Weekly Technical Market Insight: 26th – 30th October 2020

Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets

US Dollar Index:

Harvesting fresh motivation from daily trendline resistance (102.99), the US dollar index, or DXY, sunk 1 percent last week and subsequently tested the resilience of daily demand at 92.71/93.14 (a drop-base-rally formation).

With the lower portion of the aforesaid demand challenged, potentially with enough juice to test stops, and Friday’s candle finishing around session lows, approaching daily support at 92.26 is a possibility this week (with a break targeting daily support at 90.99). Also interesting is the daily head and shoulder’s top construction (93.66/94.74/93.87) – traders will note last Tuesday observed price penetrate the pattern’s neckline (92.76).

With respect to the RSI oscillator, we’re caught inside a falling channel right now with the value finishing the week sub 50.00. The 200-day simple moving average, circling 96.73, also continues to curve lower, two years after mostly drifting higher.

In the context of trend, previous research remains valid:

Since March 2008, a large-scale pullback has been seen on the monthly timeframe (primary trend is considered south). The daily timeframe’s immediate trend, however, has also faced lower since March 2020.

Weekly Technical Market Insight: 26th – 30th October 2020, 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, this argues additional upside may be on the horizon, targeting ascending resistance (prior support – 1.1641).

Before seeking higher territory, though, a dip to retest the recently penetrated trendline resistance (support) could materialise.

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

Daily timeframe:

Following four successive daily bull candles off descending support (prior resistance – 1.2011), sellers made an entrance from supply at 1.1872/1.1818 last week, a rally-base-drop configuration.

Bearish follow-through, however, seems unlikely in light of Friday’s close. This week, therefore, may push for supply at 1.2012/1.1937, extended from May 2018.

The RSI oscillator, for those who follow this particular indicator, will note the value recently flipped off trendline support (prior resistance) and is in the middle of establishing a trendline support from 33.60.

H4 timeframe:

Leaving behind demand at 1.1760/1.1779 (and a 50% retracement level at 1.1761), EUR/USD bulls took on an offensive role Friday, throwing light back on channel resistance (1.1830). As you can probably see, this ascending resistance also shares a bond with a supply from 1.1928/1.1902, as well as an AB=CD bearish correction and 1.618% BC projection at 1.1923 (in addition to a 78.6% Fib level at 1.1926 and a 127.2% Fib projection at 1.1933).

H1 timeframe:

Confirmed by RSI hidden bullish divergence, Friday recognised 1.18 as a line of support in early London, carrying candle action above the 100-period simple moving average and testing supply at 1.1864/1.1853. Although an initial rejection formed heading into US trading (common viewing as we transition into the US session at support or resistance), sellers lacked drive.

Occupying the aforesaid supply today and neighbouring resistance at 1.1870 shines light on the 1.19 level.

Structures of Interest:

Long term:

Monthly supply at 1.1857/1.1352 recently having its upper boundary taken out, along with daily sellers echoing a relaxed attitude out of supply at 1.1872/1.1818, signals buyers may have an edge this week.

Short term:

While H4 is seen closing in on some rather heavyweight resistance between 1.1928/1.1902, a H1 close above 1.1870 resistance could activate a short-term bullish theme to the 1.19 region.

It is at 1.19, sellers may make an entrance (see H4 resistances), likely with enough fuel to force a notable correction.

Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets

AUD/USD:

Monthly timeframe:

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

The month of September (lower by 2.9 percent) shattered a five-month winning streak and tested the upper border of demand at 0.7029/0.6664 (prior supply). Structurally speaking, therefore, buyers still have a strong advantage, 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:

Partially modified from previous analysis –

Recent flow withdrew to deeper waters and cast light on nearby demand at 0.6964/0.7042, with Wednesday rebounding strongly from the said zone and highlighting the 0.7243 peak (Oct 9) and supply at 0.7345/0.7287 (a rally-base-drop supply).

In terms of the RSI oscillator, 52.00 resistance remains a key watch, with a break likely to persuade the indicator to approach overbought terrain.

H4 timeframe:

Support at 0.7096 welcomed a retest on Thursday and guided price to supply at 0.7147/0.7170 (prior demand) on Friday, meeting closely with neighbouring trendline resistance (0.7413).

Additional areas to be mindful of this week are demand at 0.7014/0.7035 and 0.7210 resistance.

H1 timeframe:

With the 100-period simple moving average gyrating higher Wednesday, price action found support around 0.71 Thursday/Friday.

An enthusiastic advance unfolded Friday, generating sufficient force to cross paths with 0.7150 resistance and neighbouring supply from 0.7170/0.7157 (mild rally-base-drop structure).

Levels likely monitored beyond the aforesaid areas are demand at 0.7033/0.7045 and 0.7050 support, in addition to 0.72 resistance.

Structures of Interest:

Long term:

Room to extend gains out of daily demand at 0.6964/0.7042, and monthly price testing the upper rim of demand from 0.7029/0.6664, enhances the possibility of a bullish week.

Short term:

0.71 and nearby 100-period simple moving average on the H1, on top of H4 support at 0.7096, is potentially watched support this week.

