March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data

March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data, 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 and chalk up a reasonably appealing (bullish) hammer candlestick pattern – a noteworthy area of demand given the momentum derived from its base. Additional upside is, therefore, achievable, with demand-turned supply at 1.1857/1.1352 and long-term trendline resistance (1.6038) established as upside targets.

To the downside, however, traders looking beyond the current demand zone likely have crosshairs fixed on a reasonably ‘fresh’ demand at 0.9581/1.0221 (boasts history dating back as far as 2003).

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

Daily timeframe:

Partially altered outlook from previous analysis –

Supply coming in at 1.1117/1.1078, which intersects with the 200-day SMA, put up little fight Monday, exposing familiar supply at 1.1281/1.1208, which entered view Tuesday. Wednesday, nevertheless, observed a rotation to the downside, snapping a four-day winning streak and drawing the candles back to 1.1117/1.1078, specifically the 200-day SMA, currently circulating around 1.1097. Thursday followed through with a stronger-than-expected rotation higher, in line with monthly direction, consequently lifting price deeper within current supply.

What’s also notable from a technical perspective here is the RSI indicator recently piercing overbought levels, as well as an RSI trendline support-turned resistance entering play.

H4 timeframe:

Supply-turned demand at 1.1109/1.1087 remains in the mix, having done a superb job of containing downside this week. As a result of this, fresh demand formed at 1.1119/1.1143 and the unit concluded Thursday grasping the 1.1239 December 31st high.

In the event of a break higher here, buy-stop liquidity may fuel a move to supply at 1.1294/1.1271, drawn from July 2019.

H1 timeframe:

The greenback was hit Thursday with the US dollar index falling beneath 97.00 as the 10-year Treasury yield tunnelled beneath 1% to print a fresh record low of 0.8990%. The single currency performed well, adding 100 points, or 0.93%.

The sequence of higher highs/lows fuelled a move through orders at 1.12 yesterday, settling the day a touch south of supply coming in at 1.1268/1.1255. Traders will also want to note the RSI indicator is seen testing overbought levels.

It is worth noting the current H4 supply zone at 1.1294/1.1271 is positioned around the top edge of daily supply at 1.1281/1.1208, while H1 supply at 1.1268/1.1255 is sited beneath the current H4 supply, though within the limits of the aforementioned daily supply.

Structures of Interest:

H4 supply at 1.1294/1.1271 could be in for some action today. Its an incredibly well-placed zone – see above in bold. However, the pullback from here may be tainted by monthly price eyeing higher levels, with 1.1239 likely to develop support.

What’s also appealing regarding the current H4 supply is buy-stop liquidity above 1.1239 and H1 supply mentioned above at 1.1268/1.1255, as well as both the daily and H1 timeframes showing overbought conditions, in terms of RSI readings.

March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data, 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, with price attempting to bottom within its lower boundary. 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.

Daily timeframe:

Partially altered outlook from previous analysis –

Supply at 1.6585/1.6625 remains in the spotlight, despite having its upper edge challenged a number of times this week.

0.6680ish offers resistance (red oval), while proven supply can also be seen at 0.6778/0.6731, aligning with trendline resistance (0.7393).

The RSI recently exited oversold territory, hovering south of 50.00.

H4 timeframe:

Supply at 0.6655/0.6629 continues to offer a ceiling on the H4 timeframe. On top of this, price penetrated the lower boundary of an ascending channel (0.6434), reaching lows at 0.6583 Thursday.

Thursday’s report stated:

A break of channel support is required here to ignite conviction to the downside, while gravitating higher could lead to supply at 0.6695/0.6677 making an entrance.

With the above in mind, we appear to be heading for a retest of the current supply. Holding off here has demand at 0.6511/0.6542 to target.

H1 timeframe:

Thursday snapped a three-day winning streak amid global risk aversion, drilling through the lower boundary of a rising wedge pattern (0.6577/0.6614), and dipping a toe in waters south of 0.66, before mildly paring losses into the close.

With 0.66 holding, 0.6650 is a resistance worthy of note, bolstered by a 161.8% Fibonacci ext. at 0.6648. The RSI is seen gathering traction above 50.00, while the 100-period SMA drifts north, currently circulating around 0.6578.

