May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls

May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls, 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 demand-turned supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [0.6038]) and demand at 1.0488/1.0912.

April, as you can see, spent the best part of the month feasting on the top edge of 1.0488/1.0912, though did manage to squeeze out a Japanese hammer candlestick pattern, viewed as a bullish reversal signal.

May, on the other hand, is currently tunnelling back into the said demand, overlooking April’s candlestick signal.

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

Daily timeframe:

Partially altered from previous analysis –

Thursday bottomed a few pips ahead of the 78.6% Fib level at 1.0745 and clawed back a large portion of Wednesday’s slide.

Another constructive development on this timeframe is, albeit in large form, a bearish pennant pattern between 1.1147/1.0635. A decisive daily close beneath pattern structure could generate a wave of selling.

Breaking lower would entail overturning 1.0745 and eventually contending with demand at 1.0526/1.0638, an area extended from March 2017.

H4 timeframe:

Trendline resistance-turned support (1.1147) maintained its position Thursday, despite price dipping a toe in waters beneath 1.0770, missing another trendline support coming in from 1.0635. Since then we’ve seen upside gain speed, conquering resistance at 1.0821 and bringing light to the possibility of additional gains to supply at 1.0906/1.0878.

H1 timeframe:

Research highlighted the H1 supply-turned demand at 1.0760-1.0775 as a possible reversal zone in Thursday’s analysis. The area came together with two H4 trendline supports (1.0635/1.1147), a nearby 1.0750 level on the H1 and also joined closely with the 78.6% Fib level at 1.0745 on the daily timeframe.

US trade welcomed 1.0760-1.0775 into the picture Thursday, with price swiftly rebounding from the zone, taking 1.08 and ultimately crossing paths with supply at 1.0847/1.0832. It should be noted that directly above this zone, 1.0850 is also seen as possible resistance as well as the 100-period simple moving average (SMA) at 1.0861.

The RSI momentum indicator is seen fast approaching overbought territory.

Structures of Interest:

Although H4 price reveals interest in perhaps taking things higher above 1.0821, H1 supply at 1.0847/1.0832, as well as 1.0850, could prove troublesome for buyers. A pivotal H1 close above the said barriers is likely required before fresh buyers enter the mix towards 1.09.

May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls, FP Markets

AUD/USD:

Monthly timeframe:

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

Overwhelmed by the effects of the coronavirus pandemic, the month of March scored seventeen-year lows at 0.5506 ahead of demand pencilled in from 0.5219/0.5426, before staging an impressive recovery.

April’s 370-pip advance has, as you can see, landed May within striking distance of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

With reference to the market’s primary trend, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

Fashioned in the form of a near-full-bodied bull candle, daily price faces the possibility of revisiting supply from 0.6618/0.6544. It should also be emphasised this area comes with a 127.2% Fib ext. level at 0.6578 and a nearby 161.8% Fib ext. level at 0.6642. Traders will also likely include the 200-day simple moving average (SMA) at 0.6671.

April 21 low at 0.6253 is visible as the next possible support band on this chart; breaking lower reveals demand at 0.5926/0.6062 may come under fire.

H4 timeframe:

While the harmonic Gartley formation, boasting a defining limit at the 78.6% Fib level from 0.6433 (blue), remains a point of interest on this timeframe, it’s still worth keeping an eye on local price action.

H4 price, as you can see, recently pencilled in a double-bottom scenario out of demand at 0.6356/0.6384, with yesterday’s action confirming the pattern by breaking through Tuesday’s high at 0.6476 (red arrow) and establishing a take-profit target around 0.6578 (green boxes).

H1 timeframe:

Aside from a modest dip to 0.6450 into the US session, Thursday ran with a series of bullish candles and powered into 0.65 and a converging trendline support-turned resistance. This also hauled the RSI indicator into overbought waters.

Above 0.65 we see little stopping price from making a run for 0.6550 and a large area of stacked supply between 0.6612/0.6543, which also comes with a nearby 161.8% Fib ext. point at 0.6539.

