Weekly Technical Market Insight: 14th – 18th September 2020

Weekly Technical Market Insight: 14th – 18th September 2020, FP Markets

 

US Dollar Index:

The beginning of the week observed price action prod through (and retest) the upper frame of a daily falling wedge pattern (93.91/92.55), fuelled amid recovery gains off daily support at 92.26, an active S/R level on the US dollar index (DXY) since late 2017.

A falling wedge can represent either a reversal or continuation signal – in this case the pattern implies a reversal signal. Before reaching the falling wedge take-profit target at 94.65 (measured by gauging the base distance and adding this value to the breakout point – light purple boxes), daily supply at 94.02/93.56, an area that’s contained upside since August, must be unseated, along with daily trendline resistance, drawn from the 100.56 peak. Additional resistances to be conscious of this week are daily resistance at 95.03 and daily trendline resistance (102.99).

 

  • The RSI oscillator has produced a series of higher lows/highs after bottoming at 17.50 heading into August, recently greeting the 50.00 mid-way point.

 

  • Concerning the 200-day simple moving average, circling 97.29, the dynamic value continues to curve lower, two years after mostly drifting higher.

 

Weekly Technical Market Insight: 14th – 18th September 2020, FP Markets

EUR/USD:

Monthly timeframe:

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

August saw the euro nudge to a fourth successive monthly gain against the US dollar, adding nearly 1.5 percent. The move toppled supply from 1.1857/1.1352 and extended space north of long-term trendline resistance (1.6038), arguing additional upside may be on the horizon, targeting trendline resistance (prior support – 1.1641).

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

Daily timeframe:

Efforts to extend higher remain contained within the parapets of a rising channel pattern (1.1695/1.1909), in addition to supply at 1.2012/1.1937 making an entrance on August 18, extended from May 2018. Mid-week, as you can see, witnessed a modest recovery form from the aforesaid channel support as well as a fusing trendline support (1.0774).

Based on the daily timeframe, trend traders will note that alongside monthly price violating long-term structure, EUR/USD has trended higher since late March.

With respect to the RSI indicator, we crossed back above 50.00 in the second half of the week, rebounding from a month-long channel support.

H4 timeframe:

Supply at 1.1928/1.1902 welcomed the pair on Thursday, decisively putting a lid on gains and delivering price to demand at 1.1794/1.1833. The latter represents a reasonably significant zone, a rally-base-rally area where a decision was made to break the 1.1865 September 4 peak and approach supply. Together with trendline support (1.1965), Friday’s mild bullish tone out of the aforesaid demand was not surprising.

Failure to hold current demand this week, support at 1.1753, nearby trendline support (1.1185) and familiar demand at 1.1682/1.1716 are visible areas to monitor.

H1 timeframe:

Friday extended recovery gains from the 100-period SMA at 1.1813, drawing through 1.1850 resistance to test a relatively long-standing supply zone at 1.1894/1.1865. The week settled back under 1.1850, redirecting focus to the SMA and also 1.18 support.

Harmonic traders will note we also have a bullish Gartley pattern forming, with a PRZ zone seen between 1.1766/1.1788 (AB=CD structure, a 78.6% Fib level and a 1.618 BC projection). Interestingly, this is located directly beneath 1.18, meaning sell-stop liquidity could help feed buying pressure derived from the Gartley formation.

In terms of where we stand on the RSI indicator, a clear support/resistance zone is present around 45.00.

Structures of Interest:

Long term:

 

  • Monthly timeframe suggests buyers could push beyond supply at 1.1857/1.1352.

 

  • As daily action recently rebounded from trendline supports, daily supply at 1.2012/1.1937 could be seen this week.

 

Short term:

Technical eyes are likely on the completion of the H1 Gartley pattern between 1.1766/1.1788 this week, though be aware that H4 might stretch for 1.1753 support before buying takes hold. This would test the extremes of the Gartley configuration.

Weekly Technical Market Insight: 14th – 18th September 2020, FP Markets

AUD/USD:

Monthly timeframe:

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

July’s rally, coupled with August’s 3.3% follow-through, witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582) abandon its position. Technically, buyers appear 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).

While price has indeed removed trendline resistance and supply, traders might still want to take into account the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Brought forward from previous analysis –

 

  • Demand at 0.7131/0.7192 (a drop-base-rally area) remains in play.

 

  • Support at 0.7067 is seen should we push through the aforesaid demand this week.

 

  • Supply at 0.7453/0.7384 can be found to the upside, an area which recently capped YTD peaks at 0.7413.

 

  • The trend, according to the daily timeframe, has emphasised a positive tone since bottoming in late March.

 

  • Indicator-based traders may also want to recognise the RSI holds support around 53.00, a dynamic S/R level since October 2019.

 

H4 timeframe:

Partially altered from previous analysis –

Supply at 0.7300/0.7282 did a superb job in holding back buyers last week, despite a rigorous spike to 0.7324.

Trendline support (0.7076) and demand at 0.7186/0.7207 also came together earlier in the week, providing a stage for buyers to advance from.

Removing supply this week throws light on supply at 0.7339/0.7357, a prior demand zone; dipping to lower levels, however, calls for a possible reconnection with the aforesaid trendline support and demand.

H1 timeframe:

0.7250 support and merging trendline support (prior resistance – 0.7413) proved to be a stable floor heading into Friday’s session. Early action toppled the 100-period SMA and crossed paths with 0.73 into US trading. It’s common to see the US session oppose European flow – 0.73 held firm as resistance and delivered price back to the 100-period SMA, which, as you can see, pared a portion of earlier downside.

