August 26th 2020: Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative

August 26th 2020:  Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative, FP Markets

EUR/USD:

Monthly timeframe:

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

The euro nudged to a third successive monthly gain against the US dollar in July, adding nearly 5 percent. The move toppled long-term trendline resistance (1.6038) and made contact with the upper border of supply from 1.1857/1.1352.

This argues a move to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next target. Also worth noting, though, is the primary downtrend (since July 2008) remains intact until 1.2555 is engulfed (Feb 1 high [2018]).

August, as you can see, has been relatively lacklustre, currently up by only 0.5 percent.

Daily timeframe:

Brought forward from previous analysis –

Efforts to extend July’s advance have so far been contained within a rising channel pattern (1.1695/1.1909), in addition to supply at 1.2012/1.1937 also recently making an entrance, extended from May 2018. Trendline support (1.0774) is likely to welcome price movement should a break lower come to pass, while immersing the aforesaid supply favours moves to resistance at 1.2095.

The RSI indicator, since the beginning of August, has drifted lower and exited overbought space, currently circling the 60.00 neighbourhood.

H4 timeframe:

Price recently came into contact with supply at 1.1828/1.1868, delivering a reasonably solid bearish candle on Monday. Evidently, this was not enough to tempt follow-through selling, therefore price action is, once again, exploring the lower edge of the aforesaid supply area.

An extension to the upside, moves that topple current supply, tips price for more outperformance to another supply coming in from 1.1953/1.1929.

H1 timeframe:

An early 1.18 retest amid European trade Tuesday observed the 100-period simple moving average come under fire. Although proving a reasonably formidable intraday resistance, recent trading closed above the dynamic value and shifted attention to 1.1850 resistance, with a break potentially pressuring things to channel resistance (1.1849), a base that intersects with an area of stacked supply between 1.1896/1.1910 and 1.1894/1.1876. Traders will note the upper base houses 1.19.

In terms of where we stand with the RSI indicator, the value is currently loitering around 60.00, threatening a possible move to overbought status.

Structures of Interest:

All in all, this market echoes a mild bullish tone at the moment, which could lead to +1.1850 moves today.

 

  • Monthly price recently breaking supply.

 

  • Immediate trend faces north, despite primary trend still pointing south.

 

  • Daily sellers struggling to print fresh lows from supply.

 

  • H4 supply looking tired.

 

August 26th 2020:  Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative, 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) abandon its position.

Concluding July higher by 3.5 percent, buyers, despite August’s failure to build on recent upside, 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).

Although price has removed trendline resistance, the market’s primary trend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Brought forward from previous analysis –

Since mid-June, the pair has been compressing north between two converging trendlines (0.6832/0.7064), in what appears to be a rising wedge.

Price, as you can see, recently tumbled just ahead of supply at 0.7346/0.7282, leading to a test of the rising wedge base, which has so far held firm.

A break below the aforesaid rising wedge may have dips find initial support around the 0.7067 region.

H4 timeframe:

Trendline support (0.7076) continues to maintain its position on the H4 timeframe. Yesterday’s upward lift from the aforesaid barrier appears to be tipped for additional gains to resistance at 0.7237. Should the resistance contain upside, this could be the early stages of a right shoulder from a head and shoulder’s top formation (0.7241/0.7275).

H1 timeframe:

Brought forward from previous analysis –

A defined range is now present on the H1 timeframe between the 0.72 level and the 0.7150 support (the 100-period simple moving average is seen drifting within). Outside of this consolidation, supply at 0.7236/0.7222, a clear-cut drop-base-drop zone, is seen, whereas stepping to lower terrain throws light on demand at 0.7105/0.7118.

Interestingly, we also see the H1 candles recently climbed above local trendline resistance (0.7215).

H4 resistance at 0.7237 is also positioned a pip above the H1 supply at 0.7236/0.7222.

Structures of Interest:

Partially altered from previous analysis –

Monthly price is attempting to secure ground north of supply at 0.7029/0.6664, while daily candles are in the process of forming a rising wedge pattern, a potential reversal formation.

