June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies

June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies, 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 supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]) and demand at 1.0488/1.0912.

April spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal. May, as you can see, recovered off worst levels and wrapped up a few pips shy of monthly highs.

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

Daily timeframe:

Partially altered from previous analysis –

Recording its fifth successive daily gain Monday, extending space above the 200-day simple moving average at 1.1010, supply at 1.1239/1.1179 may be something to work with today.

Above current supply, another supply area exists at 1.1323/1.1268, joined with trendline resistance (1.0879), a 127.2% Fib ext. level at 1.1286 and 78.6% Fib ret level from 1.1310.

H4 timeframe:

Monday presented traders with a peak at 1.1154, drawing in a 161.8% Fib ext. level at 1.1154 which, as you can see, is stationed under 1.1189/1.1158, a rally-base-drop supply zone.

Holding lower this week could put forward retest scenarios at the recently penetrated trendline resistance (1.0969) and demand area at 1.1057/1.1013 (prior supply) this week.

H1 timeframe:

Upside momentum continues to slow, despite the US dollar index registering consecutive daily losses. 1.1150 withstood an early upside attempt into London Monday, a move that guided the candles back to 1.11/channel support (prior resistance – 1.0991). Bidding past 1.1150 today throws light on 1.12, while swarming 1.11 would clear out intraday buyers and potentially head for 1.1050, coupled with channel support (1.0870) and the 100-period simple moving average.

Indicator-based traders may also acknowledge the RSI oscillator forming support off its 50.00 point.

Structures of Interest:

Monthly price retains a healthy position out of demand at 1.0488/1.0912, enough to perhaps pull daily price into supply at 1.1239/1.1179.

A H1 close above 1.1150 today could stimulate a drive into H4 supply at 1.1189/1.1158. While intraday trade may take breaking 1.1150 as a signal to push higher, this is precarious ground. The aforesaid H4 supply is glued to the underside of daily supply at 1.1239/1.1179, making it a potentially potent barrier to overcome.

June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies, FP Markets

AUD/USD:

Monthly timeframe:

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

April’s 370-pip advance, together with May’s extension and June’s early rally has, as you can see, landed price within the parapets of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

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

Daily timeframe:

Monday’s near-2% advance, sponsored by a waning buck and upbeat risk sentiment, crossed resistance at 0.6755 and shined light on notable supply coming in from 0.6883/0.6824. Additionally, we also crossed above the 200-day simple moving average, generally regarded as a bullish signal.

Also of note is the RSI punching into overbought territory.

H4 timeframe:

Monday elevated H4 price through supply at 0.6764/0.6738, liberating the commodity-exposed currency towards at least resistance found at 0.6812. Traders may also find use in noting the supply posted directly above resistance at 0.6858/0.6837.

H1 timeframe:

Partially altered from previous analysis –

Since last Wednesday, short-term technicals have been in the process of building an ascending triangle pattern between 0.6675 and 0.6567, regarded as a continuation pattern. The take-profit target is measured by taking the value of the base and adding this to the breakout point (yellow), seen at 0.6785.

As you can see, price breached the upper base of the noted pattern in the early hours of Monday and struck the pattern’s take-profit target amid US trade. In recent hours, though, we also witnessed 0.68 come under fire.

Structures of Interest:

Monthly supply at 0.7029/0.6664 is under attack, with monthly trendline resistance, an intersecting line, within close proximity. After crossing the 200-day simple moving average and daily resistance at 0.6755 on the daily timeframe, supply at 0.6883/0.6824 may make a show.

As price accelerated upside considerably on Monday, this, technically, represents a strongly overbought market. Breakout buyers above 0.68 must face H4 resistance at 0.6812, daily supply at 0.6883/0.6824 and monthly supply from 0.7029/0.6664. This is considerable resistance.

While the uptrend could continue through the said resistances, the fact a strong monthly supply is involved that merges with trendline resistance should be a concern.

June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies, 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. April was pretty uneventful, ranging between 109.38/106.35. May also remained subdued, ranging between 108.08/105.98.

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

Daily timeframe:

Brought forward from previous analysis –

Since registering a top from 109.38 at the beginning of April, USD/JPY moulded a falling wedge pattern, which had its upper limit breached on May 11 in strong fashion, boosted by demand at 105.70/106.66. The take-profit target out of the pattern, traditionally measured by taking the value of the base and adding this to the breakout point (purple), sets an upside objective of around 109.30.

