April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index

April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index, FP Markets

EUR/USD:

Monthly timeframe:

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

March, evident from the monthly chart, left behind a long-legged doji indecision candle, with its extremes crossing paths with heavyweight demand-turned supply at 1.1857/1.1352 and demand at 1.0488/1.0912.

The technical foundation has April rangebound between the two aforementioned price structures; notably, however, the current monthly candle is seen tunnelling into the upper boundary of 1.0488/1.0912.

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

Daily timeframe:

Partially altered from previous analysis –

Following two back-to-back doji indecision candles, EUR/USD found itself under pressure Wednesday consequently forming a dominant bearish outside day configuration. Structurally, though, price remains trading around the upper boundary of a 78.6%/61.8% Fib zone at 1.0745/1.0830 (pink).

Last Wednesday’s high at 1.0990 may provide resistance, with a nudge above this point bringing on the 200-day simple moving average (SMA) at 1.1046. The inability to sustain upside out of 1.0745/1.0830, however, suggests demand at 1.0526/1.0638, an area extended from March 2017, may elbow its way back into the spotlight.

H4 timeframe:

Support from 1.0831 gave way in recent hours with price crossing paths with fresh demand at 1.0782/1.0807, an area plotted within the 78.6%/61.8% Fib zone at 1.0745/1.0830, based on the daily chart.

Closing back above 1.0831 on a H4 basis may spark a surge to the upside, with eyes on the 1.0890ish region and possibly beyond. Yet, slipping below current demand could bring about a strong decline towards demand at 1.0602/1.0630.

H1 timeframe:

US hours Wednesday witnessed the pair voyage south of 1.0850 in dominant fashion, pressured amid notable upside in the US dollar index that reclaimed 100.00. As evident from the H1 timeframe we have bottomed ahead of 1.08, by means of a Japanese candlestick pattern (hammer) – traditional interpretation marks this pattern as a bullish signal.

In addition to the technical structure underlined above, technicians will also note an ABCD correction pattern that completes a touch sub 1.08 (orange).

Structures of Interest:

Monthly price trading within demand at 1.0488/1.0912; daily price trading out of 1.0745/1.0830; H4 price off demand at 1.0782/1.0807 and the H1 chart recently bottoming ahead of 1.08 and an ABCD bullish correction, positions buyers in a potentially favourable location.

Traders, nonetheless, may wait for H4 price to close above resistance at 1.0831 before taking action.

April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index, FP Markets

AUD/USD:

Monthly timeframe:

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

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery. The recovery move, alongside April’s advance so far, has landed the unit within striking distance of supply fixed at 0.7029/0.6664, intersecting with a long-term trendline resistance (1.0582).

With reference to the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Brought forward from previous analysis –

AUD/USD, based on the daily timeframe, can be found languishing south of a 61.8% Fib level at 0.6449, accompanied closely by a trendline resistance (0.7031).

It may also be worth noting that a break above the said structures shines the spotlight on a nearby supply at 0.6618/0.6544, sited just south of a 161.8% Fib ext. level at 0.6642. To the downside, demand at 0.5926/0.6062, as of current price, remains the next support target on this timeframe.

H4 timeframe:

Partially altered from previous analysis –

The harmonic Gartley formation, boasting its defining limit at the 78.6% Fib level from 0.6433, remains a focal point on the H4 timeframe. Technicians will also note additional Fibonacci studies are present around this area in the form of a 127.2% Fib ext. level at 0.6421 and a 161.8% Fib ext. level at 0.6420.

Price action, as you can see though, is having a hard time reaching demand plotted at 0.6192/0.6247. Striking this zone will likely be enough to tempt short sellers out of the said Gartley formation to reduce risk to breakeven. Some, however, may still hold out for the 38.2% Fib retracement of legs A-D, standing within the lower boundary of demand from 0.6065/0.6106 at 0.6075.

H1 timeframe:

Improved sentiment across the board provided fresh impetus to AUD/USD Wednesday, snapping a two-day losing streak. Heading into the London session, however, buyers lost their flavour at 0.6350, forming a Gravestone doji Japanese candlestick pattern. What’s also interesting on this timeframe is between 0.6302/0.6323 we have what appears to be a rising wedge continuation pattern in play. Take-profit targets are subjective, though traditionally traders tend to measure the base value and add this to the breakout point.

Structures of Interest:

Supply at 0.7029/0.6664 remains an obvious ceiling on the monthly timeframe to be aware of should we continue pursuing higher ground. Though before reaching this base, the noted daily resistances must be overthrown.

With reference to the H1 timeframe, price appears poised to break the lower edge of its rising wedge pattern, potentially unshackling downside to at least 0.63. This coupled with room to extend losses out of the current H4 Gartley pattern off 0.6433 could see sellers jump aboard any downside movement on the H1 today.

