Technical View for August 5th 2022: NFP Eyed

Technical View for August 5th 2022: NFP Eyed, FP Markets

Charts: Trading View

(Italics: Previous Analysis)


The US dollar, according to the US Dollar Index, echoed a downbeat tone on Thursday ahead of the eagerly awaited US jobs figures today. In terms of risk events, US weekly unemployment claims came in largely as expected at 260,000.

EUR/USD finished the day higher by 0.6 per cent, movement throwing light on resistance at $1.0377 on the daily timeframe. Technicians will note the level intersects with trendline resistance, extended from the high $1.1495. Interestingly, though, the daily chart’s RSI is nibbling at the lower side of the 50.00 centreline; a break north of here indicates positive momentum and could fuel a (price) pop to $1.0377.

Ultimately, however, the trend is decisively lower. Visible from the weekly timeframe, the currency pair has been lower since the beginning of 2021. Resistance on the weekly timeframe at $1.0298 also came within a whisker of welcoming price action this week; currently, weekly flow is shaped in the form of a doji indecision candle (which could be a sign that buyers have exhausted their efforts and sellers may soon control things). On the assumption that sellers remain in command, the weekly timeframe’s next downside objective rests at a 1.272% Fibonacci projection from $0.9925.

The decision point at $1.0276-1.0235 remains centre of attention on the H4 chart as does support coming in at $1.0125. As buyers strengthen their grip, the decision point is in a vulnerable position and perhaps tilting towards a test of the H4 Quasimodo support-turned resistance at $1.0354. Lower on the curve, H1 price is now exploring territory above $1.02, opening the door to a test of Quasimodo resistance at $1.0275 (complemented by an 88.6% Fibonacci retracement at $1.0274, a 1.618% Fibonacci projection at $1.0282, a trendline support-turned resistance, taken from the low $1.0114, as well as the nearby $1.03 figure).

Technical Expectation:

With weekly price testing the lower AREA of resistance at $1.0298, in a market trending lower since 2021, and the H4 timeframe testing a decision point at $1.0276-1.0235 (albeit vulnerable), H1 selling might unfold between $1.03 and Quasimodo resistance at $1.0275 if tested.

Technical View for August 5th 2022: NFP Eyed, FP MarketsAUD/USD:

The Australian dollar eked out modest gains against its US counterpart on Thursday, following Wednesday’s (near) to-the-pip retest of support at $0.6901 on the daily timeframe. As you can see, price action on the daily timeframe demonstrates room to approach familiar resistance at $0.7039 (accompanied by a 38.2% Fibonacci retracement at $0.7051). Note that north of here we also have the 200-day simple moving average circling around $0.7162.

Price action on the weekly timeframe continues to engage resistance at $0.6996. This follows a recovery from support between $0.6632 and $0.6764 (composed of a 100% Fibonacci projection, a price support, and a 50% retracement). Siding with the current weekly resistance, nonetheless, is trend direction: reflected a primary downtrend since $0.8007 (22nd Feb high [2021]).

Out of the H4 timeframe, prime resistance at $0.7062-0.7031 (arranged just above weekly resistance at $0.6996 and houses daily resistance at $0.7039) and supply-turned demand at $0.6901-0.6862 continue to play a central role. Areas beyond the two noted zones are prime resistance at $0.7103-0.7081 and prime support at $0.6773-0.6812 (though I would like to see price engulf the current prime resistance [$0.7062-0.7031] before validating the prime support). From the H1 timeframe, the $0.6898-0.6913 prime support zone is a key downside base to be aware of, an area sharing chart space with $0.69 and Quasimodo support coming in from $0.6893. Overhead, resistance calls for attention around the widely watched $0.70 figure, followed by the lower limit of H4 prime resistance at $0.7031.

Technical Expectation:

Between daily resistance at $0.7039 and weekly resistance at $0.6996, coupled with the currency pair’s downtrend, the aforementioned resistance zone could be somewhere the charts welcome a bearish scenario, targeting a break of daily support at $0.6901.

From the H4 timeframe, trading higher than prime resistance at $0.7103-0.7081 is questionable in light of the bigger picture at the moment. So, a test of this area might serve as a platform for sellers to work with. More near term, $0.70 offers resistance on the H1 timeframe, yet traders are urged to pencil in the possibility of a whipsaw here to the lower side of the H4 prime resistance at $0.7031.

Technical View for August 5th 2022: NFP Eyed, FP MarketsUSD/JPY:

Driven by the theme of modestly weak US Treasury yields and softening demand for the greenback, the USD/JPY snapped a two-day bullish phase from supply-turned demand at ¥131.93-131.10. However, this is an area that is not only glued to the upper edge of a weekly decision point at ¥126.40-131.30, it is also a point the charts saw buyers step in and retest on 16th June. Resistance targets on the bigger picture are seen at ¥137.23 on the weekly scale, closely shadowed by daily Quasimodo support-turned resistance at ¥139.55.

Also of note on the higher timeframes, the primary bull trend remains in full swing: printing dominant up moves since 2021. As such, the two-week correction from weekly resistance at ¥137.23 and recent retest of the weekly decision point at ¥126.40-131.30 could simply be a dip-buying scenario we are seeing play out. One final feature worth underlining is the daily chart’s relative strength index (RSI) seen shaking hands with resistance at 50.00-40.00.

A decision point from ¥134.70-134.20 has been an area I have been monitoring since the late July test which resulted in a significant nose dive to Quasimodo resistance-turned support at ¥130.58. As you can see, this area greeted price once again in recent trading and sellers put in an appearance. Addressing the H1 timeframe, you will note that price retested ¥133 on Thursday after a brief spell north of ¥134. My main focus remains on prime resistance calling at ¥135.31-134.86, though we may not reach this far north this week. Territory beneath ¥133 shows limited support until ¥132.

Technical Expectation:

Knowing the weekly timeframe is testing a decision point at ¥126.40-131.30 that holds a daily supply-turned demand zone at ¥131.93-131.10, in a market trending higher since 2021, buyers could be gearing up to refresh multi-decade highs.

Taking into account the higher timeframes, movement on the lower timeframes could see H1 price defend support from ¥133, despite H4 action rejecting a decision point at ¥134.70-134.20. Ultimately, a sizeable move from ¥133 may eventually fuel a break of ¥134 to test at least H1 prime resistance from ¥135.31-134.86.

Technical View for August 5th 2022: NFP Eyed, FP MarketsDISCLAIMER:

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, 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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