Structures of Interest:

Monthly demand at 0.6358/0.6839 is still in play, holding on by a thread. Daily price suggests additional buying, north of supply at 1.6585/1.6625.

H4 price holds at supply, with price penetrating the lower boundary of a nearby channel support.

Limited resistance, aside from the possibility of yesterday’s high at 0.6636 holding, exists on the H1 until reaching resistance at 0.6650.

On account of the above, pressure from monthly demand, and the recent break of daily supply, could see 0.6650 enter play today on H1, taking the H4 candles toward the upper limit of its current supply.

March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data, 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. The breakout for this configuration is common to the downside, but an upward breakout is considered more reliable and profitable. In recent movement, price elbowed a touch outside the upper boundary of the aforementioned descending triangle to 112.22, and retreated lower, forming a shooting star pattern into February’s end.

Outside of the current pattern, a supply area is visible at 126.10/122.66, while lower on the curve we have a demand area at 96.41/100.81.

March currently trades lower by 1.66%.

Daily timeframe:

Partially altered outlook from previous analysis –

Tuesday’s 120-point downside move drew the market into the jaws of demand coming in at 106.60/107.09, which witnessed a minor breach in October 2019. Demand at 105.57/106.17, albeit not the prettiest of areas given the lack of momentum drawn from the base, moved into focus yesterday following Thursday’s 130-point decline. 106.60/107.09 now represents a potential supply zone.

The RSI indicator entered oversold waters.

H4 timeframe:

Demand at 106.94/107.30 (now a serving supply) gave way in recent trade, with crosshairs now fixed on demand at 105.64/105.89. Note the current demand holds within it a 161.8% Fib ext. at 105.83.

H1 timeframe:

Broad USD weakness Thursday, weighed by waning US Treasuries scoring all-time lows, as well as global equities plummeting, directed USD/JPY through 106.50 to 106 in recent trade. 106.50, as can be seen from the chart, offered resistance shortly after giving way as support.

Structures of Interest:

Supporting 106 on the H1 has daily demand at 105.57/106.17, with both daily and H1 timeframes presenting oversold conditions from respective RSIs. A touch south of 106, we also have H4 demand lurking around 105.64/105.89.

Before buyers step in from daily demand, we could whipsaw through 106, tripping sell-stop liquidity, and bring in H4 buyers from demand at 105.64/105.89.

106.50 represents initial resistance, followed by the underside of daily demand-turned supply at 106.60.

March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data, 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, however, declined nearly 3.00%.

Daily timeframe:

Partially altered outlook from previous analysis –

Demand formed at 1.2649/1.2799 entered view at the beginning of the week, fading YTD lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019), and has, this week, produced three successive bullish candles out of its base, poised to grip a local trendline resistance (1.3514), with supply seen at 1.3303/1.3184 in the event we travel higher.

The 200-day SMA also resides within the current demand zone, circulating around 1.2698.

H4 timeframe:

Thanks to recent upside, the market witnessed the H4 candles power through supply at 1.2885/1.2921 and form a small fresh demand area at 1.2859/1.2875.

Sustained upside north of 1.2885/1.2921, now a serving demand zone, has supply at 1.3023/1.3006 in the firing range.

H1 timeframe:

Sterling was largely a dollar story Thursday, overpowering 1.29 and retesting the latter as support in early US trade. 1.2950 nudged into view in recent hours, reinforced by a 78.6% Fib retracement at 1.2953.

Attractive supply rests nearby at 1.2998/1.2981, stationed a hair beneath the key figure 1.30. A break of the said barriers leads supply at 1.3041/1.3016 into sight. The RSI, a momentum oscillator, shows overbought conditions on this timeframe, dipping from a recent peak at 80.74.

Structures of Interest:

Daily price approaching trendline resistance may sway traders from attempting to print another bullish close today. Instead, we may see indecisive action unfold, shaped by way of a doji indecision candle. This could draw sellers out of H1 supply at 1.2998/1.2981 today, albeit with the possibility of a fakeout to 1.30. Interestingly, H4 supply resides a touch above 1.30 at 1.3023/1.3006.

Support from 1.30 today will likely emerge off 1.2950, followed by H4 supply-turned demand at 1.2885/1.2921 and then 1.29.

March 6th 2020: Dollar Remains Vulnerable Ahead of US Non-Farm Payrolls Data, 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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