H4 trendline support (0.7076), an ascending line that is now seen slicing through the middle of the current H1 range, remains prominent. The recent H1 trendline resistance break, on top of where the H4 trendline support is now located, as well as room seen to move higher on both the monthly and daily timeframes, forecasts a 0.72 break today, targeting H1 supply at 0.7236/0.7222.

August 26th 2020:  Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative, 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, May and June were pretty uneventful, with the latter wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, sunk nearly 2 percent, testing the lower boundary of the descending triangle, while August currently trades higher by 0.50 percent.

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 –

Since early last week, buyers and sellers have been squaring off mid-range between supply from 107.58/106.85 and support at 104.62, taken from the monthly timeframe (descending triangle support).

Thanks to upbeat risk sentiment, demand for the safe-haven Japanese yen diminished yesterday, consequently lifting USD/JPY to within shouting distance of the aforesaid supply. A push north may take on trendline resistance (111.71) and the 200-day simple moving average at 107.99.

H4 timeframe:

As anticipated, supply at 105.92/106.16 (prior demand) was taken on Tuesday, due to last week’s mild breach and relatively non-committal tone from sellers.

Price action forged an advance to supply at 106.65/106.43, joined with an ABCD pattern at 106.57 and a 127.2% Fib ext. level at 106.47.

H1 timeframe:

Tuesday’s bid overrun 106 resistance and also 106.19 resistance, potentially unshackling upside to a harmonic bearish bat pattern. Its PRZ (potential reversal zone) is made up of an 88.6% Fib level at 106.83, a 161.8% Fib ext. level at 106.89 and a 2.0 BC projection at 107.01.

106.19 could also re-enter the fight today as support.

With respect to the RSI value, the indicator entered overbought territory yesterday, though exited the region heading into the close.

Structures of Interest:

Recently connecting with monthly support at 104.62 may force daily price to supply at 107.58/106.85 and possibly also trendline resistance (111.71).

Intraday, H4 supply at 106.65/106.43 is in the limelight, as is its approach: an ABCD bearish pattern at 106.57. This, of course, may send the pair lower today, yet with monthly coming from support and daily/H1 action showing room to move higher, buyers still appear to have the advantage.

It may be a different story (sellers might take control) if we reach the H1 bearish harmonic bat PRZ between 107.01/106.83, as we’re then engaging with daily supply at 107.58/106.85.

August 26th 2020:  Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative, 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 finished higher by 5.5 percent in July, leading to long-term trendline resistance (1.7191) vacating its position.

Despite the primary trend facing lower since early 2008 (unbroken until 1.4376 gives way – April 2 high [2018]), the break of current trendline resistance could still have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.

August currently trades higher by 0.6 percent.

Daily timeframe:

Brought forward from previous analysis –

Resistance at 1.3201, along with a 161.8% Fib ext. level at 1.3264, remains in play on the daily timeframe, welcoming price action last week. Note we also have another 161.8% Fib ext. level at 1.3408 to work with in the event of moves higher. 1.3021/1.2844 is stationed nearby as demand, with a violation uncovering the 200-day simple moving average at 1.2720.

As you can see, buyers and sellers emphasise an indecisive tone right now. On one side, sellers are defending the aforesaid structures, while on the other side of the field buyers appear eager to extend the immediate trend, set in March.

H4 timeframe:

Sterling scored gains after bottoming ahead of channel support (1.3064), filtered closely with a trendline support (1.2981). Assuming bulls maintain a position today, channel resistance (1.3267) could make a show, with a break likely pushing for supply at 1.3301/1.3273, taken from December 2019.

H1 timeframe:

Early US on Tuesday gripped 1.3150 resistance, with downside attempts limited by the 100-period simple moving average. This implies buyers may try for higher levels above 1.3150 today, with 1.32 in line to receive price.

Indicator-based traders will also note the RSI is circling just south of its overbought level.

Structures of Interest:

Though monthly indicates scope to navigate territory north of current price, daily resistance at 1.3201 and the daily 161.8% Fib ext. level at 1.3264 have so far hindered upside attempts.

Intraday, however, a H1 move over 1.3150 today could come to fruition, with room to reach for 1.32 resistance, followed by channel resistance on the H4 timeframe (1.3267).

August 26th 2020:  Dollar Offered Towards 93.00 as Month-End Currents Crawl into the Narrative, 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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