe, with the pair tipped for higher prices at least until connecting with 0.6680ish or supply at 0.6778/0.6731.

Shorter term:

In line with higher-timeframe structure, H4 supply at 0.6655/0.6629 lacks enthusiasm, as do the H1 candles at the underside of 0.6650.

On account of the above, all four timeframes analysed express desire to explore higher levels this week, with initial resistance seen at H4 supply from 0.6695/0.6677.

Weekly Technical Market Insight: 9th – 13th March 2020, 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 busy carving out a descending triangle pattern (118.66/104.62). The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into February’s end.

March trades lower by 2.42%, striving towards the lower boundary of the aforesaid descending triangle.

Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.

Daily timeframe:

Thursday’s 130-point decline, followed by Friday’s additional loss, overturned demand coming in at 105.57/106.17 (now serving supply), leading to an area of support at 104.44/105.06 entering play.

The RSI indicator entered oversold waters, the first time since August 2019.

H4 timeframe:

Friday edged south of demand at 105.64/105.89 and retested the lower edge of the area as supply heading into the close.

There’s not really much to go on to the left of price, therefore focus shifts to the possibility of buyers making a show off the daily support area at 104.44/105.06.

H1 timeframe:

Having seen US non-farm payrolls data deliver little, the H1 candles concluded the week forming what appears to be a bearish flag (105.00/105.72), while contained within a narrow range between 105.50/105.00.

105.50 breaking this week may draw 106 into view, alongside trendline support-turned resistance (107.36). In fact, the point the said structures merge (green) is an area intraday sellers perhaps have eyes for today/early week.

Structures of Interest:

Longer term:

The lower edge of the monthly descending triangle at 104.62 could encourage an unwinding of short positions. This is further strengthened on the back of the current daily support area at 104.44/105.06, and the RSI value swimming within oversold waters.

Shorter term:

H4 action has the unit fading the underside of a recently broken demand at 105.64/105.89, with H1 candles eyeing 106 for possible bearish scenarios.

Going on the above, higher-timeframe structure portends a recovery might be in order; shorter-term, though, it appears sellers want lower levels. As a result, traders considering 106 as a location for possible shorts, keep the higher timeframes in mind.

Weekly Technical Market Insight: 9th – 13th March 2020, FP Markets

GBP/USD:

 

Monthly timeframe:

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

Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This, along with trendline resistance (2.1161), remains a well-rounded resistance area to keep an eye on long term.

In recent months, a recovery formed off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high. The month of February declined nearly 3.00%, with March attempting to reclaim lost ground, currently trading at +1.73%.

Daily timeframe:

Partially altered outlook from previous analysis –

Demand at 1.2649/1.2799 entered view at the beginning of last week, fading YTD lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019), and has, over the course of the week, produced four successive bullish candles out of its base. Price is poised to build on recent gains this week, after taking out a local trendline resistance (1.3514). Supply seen at 1.3303/1.3184 is next in the firing range.

The 200-day SMA also resides within the current demand zone, circulating around 1.2699.

H4 timeframe:

Supply at 1.3023/1.3006 succumbed to GBP strength Friday, closing in the shape of a near-full-bodied bullish candle. To the left of current price, technical structure offers limited supply (purple arc) until engaging with demand-turned supply at 1.3110/1.3074.

Before reaching 1.3110/1.3074, expect some form of retest at 1.3023/1.3006 to form.

H1 timeframe:

Friday had 1.2998/1.2981 retested again, representing a durable supply-turned demand area, which brings with it an additional beat from the widely watched key figure 1.30. Supply at 1.3071/1.3046, drawn from early February, remains in motion, with the pair closing around the underside of this base into the close. A break north this week draws focus to the 1.31 handle, boasting reasonably sound history since the beginning of the year.

Note the current H1 supply is located a few points beneath H4 supply highlighted above at 1.3110/1.3074, and the 100-period SMA is seen drifting north after bottoming off 1.2815.

The RSI, a momentum oscillator, shows overbought conditions on this timeframe, dipping from a recent peak at 80.74 and producing bearish divergence.

Structures of Interest:

Longer term:

Crossing daily trendline resistance on Friday offers a relatively bright outlook for the euro this week, with upside hurdles not expected to make a stance until 1.3303/1.3184. However, traders must contend with the possibility the current trendline may be retested this week.

Shorter term:

H1 supply at 1.3071/1.3046 withstood a number of upside attempts in its time, and could now be fragile. This, along with nearby H1 demand at 1.2998/1.2981 containing downside, and H4 supply sited just above the current H1 supply, also suggests further upside is possible.

With the above taken into account, this may see traders attempt intraday bullish positions this week, though at which level is, of course, trader dependent.

Weekly Technical Market Insight: 9th – 13th March 2020, 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.

 

 

 

 

  • Weekly Technical Market Insight: 9th – 13th March 2020, FP Markets
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