July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00

July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00, FP Markets

EUR/USD:

Monthly timeframe:

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

The month of May, as you can see, recovered off worst levels out of demand from 1.0488/1.0912 and closed firm.

June extended gains to highs at 1.1422 and finished adding 1.19%, despite running into opposition at the lower ledge of nearby supply from 1.1857/1.1352 mid-month (unites with long-term trendline resistance [1.6038]).

July is currently seen toying with levels just ahead of the aforesaid supply.

With reference to the primary trend, the pair has exhibited clear lower peaks and troughs since 2008.

Daily timeframe:

Partially altered from previous analysis –

The month of June observed EUR/USD address a potential reversal zone (PRZ), derived from a harmonic bearish bat pattern. The base is comprised of an 88.6% Fib level at 1.1395, a 161.8% BC projection at 1.1410 and a 161.8% Fib ext. level at 1.1462 (red oval). It’s typical, in the case of bearish formations, to see traders sell PRZs and place protective stop-loss orders above the X point (1.1495). Common take-profit targets fall in at the 38.2% and 61.8% Fib levels (of legs A/D) at 1.1106 and 1.0926, respectively.

As you can see, the Fib targets have yet to be met.

H4 timeframe:

Monday’s action brought light to a 127.2% AB=CD bearish pattern at 1.1336 along with nearby resistance at 1.1348. As you can see, the aforesaid resistances were adequate enough to hold back buyers Tuesday, throwing candles back to the breached channel formation (1.1422).

Breaking through channel support today may lead to the 1.1219 (July 3) low making an entrance, and with a little oomph, demand at 1.1189/1.1158 (prior supply).

H1 timeframe:

Heading into US trade Tuesday, a mild whipsaw above 1.13 emerged, a move that tested local supply at 1.1316/1.1306. This had control change hands over to sellers, with price addressing the 100-period simple moving average at 1.1270 into the closing stages of the session.

Clearing the aforesaid simple moving average today shines light on demand coming in from 1.1239/1.1251, merging with 1.1250 support. A break here, however, places 1.1181/1.1202 demand on the radar.

Structures of Interest:

Monthly supply at 1.1857/1.1352 continues to emphasise a bearish tone in this market. The daily chart also reminds traders there’s still scope for a drop to the 38.2% Fib level at 1.1106.

H4 is appearing soft off channel resistance-turned support (1.1422) after fading the recent AB=CD completion. This, combined with the higher timeframes, sends a bearish undercurrent through to the H1 timeframe today. Therefore, the current simple moving average is likely on its way out, with price poised to make its way towards demand around the 1.1250 point.

July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00, 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’s follow-through, has supply at 0.7029/0.6664 echoing a vulnerable tone in early July, particularly as an intersecting long-term trendline resistance (1.0582) shows signs of giving way.

Regarding the market’s primary trend, a series of lower lows and lower highs have been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

AUD/USD ousted resistance at 0.6931 Monday, with Tuesday retesting the latter as support.

The break to the upside shines focus on two trendline resistances close by (prior supports – 0.6744/0.6671), with a break unmasking another resistance at 0.7197.

Failure to maintain a position above 0.6931 will throw light back on support at 0.6755. Traders will also note the 200-day simple moving average at 0.6671 lurks just south of here, a dynamic value in the process of flattening following months of drifting lower.

H4 timeframe:

Partially altered from previous analysis –

Since June 10, H4 has been in the process of establishing a (bullish) pennant pattern between 0.7064/0.6776, generally considered a continuation pattern among chart pattern traders. As you can see, last week had price penetrate the upper boundary of the aforesaid pennant, unearthing a potential buy signal. Supply at 0.7058/0.7029 is featured as the next obstacle on this timeframe.

H1 timeframe:

The value of the Australian dollar fell against the greenback Tuesday, eventually squeezing under 0.6950. Establishing a position sub 0.6950 today could see buyers and sellers butt heads at 0.69. Technicians will also acknowledge the round number is joined closely with a support at 0.6886 and an ABCD correction.

Spinning back above 0.6950, nevertheless, throws light on supply at 0.7003/0.6987, an area containing the widely watched 0.70 value.

Structures of Interest:

Higher timeframes imply bulls maintain control at the moment, particularly if we turn higher from daily support today at 0.6931.

Intraday also has H4 pointing to higher levels: supply at 0.7058/0.7029. Before we explore higher ground, H1 puts forward the possibility of completing its ABCD correction at 0.69. Consequently, this unlocks a possible platform for buyers to consider.  

July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00, 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.

April and May were pretty uneventful, with June also wrapping up indecisively in the shape of a neutral doji candlestick pattern.

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 –

Despite failing to connect with the 200-day simple moving average at 108.37 last week, upside momentum came to an abrupt halt and fashioned a bearish outside day.

Having seen an indecisive tone take over the pair of late, light still shines on a possible run back to demand at 105.70/106.66.

H4 timeframe:

Partially altered from previous analysis –

Following a temporary bottom ahead of demand at 107.03/107.28, price action made contact with the aforesaid area as we transitioned into Tuesday’s session. The reaction out of the zone made its way to 107.79, before mildly turning lower. Recent buying is not surprising, having noted the base represents a decision point that broke through the 107.45 and 107.64 peaks. With that being the case, resistance at 108.09 could still be in the offing should buyers take the currency pair higher.

It should also be noted we have a trendline support lurking just beneath the current demand zone (106.58).

H1 timeframe:

Located within the upper boundary of H4 demand, traders will also note another demand sited on the H1 at 107.16/107.26 was forced into the mix late Monday/early Tuesday, confirmed by an RSI oversold signal. This sent the candles above 107.50 in dominant fashion.

As you can see, US trade was pretty light, narrowly consolidating at the 107.50 support/100-period simple moving average.

Structures of Interest:

The rally from H4 demand at 107.03/107.28, as well as H1 demand within at 107.16/107.26, is likely to remain in motion should 107.50 support hold. This, therefore, could be a potential area to consider bullish strategies.

July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00, FP Markets

GBP/USD:

Monthly timeframe:

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

Support at 1.1904/1.2235 and long-term trendline resistance (1.7191) remains clear structure on the monthly timeframe at the moment, with the latter prompting a notable upper shadow in June.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008, essentially placing 1.1904/1.2235 in a vulnerable position.

Daily timeframe:

Partially altered from previous analysis –

Demand at 1.2192/1.2361 recently received price action, stirring a notable bid. This is an area not only fastened to the top edge of monthly support, but also considered the decision point that broke 1.2647 (April 14 high). To the upside, traders will still be looking at the 200-day simple moving average at 1.2685 as the next available resistance, with a violation uncovering supply at 1.3021/1.2844.

H4 timeframe:

Thanks to a bump higher Tuesday, demand at 1.2462/1.2506 came to life, stationed just north of support at 1.2453. Resistance at 1.2629 will call for attention should GBP/USD maintain its bullish tone today, with a break of this level likely to see price work its way towards nearby supply at 1.2720/1.2682.

H1 timeframe:

Tuesday settled a few pips under 1.2550 after modestly fading session peaks at 1.2592. This has drawn attention back to 1.25, a level offering a well-grounded support to work with today, aligning with two trendline supports (1.2529/1.2257) and the 100-period simple moving average (red oval).

Structures of Interest:

A pullback to H4 demand at 1.2462/1.2506 is likely on the cards, which happens to house the 1.25 handle within its upper boundary. Local convergence around 1.25 on the H1, along with H4 demand, is likely enough to keep sterling on the winning side of the table.

July 8th 2020: DXY Firmer Though Fails to Overthrow 97.00, FP Markets

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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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