April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index, 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 between 118.66/104.62. The month of March concluded by way of a long-legged doji candlestick pattern, ranging between 111.71/101.18, with extremes piercing the outer limits of the aforementioned descending triangle formation.

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

Daily timeframe:

Partially altered from previous analysis –

Leaving demand from 105.70/106.66 unopposed, USD/JPY seems to be in the process of forming a double-bottom pattern from 106.87 (black line). Although the 200-day simple moving average (SMA), currently circulating around 108.30, could hamper upside, pattern traders will still be watching/hoping for a break above the 109.38 April 6 high (red arrow) to confirm the double-bottom pattern. This potentially preps the ground for moves to 111.30ish based on the double-bottom’s take-profit target (usually measured from the lowest trough to the peak and then adding this value to the breakout point).

Candlestick traders will, however, likely note yesterday’s session ended by way of a doji indecision formation.

H4 timeframe:

Partially altered from previous analysis –

Demand at 106.75/107.22 remains a feature on the H4 timeframe, capping downside since the beginning of the month and sited just ahead of daily demand underlined above at 105.70/106.66.

Interestingly, since the middle of last week the candles have been compressing within what appears to be a bearish pennant pattern between 106.92/108.07. A decisive move south will likely overwhelm buyers from H4 demand and potentially make a run for demand at 105.75/105.17. Traditionally, take-profit targets out of the noted pattern are formed by measuring the preceding move (109.38-106.92) and adding this value to the breakout point.

Should we pop higher, on the other hand, resistance is seen nearby at 108.53, with familiar supply also resting at 109.71/109.20.

H1 timeframe:

In recent sessions we’ve seen the H1 candles begin carving out what appears to be a rising wedge pattern from 107.28/107.89. Aside from this formation, notable supply also remains fixed to the upside at 108.16/107.99, which holds the 108 handle within its lower boundary, whereas to the downside we see the 107.50 support. Additionally, the technical landscape reveals a 100-period SMA in the mix, currently circulating around 107.69.

Structures of Interest:

Owing to lacklustre movement, higher-timeframe price action has witnessed limited change. Monthly price could effectively pop either way, while daily price, although showing signs of a potential double-bottom pattern at 106.87, may be hindered by the 200-day SMA at 108.30.

A decisive H4 close beneath the current bearish pennant pattern suggests we may head lower, though most traders will want to see at least a decisive H1 close beneath the current rising wedge before taking action. Other traders, however, may also want H4 demand at 106.75/107.22 cleared before moving forward.

April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index, FP Markets

GBP/USD:

Monthly timeframe:

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

Although March clocked levels not seen since the 1980s, ahead of a 127.2% Fib ext. level at 1.1297, price staged an impressive recovery and regained approximately 80% of the month’s losses.

Support at 1.1904/1.2235 remains in play April, despite recent moves to said lows. Neighbouring resistance can be seen in the form of a trendline formation (1.7191).

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.

Daily timeframe:

Partially altered from previous analysis –

Demand-turned supply at 1.2649/1.2799, an area that aligns with a 200-day simple moving average (SMA) at 1.2645, remains a dominant fixture to the upside on this timeframe.

Demand at 1.2509/1.2372 ceded ground Tuesday in reasonably dominant fashion, which, as can be seen from the chart, was retested as resistance on Wednesday. This may be enough to draw focus towards demand at 1.2212/1.2075 today.

H4 timeframe:

Price action recently welcomed demand at 1.2147/1.2257 back into the frame, which, so far, has been able to withstand any downside attempts. Supply rests close by at 1.2496/1.2437; this is a reasonably dominant supply with notable downside momentum out of its base, seen just ahead of another layer of supply at 1.2622/1.2517. Also appealing from 1.2496/1.2437 is the converging 161.8% Fib ext. level at 1.2466 (blue).

H1 timeframe:

1.23 elbowed its way into view in the later stages of US trade Wednesday and holds as support, as we write. Trendline resistance (1.2647) has been thrown back into view, with a violation likely to see 1.24 and the 100-period SMA come under fire.

Technicians, particularly harmonic traders, may also wish to acknowledge a possible ABCD pattern (orange) that completes a few points ahead of 1.2450.

Structures of Interest:

This is a tricky market to read at the moment.

On the one hand, monthly price is holding north of support at 1.1904/1.2235, albeit in the shape of a bearish candle, while on the other hand, daily activity retests the underside of 1.2509/1.2372 as resistance, suggesting lower levels.

Against the backdrop of longer-term movement, H4 price is showing scope for a move towards supply at 1.2496/1.2437, effectively in harmony with the monthly timeframe. However, H1 resistances, along with the daily zone, could hinder upside attempts.

April 23rd 2020: Risk-Sensitive Currencies Benefit Despite Strong Dollar Index, 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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