Structures of Interest:

Monthly price shows room to approach 0.6664; daily price also shows room to extend towards 0.6544, while H4 price as an upside target (set by the double-bottom pattern) at 0.6578.

Aside from H1 testing 0.65, higher timeframes suggest we could be heading higher. Therefore, a break above 0.65 could be in the offing, which may see intraday breakout buyers make a play, targeting 0.6539 as an initial target.

May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls, 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, on the other hand, trades lower by nearly 1.00%.

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

Daily timeframe:

Although scratching in a modest recovery Thursday, snapping a four-day losing streak, sellers clearly still have the upper hand in this market. Price action, as you can see, remains entrenched within the parapets of demand from 105.70/106.66; abandoning its position may eventually see demand at 100.68/101.85 make a show.

H4 timeframe:

Partially altered from previous analysis –

A bearish pennant pattern between 106.92/108.07 took hold after having its lower boundary taken in recent weeks. Traditionally, take-profit targets out of bearish pennant patterns are formed by measuring the preceding move (109.38-106.92) and adding the value to the breakout point (black arrows – 104.89).

Thursday observed price reject a local trendline support-turned resistance (106.35), shifting focus towards demand at 105.75/105.17, an area sited just above the bearish pennant’s take-profit target.

H1 timeframe:

Supply at 106.76/106.63 knocked some of the wind out of the US dollar’s rally on Thursday, aided by the 106.50 level and the 100-period simple moving average (SMA). With respect to support, 106 calls for attention, with a break perhaps exposing the upper layer of H4 demand at 105.75.

Structures of Interest:

The response out of daily demand at 105.70/106.66 echoes a fragile tone, as well as monthly price also exhibiting scope to navigate lower levels, strengthening the possibility of the H4 bearish pennant pattern completing its target of 104.89.

A retest at the H1 supply from 106.76/106.63, therefore, may spark seller interest, as might a break through 106. Though do recall the upper layer of H4 demand at 105.75 lurks nearby.

May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls, FP Markets

GBP/USD:

Monthly timeframe:

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

Although March clocked levels not seen since the 1980s, ahead of a 127.2% Fib ext. level at 1.1297, price staged an impressive recovery and regained approximately 80% of the month’s losses.

Support at 1.1904/1.2235 remains in play in early May. Neighbouring resistance can be seen in the form of a trendline (1.7191).

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

Daily timeframe:

Partially altered from previous analysis –

Upside momentum recently diminished as the pair crossed paths with the 200-day simple moving average (SMA) at 1.2647, a value that boasts a close connection to a demand-turned supply at 1.2649/1.2799.

Thursday attempted to make a comeback, though faltered at highs of 1.2418 and wrapped up the session in the form of an indecision candle. Demand at 1.2212/1.2075 remains in sight as the next point of interest to the downside.

H4 timeframe:

Trendline support (1.2163) made its debut on Thursday and left traders with a hammer candlestick pattern, generally viewed as a bullish signal. Traders will likely be hesitant about committing to long positions here, having seen demand-turned supply at 1.2399/1.2453 cap upside. Beyond here, resistance is also seen nearby at 1.2520 and at 1.2624.

Technicians will also note a large demand is present between 1.2147/1.2257.

H1 timeframe:

According to the H1 timeframe, it appears bulls transitioned into the driver’s seat, breaking trendline resistance (1.2643) and placing a marker on 1.24 as possible resistance, followed by fresh supply posted at 1.2450/1.2426. Note the 100-period simple moving average (SMA) is seen closing in on 1.24.

Structures of Interest:

As stated in recent analysis, monthly price exhibits scope to approach 1.2235 (the top edge of support); daily price also suggests the possibility of a move to 1.2212 (the upper edge of demand).

H4 action has the potential to rally off trendline support today, if we take 1.2399/1.2453, though do be prepared for some competition around 1.2520. Upside is also somewhat confirmed on the H1 timeframe. Breaking the trendline resistance likely excites breakout buyers, but with 1.24 stationed close by, along with supply at 1.2450/1.2426, these areas may throw a spanner in the works.

May 8th 2020: DXY Snaps Three-Day Winning Streak Ahead of Non-Farm Payrolls, FP Markets

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