In order to reach the noted take-profit target, the 200-day simple moving average at 108.32 must be taken out.

H4 timeframe:

Partially altered from previous analysis –

Structurally, supply at 108.10/107.79 has remained in motion since mid-April. Local demand at 107.21/107.41, despite withstanding a number of downside attempts in late May, suffered a minor whipsaw last Friday.

A break above supply advertises moves to supply coming in from 108.87/108.48, perhaps formed by way of an ABCD approach that completes around 108.44 (orange). Exploring waters beyond current demand has support at 106.91 on the radar.

H1 timeframe:

Partially altered from previous analysis –

Whipsawing through demand at 107.15/107.23 and testing a 127.2% Fib ext. level at 107.10 heading into Europe Friday caused pain. Buyers out of demand had protective stop-loss orders tripped, a move that simultaneously caused a bear trap.

Monday offered a reasonably passive tone, fluctuating between gains/losses around the 100-period simple moving average at 107.61. Despite nearby tops around 107.90, 108 commands attention as resistance, along with the 127.2% Fib ext. level at 108.12.

Structures of Interest:

As aired in recent analysis:

 

  • Daily price displays room to approach the 200-day simple moving average at 108.32 and the falling wedge take-profit target of around 109.30.

 

  • H4 traders will be wary of buying this market, thanks to H4 supply at 108.10/107.79. 108 on the H1 timeframe (and the 127.2% Fib ext. level at 108.12) could, therefore, be an angle of interest for sellers.

 

  • A violation of the current H4 supply would be interesting. Not only could this have players welcome the 200-day SMA, the H4 ABCD correction at 108.44 marks appealing resistance, as does H4 supply at 108.87/108.48.

June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies, 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 remains in motion as we transition into June. Neighbouring resistance, should we see an attempt at recovery, can be found in the form of a trendline (1.7191). A violation of support, nevertheless, puts forward a 127.2% Fib ext. level at 1.1297.

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

Daily timeframe:

Partially altered from previous analysis –

A few pips south of supply at 1.2649/1.2799 (prior demand), a double-top pattern formed at 1.2647, with May 13 consuming the neckline (April 21 low 1.2247) and establishing a potential take-profit target (purple) around 1.1855.

Recent trade observed a retest at the double-top neckline at 1.2247 unfold. Sellers have so far taken a back seat as price closed a touch off highs at 1.2506 yesterday.

Although this positions the double-top pattern in weak light, sellers may still make a showing. This offers traders an opportunity to sell this market at a healthier risk/reward ratio, as protective stop-loss orders are generally positioned above pattern peaks: 1.2647, or in this case maybe even above current supply at 1.2799.

H4 timeframe:

Partially altered from previous analysis –

After coming within touching distance of healthy demand at 1.2170/1.2204 and trendline support (1.2075), GBP/USD entered into a strong phase of buying, with Monday greeting trendline resistance (1.2163) and a 161.8% Fib ext. level at 1.2491, positioned just ahead of resistance at 1.2520.

H1 timeframe:

Albeit following a period of hesitation around 1.24, Monday saw US trade lift GBP/USD above the noted round number, above 1.2450 and into the walls of supply at 1.2511/1.2482 (houses the 1.25 handle). Note recent buying also hauled the RSI into overbought territory.

Structures of Interest:

As noted in recent analysis, monthly holds 1.1904/1.2235, despite positioned against the major trend.

Sellers on the daily timeframe, basing analysis on the double-top pattern, still have a hand in the fight despite offering a fragile outlook right now.

Buyers and sellers on the H4 timeframe are seen squaring off at trendline resistance/161.8% Fib ext. level at 1.2491. Note resistance at 1.2520 may also play a role.

H1 supply at 1.2511/1.2482, along with the round number 1.25, holds ground at the moment. In spite of the base uniting with H4 resistance structure, a whipsaw to H4 resistance at 1.2520 is a potential intraday scenario to watch for today. A rejection here may encourage a wave of selling, with 1.2450 set as an initial target on the H1.

June 2nd 2020: Upbeat Sentiment Underpins Risk Currencies, 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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