March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes

March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes, 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 February witnessed EUR/USD revisit the upper limit of demand at 1.0488/1.0912 – a noteworthy area given the momentum derived from its base – and pencil in an appealing (bullish) hammer candlestick pattern.

Upside this month, currently trades +2.33%, manoeuvred the pair into demand-turned supply at 1.1857/1.1352, though left long-term trendline resistance (1.6038) unchallenged. Price is seen retreating from the said area, opening up the possibility of a revisit to demand mentioned above at 1.0488/1.0912.

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

Daily timeframe:

Snapping a three-day winning streak, daily price retreated from supply at 1.1540/1.1486 Tuesday, down more than 130 points, as of writing. Supply-turned demand at 1.1159/1.1233 resides close by, intersecting closely with a familiar trend line support (1.0879), active since October 2019. A breach of the noted demand welcomes the 200-day SMA, currently circulating around the 1.11 neighbourhood.

What’s also notable from a technical perspective is the RSI indicator exiting overbought levels, fading peaks at 82.00, values not seen since March 2008.

H4 timeframe:

Supply at 1.1496/1.1471, which happens to converge with a 161.8% Fib ext. point at 1.1475, entered play on Monday, following a move through supply at 1.1399/1.1376.

1.1399/1.1376 gave way Tuesday as possible demand, leading price to a supply-turned demand at 1.1294/1.1271. A break lower from this point shines the limelight on fresh demand priced in at 1.1218/1.1245. This was the decision point to break the 1.1239 December 31st high, therefore boasting significance.

H1 timeframe:

Benchmark 10-year US Treasury yields staged an impressive recovery off all-time lows Tuesday, regaining 0.8% and prompting USD upside. This, of course, weighed on Europe’s single currency, dropping the EUR/USD through 1.14 and, in recent hours, through 1.13 and the 100-period SMA.

Recent movement also formed a local descending channel (1.1478/1.1332), with price action currently challenging its lower limits. Increased selling today has 1.12 in sight, though before we reach this far south, traders must contend with H4 demand at 1.1218/1.1245.

With reference to the RSI indicator, the value drifts a touch north of its oversold perimeter.

Structures of Interest:

Intraday shorting opportunities could be in the offing south of 1.13 today, targeting the top edge of H4 demand at 1.1245, followed by the top edge of daily demand at 1.1233.

In light of this demand, buyers are also likely to make a stand before price reaches the 1.12 handle, therefore highlighting possible buying opportunities within H4 demand today as well.

March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes, FP Markets

AUD/USD:

Monthly timeframe:

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

Demand at 0.6358/0.6839 remains in the fight, yet price struggles to pencil in anything of note to the upside, currently trading in the shape of a doji indecision candle. An eventual break of the said demand zone has another layer of demand close by at 0.6094/0.5866, while a recovery could eventually lead to trendline support-turned resistance (0.4776) making an appearance, followed by supply at 0.8303/0.8082.

The primary trend in this market continues to face a southerly trajectory.

Daily timeframe:

Outlook partially altered from recent analysis –

0.6680ish (red oval) welcomed price action on Monday, as did long-term demand drawn from late 2008 at 0.6330/0.6245 (note this demand contained the mild break of monthly demand above at 0.6358/0.6839). Proven supply also resides at 0.6778/0.6731, aligning with trendline resistance (0.7393).

Tuesday observed a reasonably decisive move lower, wrapping up a touch off session lows at 0.6462. Technically speaking, there’s little stopping additional losses materialising on this timeframe until reaching demand underscored above at 0.6330/0.6245.

The RSI recently exited oversold territory, though has been unable to conquer 50.00 thus far.

H4 timeframe:

Recent downside had H4 price drill through demand at 0.6511/0.6542; this area was likely weakened due to Monday’s pivotal move to lows at 0.6314.

0.6511/0.6542, as of current price, holds as a resistance area, which could, given space to manoeuvre lower on the daily timeframe, head back to the 127.2% Fib ext. point at 0.6351.

H1 timeframe:

Technical development on H1 charts saw the unit leap through 0.65, likely tripping sell-stop liquidity, and bottom a few points north of 0.6457ish, a combination of a 61.8% Fib retracement and a 161.8% Fib ext. point. 0.65 welcomed price in recent hours, with a break north of here potentially setting the stage for an approach to 0.6550. Beyond here, consumed supply is visible to the left of price, perhaps paving the way to 0.66 or the 100-period SMA.

With reference to the RSI, the value recently bottomed within oversold territory, and is currently circulating around 40.00.

Structures of Interest:

Indecisive action present on the weekly timeframe within the lower boundary of demand casts a cloud over long-term buying. This is further emphasised on the daily timeframe, showing room to press as far south as demand from 0.6330/0.6245, as well as the H4 candles testing the underside of a recently broken demand at 0.6511/0.6542.