H4 supply at 0.7147/0.7170 and trendline resistance, nonetheless, is problematic for buyers, yet knowing higher timeframes trade from demand could surpass any H4 arrangement.

Weekly Technical Market Insight: 26th – 30th October 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 2020 onwards, as you can see though, has had price toying with the lower boundary of the aforesaid pattern.

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:

Interestingly, since August, daily price has also been in the process of shaping a descending triangle pattern between 106.94/104.18.

Traders will note supply at 106.33/105.78 aligns with the upper perimeter of the descending triangle, while the lower edge of the monthly descending triangle (green – 104.62) sits just north of the daily pattern’s lower border line.

Breaking beneath both the daily and monthly timeframe’s descending triangle supports this week shifts focus back to daily demand at 100.68/101.85, fastened to the upper edge of monthly demand at 96.41/100.81.

H4 timeframe:

Partially modified from previous analysis –

Wednesday’s energetic sell-off blew through a head and shoulder’s top pattern neckline, drawn from 104.94 (and demand at 104.92/105.09), and crossed paths with an area of demand at 104.40/104.57. Moderate buying developed into the close of the week, with enough fuel to retest the base of 104.92/105.09.

Continued support off 104.40/104.57 this week feeds a possible 104.92/105.09 break and subsequent advance to supply at 105.52/105.69.

Yet, additional selling could take on the head and shoulder’s take-profit target, as per the pattern’s rules of engagement, around 103.95 (red), arranged just south of a 161.8% Fib projection at 104.11.

H1 timeframe:

The 38.2% Fib level at 104.87 and a 127.2% Fib projection at 104.86, levels that align closely with H4 supply at 104.92/105.09, weathered an upside attempt Friday. This clears the air to bottoms around 104.57 and 104.50 support and demand at 104.26/104.37 (prior supply).

Structures of Interest:

Long term:

Longer term, we are at an interesting juncture, made up of monthly and daily descending triangle supports from 104.62 and 104.18, respectively.

Short term:

Shorter term, H1 and H4 resistances are visibly putting up a fight despite higher timeframes signalling strong support.

A 104.50 test (this may also trigger a whipsaw into H1 demand at 104.26/104.37 [positioned under H4 demand at 104.40/104.57), in light of the bigger picture, could stir bullish strategies this week and reattempt to dethrone H1 Fibs and test 105.

Weekly Technical Market Insight: 26th – 30th October 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 (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, in spite of October trading higher by 1 percent right now, 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:

Partially modified from previous analysis –

GBP/USD recently sailed to fresh pinnacles at 1.3176, surfacing a few pips below resistance at 1.3201.

Following this, the latter part of the week saw a mild correction, though nothing to really get excited about and not enough to shine light on demand at 1.2645/1.2773 (and the 200-day simple moving average). Also noteworthy on this timeframe is the RSI oscillator attempting to make its way above 60.00, balancing off 47.00 support.

H4 timeframe:

After discovering thin air above 1.3116/1.3160 supply (prior demand) last week, a mild retracement phase emerged and set price action within a stone’s throw from an interesting zone of support (green) between 1.2973/1.3006 (formed from a collection of Fib studies and a support at 1.3006). Also worthy of mention is the nearby trendline support (1.2687).

H1 timeframe:

Although the week ended flirting with the 100-period simple moving average, positioned under resistance at 1.3067, strong support is seen.

In line with the H4 timeframe’s support zone at 1.2973/1.3006, the H1 timeframe reveals demand at 1.2970/1.2983, formed alongside two trendline supports (1.2862/1.3082) and the widely watched psychological level 1.30.

Structures of Interest:

Long term:

There are no immediate areas in play right now. Keeping an eye on the 1.3201 daily resistance, however, is recommended and also daily demand at 1.2645/1.2773, should further selling occur.

Short term:

The combination of H4 support at 1.2973/1.3006 and H1 support at 1.2970/1.30 offers traders a strong area of technical confluence to work with this week.

Breaking through the zones, nevertheless, will likely see immediate support at 1.2950 develop.

Weekly Technical Market Insight: 26th – 30th October 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: 26th – 30th October 2020, FP Markets
    • Articles
    • Views
    AUTHOR

    FP Markets

    FP Markets is an Australian regulated broker established in 2005 offering access to CFDs across Forex, Indices, Commodities, Stocks & Cryptocurrencies on consistently tighter spreads in unparalleled trading conditions. FP Markets combines state-of-the-art technology with a huge selection of financial instruments to create a genuine broker destination for all types of traders.

    PROFILE
Start Trading with a Global Broker

Archives

Archives

Categories


Start
Trading
in Minutes

Open an account now


Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets Access +10,000 financial instruments
Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets Auto open & close positions
Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets News & economic calendar
Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets Technical indicator & charts
Weekly Technical Market Insight: 26th – 30th October 2020, FP Markets Many more tools included

By supplying your email you agree to FP Markets privacy policy and receive future marketing materials from FP Markets. You can unsubscribe at any time.