South of here, technicians are likely watching demand at 0.7223/0.7236, an area established prior to breaking 0.7250 to the upside. Travelling above 0.73 this week shines light on supply from 0.7346/0.7333 and a 161.8% Fib ext. level at 0.7339, followed by 0.7350 resistance.

Structures of Interest:

Long term:

 

  • Monthly action forecasts further buying over the coming months to 0.8303/0.8082.

 

  • Daily price proposes AUD/USD may push for supply at 0.7453/0.7384 this week, should demand at 0.7131/0.7192 hold. Dips, however, could find 0.7067 support makes a show.

 

Short term:

 

  • H4 is finding it difficult to topple supply from 0.7300/0.7282, yet having seen the recent response from sellers at the tail end of the week indicates buyers may take over.

 

  • H1 is seen fading the 100-period SMA, with price poised to reconnect with 0.73.

 

On account of the above analysis, overrunning 0.73 on the H1 timeframe may spark continuation buying this week to at least H1 supply at 0.7346/0.7333 (fastened to the underside of H4 supply at 0.7339/0.7357).

Weekly Technical Market Insight: 14th – 18th September 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 carving out a descending triangle pattern between 118.66/104.62. July sunk nearly 2 percent, testing the lower boundary of the descending triangle, while August ended off best levels, effectively unmoved.

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:

Brought forward from previous analysis –

Volatility, as you can see, has somewhat diminished in recent sessions.

Supply from 107.58/106.85 proved a tough nut to crack (an area sharing space with trendline resistance from 111.71 and located just under the 200-day simple moving average at 107.81) in August.

Trading to the downside is a possible scenario to 104.62 (monthly support), assuming a break of 105.10 swing lows. If a break of 104.62 comes to pass this likely shifts interest to daily demand at 100.68/101.85, drawn from 2016.

With reference to the RSI, we remain pretty neutral right now, hovering around 50.00.

H4 timeframe:

Brought forward from previous analysis –

Technical action continues to fluctuate between demand from 105.57/105.76 and a supply zone plotted at 106.93/106.44.

A break higher this week unmasks stacked supply between 107.37/107.17 and 107.23/107.08. Territory south of current demand, nonetheless, shines light on demand at 105.06/105.30 (prior supply).

H1 timeframe:

Into the second half of the week, price exhibited a non-committal tone, establishing a 20-pip consolidation between 106.07/106.24. Aligning with the upper rim of the current range, we see trendline resistance (106.55), while a few pips south we have trendline support (105.20) and 106 support on the radar.

Outside of the aforesaid levels, 106.50 resistance and demand at 105.55/105.73 are seen.

Structures of Interest:

Long term:

Longer term, we are still holding monthly support at 104.62, though any upside attempts have been capped by daily supply at 107.58/106.85. As a result, we are seeing some conflict on the higher timeframes right now.

Short term:

H4 supply at 106.93/106.44 and H4 demand at 105.57/105.76 is worth noting this week.

Intraday, a whipsaw through the current H1 range edge at 106.07 may take form early week to test 106/trendline support (105.20), a move that could encourage buying to at least fill the H1 range to 106.24.

Weekly Technical Market Insight: 14th – 18th September 2020, 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 taken from 2.1161 unopposed, September currently trades lower by 4.3%, on track to retest trendline support (prior resistance – 1.7191).

Interestingly, the primary trend has faced lower since early 2008 (unbroken until 1.4376 gives way – April 2 high [2018]).

Daily timeframe:

Thursday’s 1.5% decline had demand at 1.3021/1.2844 relinquish ground, resulting in nearby demand at 1.2645/1.2773 (houses the 200-day simple moving average at 1.2735) making a show.

As you can see, buyers and sellers are now squaring off between the lower ledge of the recently engulfed demand at 1.2844 and the top edge of demand at 1.2773.

The RSI indicator recently cemented position under 50.00 after breaching trendline support, and is now poised to greet oversold territory.

H4 timeframe:

Partially altered from previous analysis –

Thursday’s descent unwound from supply at 1.3055/1.3018, a recent drop-base-drop formation.

Price plunged from the aforesaid supply amid intensifying fears surrounding a no-deal Brexit, generating enough force to brush aside demand at 1.2837/1.2883. With the latter holding as supply into the week’s end, downside to support at 1.2742 and a 61.8% Fib level at 1.2720 (green) could be in the offing this week.

H1 timeframe:

 

  • Friday’s session on the H1 made contact with supply at 1.2892/1.2860, mildly whipsawing above 1.2850. Traders will note the supply zone is situated just south of the 1.29 level.

 

  • 28 offered limited support, with price taking on nearby support at 1.2762, derived from July 23.

 

  • The 100-period simple moving average, currently trading at 1.2959, has drifted lower since topping at the beginning of September.

 

  • RSI resistance at 55.00 is still in place and could make a show this week, after the value recently bottomed around 19.00.

 

Structures of Interest:

Long term:

Monthly price suggests we could be heading for further losses until around 1.26 (monthly trendline support).

Daily demand at 1.2645/1.2773 recently entered view, yet is finding resistance from the lower edge of recently penetrated demand at 1.3021/1.2844. So, in order to reach our monthly downside target (1.26ish), current daily demand and the 200-day SMA seen within will need to step aside.

Short term:

H4 reveals space to connect with support at 1.2742 after establishing resistance off supply at 1.2837/1.2883.

Another retest of H1 supply at 1.2892/1.2860 (located around the top edge of the aforesaid H4 supply) could form in early trading this week, though be aware a pop to 1.29 is possible before sellers make an entrance. Ultimately, traders are likely to seek 1.2750 support on the H1 as an initial downside target, which aligns closely with H4 support at 1.2742.

Weekly Technical Market Insight: 14th – 18th September 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: 14th – 18th September 2020, FP Markets
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