H1 price holding at 0.65, therefore, could be of interest for sellers, though a break of 0.6457 likely the more appealing approach for breakout short sales.

March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes, 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 (118.66/104.62). February had price elbow a touch outside the upper boundary of the aforementioned descending triangle to 112.22, though retreated lower and produced a shooting star pattern into February’s end.

Price breached the lower edge of the descending triangle, yet recovered in strong fashion in recent trade, leaving nearby demand at 96.41/100.81 unchallenged.

Right now, March trades lower by 2.62%.

Daily timeframe:

Monday’s near-300-point decline dipped through a number of key technical supports and landed within demand fixed from 100.68/101.85 (an area glued to the top edge of monthly demand underscored above at 96.41/100.81).

Recent technical developments saw Tuesday chalk up a sizable counterattack, reclaiming all of Monday’s losses and retesting demand-turned supply at 105.57/106.17, along with joining 38.2% Fib retracement at 105.39.

H4 timeframe:

Tuesday tested supply at 105.75/105.17, initially holding price to lows at 103.22 before marginally clipping the top edge of its area, registering highs at 105.91. Although unlikely enough to have cleared all sellers from the zone, it is worth noting supply seen at 108.15/107.64, in the event we push for higher ground.

H1 timeframe:

Demand for safe-haven assets diminished on Tuesday, with USD/JPY witnessing a robust recovery off multi-year lows.

105 proved stubborn resistance in recent trading, forcing a whipsaw through 104 to channel resistance-turned support (107.38). 105 was later breached, with the pair coming within touching distance of 106, before retreating back to 105.

Of interest, a combination of a 127.2% Fib ext. point at 106.26 and a 78.6% Fib retracement at 106.34, along with trendline resistance (108.53), is seen loitering a few points above 106.

With respect to the RSI, the indicator is seen printing mild bearish divergence.

Structures of Interest:

Daily price fading a demand-turned supply zone at 105.57/106.17, as well as H4 price holding at supply from 105.75/105.17, could guide H1 candles beneath 105 today for a run towards 104.

An alternative to this, of course, is a retest of 106, albeit likely enticing a modest fakeout through the number to draw in additional sellers off the Fib combination highlighted above around 106.34/106.26.

March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes, FP Markets

GBP/USD:

Monthly timeframe:

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

Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This, along with trendline resistance (2.1161), remains a well-rounded resistance area to keep an eye on long term.

In recent months, a recovery formed off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high. The month of February declined nearly 3.00%, with March attempting to reclaim lost ground, currently trading at +0.66%.

Daily timeframe:

After reconnecting with familiar supply at 1.3303/1.3184, following a whipsaw through channel resistance (1.3284), daily price chalked up a spirited retreat Tuesday. Down more than 220 points, or 1.70%, GBP/USD now faces nearby demand at 1.2649/1.2799, dovetailing with channel support (1.2954) and the 200-day SMA, currently circulating around 1.2687.

In terms of the RSI indicator, we can see the value dipped through 50.00 in recent trade.

H4 timeframe:

Extending losses south of supply at 1.3209/1.3171, which made its entrance at the beginning of the week, Tuesday witnessed supply-turned demand at 1.3023/1.3006 and demand plotted at 1.2947/1.2969 cede ground. As you can see, price action entered the jaws of demand at 1.2859/1.2875, forming a half-hearted hammer candlestick configuration. A breach of the said demand draws focus to demand at 1.2768/1.2813.

H1 timeframe:

Ahead of today’s budget (outlines the government’s budget for the year, including expected spending and income levels), sterling traded lower amid recent trade, conquering the key figure 1.30 and the 100-period SMA to the downside. Price mildly pared losses into the close out of a small, yet significant, area of demand at 1.2860/1.2875. Aside from also representing H4 demand, its importance comes from what the area achieved on the H1: it was the origin behind the break of highs around 1.2920ish.

Upside from the current demand is relatively free to approach 1.2950, with a break of this area clearing the river north back to 1.30. Also worthy of pencilling down is the RSI indicator recently exiting oversold terrain after bottoming at 25.00.

Structures of Interest:

Continued upside is possible, given demand out of the H4 timeframe at 1.2859/1.2875, though expect resistance to form around 1.2947, the lower edge of H4 demand-turned supply, and 1.2950 on the H1.

Should we push through current H1 demand today, on the other hand, and breach 1.2850, downside appears free to 1.28, an interesting area of support. Not only does it hold close the top edge of daily demand at 1.2799, the upper area of H4 demand at 1.2768/1.2813 coincides close by, too.

March 11th 2020: Risk Appetite Rebounds Amid US Stimulus Hopes, 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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