August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close

August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close, 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 punched out 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 trend change to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next upside target.

Daily timeframe:

Partially altered from previous analysis –

Friday’s attempt to sustain upside came to an abrupt halt, fading session peaks ahead of supply at 1.2012/1.1937, and responding to an ABCD bearish pattern at 1.1872.

Increased interest to the downside emerged Monday, visiting as far south as the 1.17 region before price movement found some legs and reclaimed a large portion of the daily losses. Downside still has support at 1.1553 on the radar, with a breach throwing light on demand at 1.1369/1.1450, as well as a 38.2% Fib level at 1.1460 and trendline support (1.0774). Harmonic traders will note the 38.2% Fib level commonly represents the initial take-profit target out of ABCD configurations.

With respect to the RSI indicator, the value topped around 80.00 last week and exhibits signs of exiting overbought territory.

H4 timeframe:

Demand at 1.1682/1.1716 welcomed a swift rebound into the second half of the US session Monday, shining light on resistance at 1.1839. Unwinding through current demand today lands crosshairs at trendline support (1.1254), with a break uncovering another demand area at 1.1582/1.1621.

H1 timeframe:

After sliding through the 100-period simple moving average in early Asian trading Monday, the US session welcomed 1.17 which, similar to last Tuesday, held as support. As you can see, the day came to an end with H1 candles crawling to within shouting distance of the aforesaid simple moving average, a dynamic value plotted just under the 1.18 level.

Aside from the noted levels, demand at 1.1639/1.1658 is worthy of attention, as is supply from 1.1891/1.1869. In addition, the RSI recently climbed above the 50.00 mid-point level, suggesting intraday momentum is to the upside.

Structures of Interest:

Partially altered from previous analysis –

The monthly timeframe urges traders to consider the possibility of a long-term trend change after overrunning trendline resistance. Clearing monthly supply at 1.1857/1.1352 would help confirm this. However, daily sellers are proving relatively stubborn off a recently completed ABCD bearish pattern at 1.1872, with most sellers likely targeting support at 1.1553.

H4, on the other hand, recently defended demand at 1.1682/1.1716, demonstrating intraday buyers still have a hand in the fight. A break above 1.18 today signals the possibility of an approach to H4 resistance at 1.1839 and H1 supply at 1.1891/1.1869 (holds daily ABCD reversal point at 1.1872).

August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close, 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) relinquish ground. Concluding July higher by 3.5 percent, buyers appear free to explore as far north as 0.8303/0.8082, a supply zone aligning closely with trendline resistance (prior support – 0.4776).

Despite taking trendline resistance, the market’s primary trend still points south, demonstrating a series of lower lows and lower highs since mid-2011.

Daily timeframe:

Confirmed by RSI bearish divergence out of overbought territory, supply at 0.7264/0.7224 impacted movement Friday, guiding the pair lower and snapping a five-day winning streak. Additional downside was observed Monday, missing support at 0.7067 by a hair before spinning higher and reclaiming the majority of the day’s losses.

H4 timeframe:

Monday’s whipsaw to lower levels challenged the mettle of demand at 0.7082/0.7106, likely snapping a portion of protective sell-stops, and finished the session testing supply at 0.7146/0.7127.

Areas to monitor beneath current demand can be seen at a trendline support (0.6832). In addition, support also rests nearby at 0.7043 as well as another demand at 0.7015/0.7035.

H1 timeframe:

A reasonably deep run of stops below 0.71 into modest demand at 0.7073/0.7088 developed heading into US trade Monday, ending the day within a stone’s throw away from trendline resistance (prior support – 0.7113). it should be noted this trendline resistance shares space with H4 supply at 0.7146/0.7127.

Above current trendline resistance, 0.7150 resistance is seen, along with the 100-period simple moving average, currently circling 0.7160.

Structures of Interest:

Monthly price sweeping through supply and associated trendline resistance has likely aroused interest from longer-term traders. Monday’s comeback ahead of support at 0.7067 is also likely to be interpreted as a bullish signal.

In line with higher timeframe movement, intraday buyers may be watching for a H4 close to form above supply at 0.7146/0.7127 (and a H1 close above the 100-period simple moving average on the H1), before considering bullish strategies.

August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close, 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, consequently testing the lower boundary of the current descending triangle.

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 –

Having monthly support at 104.62 make a show, daily price ended the week retesting the underside of 105.70/106.66 as possible supply, with Monday settling by way of a reasonably attractive shooting star candlestick pattern, considered a bearish signal at peaks.

Removing 105.70/106.66 will have the pair work its way into the next available supply at 107.58/106.85.

H4 timeframe:

Supply (prior demand) at 106.39/106.64, as well as resistance derived from the Andrew’s Pitchfork (107.54), made an entrance on Monday, withstanding upside on two occasions.

Support lies close by at 105.68, while the next layer of supply can be seen at 107.37/107.17 and 107.60/107.42.

H1 timeframe:

Choppy price action saw buyers and sellers butt heads around the 106 level Monday, sliding supply at 106.49/106.35 in the frame and support coming in at 105.68.

Traders will note additional resistance is also seen at 106.70, followed by 107. South of 105.68 (H4 support), 105.50 support can be found, as well as demand (prior supply) at 105.37/105.21 which shares its range with a 100-period simple moving average.

Structures of Interest:

The descending triangle’s lower perimeter recently making an entrance at 104.62 sparked modest interest, with enough impetus to throw 105.70/106.66 back in the pot as supply on the daily timeframe.

Supply (prior demand) at 106.39/106.64 on the H4 timeframe is interesting as it resides within daily supply at 105.70/106.66. The recent downside break of 106 (H1), therefore, could be sufficient to push sellers towards at least 105.68 today.

August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close, 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) being absorbed. This follows support at 1.1904/1.2235 withstanding downside attempts during April and May.

Despite the primary trend facing lower since early 2008, rupturing current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.

Daily timeframe:

Partially altered from previous analysis –

After squeezing through the 200-day simple moving average and toppling supply at 1.3021/1.2844, Friday turned ahead of resistance at 1.3201 (sited ahead of nearby 161.8% Fib ext. level at 1.3264) and moulded a shooting star candle pattern (bearish signal at peaks). Monday, as you can see, retested the broken supply as demand.

The RSI oscillator, for those who follow momentum indicators, will note the value continues to toy with the 80.00 overbought level.

H4 timeframe:

Taking into account the current uptrend, stacked demand between 1.2948/1.2910 and 1.2945/1.2989 will likely be a watched base for dip-buying strategies today. Aside from Friday’s high at 1.3170, the next upside resistance is set on the daily timeframe at 1.3201.

H1 timeframe:

The 100-period simple moving average on the H1 timeframe entered play on Monday and, despite a near-retest of the widely watched 1.30 level, sent price back above 1.3050 resistance.

1.31 has proven relatively dominant resistance, therefore we may be in for another dip to at least trendline support (1.2519) to entice reinforcements before attempting to dethrone 1.31 to the upside.

Structures of Interest:

Monthly breaking trendline resistance sends across an optimistic tone for GBP this month. This is further reinforced by the recent retest at daily demand from 1.3021/1.2844, perhaps enough to fuel things to daily resistance at 1.3201.

Before attempting to climb higher levels, as suggested by the higher timeframes, a dip to H4 demand at 1.2945/1.2989 could be in order. Note this area sits just under the 1.30 level based on the H1, indicating a whipsaw through the current H1 trendline support into 1.30 before buyers step in.

August 4th 2020: DXY Finishes off Best Levels Ahead South of 94.00, Unchanged by the Close, 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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