US Dollar Index:
After scoring a 27-month low at 92.52 heading into the second half of the week, a strong-willed recovery emerged. Albeit inspiring, the US dollar index (DXY) still marginally closed in negative territory (-0.10 percent), recording a seventh successive weekly decline (falling more than 4 percent in July).
From a technical point of view, buyers and sellers continue to square off between 92.71, a daily bear flag (between 95.72/97.45) take-profit target (measured by calculating the preceding move and adding the value to the breakout point – purple), and neighbouring supply at 94.02/93.56.
Additional elements to consider monitoring this week are nearby support at 92.26 and resistance parked at 95.03. In terms of the 200-day simple moving average, currently circling 97.92, the dynamic value is curving to the downside after two years of mostly drifting higher. Indicator-based traders will also acknowledge the RSI oscillator recently exited oversold space, recovering from troughs as far south as 17.00.
Technically, it appears buyers are attempting to make a stand. Clearing supply at 94.02/93.56 adds weight to an upside move forming this week.
EUR/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
The euro punched out a third successive monthly gain against the US dollar in July, adding nearly 5 percent. The move toppled long-term trendline resistance (1.6038) and made contact with the upper border of supply from 1.1857/1.1352. This argues a trend change to the upside may be on the horizon, with trendline resistance (prior support – 1.1641) on the radar as the next upside target.
August, as you can see, currently trades cautiously, up by 0.07 percent.
Also worth pointing out, though, is the primary trend remains intact, emphasising a southerly trajectory since July 2008.
Daily timeframe:
The ABCD bearish pattern at 1.1872, a simple harmonic configuration, is proving a tough nut to crack since price addressed the base at the end of July. Placed just ahead of supply at 1.2012/1.1937, Friday’s action delivered a muscular bearish candle, a move which snapped a three-day winning streak. An extension lower this week, assuming last Monday’s low at 1.1695 breaks down, has support at 1.1553 on the radar as the initial point of interest.
In reference to the RSI indicator, the value topped around 80.00 in recent action and finished the week departing from overbought territory.
H4 timeframe:
Supply at 1.1938/1.1909 has so far played an important role during August (glued to the underside of daily supply at 1.2012/1.1937), providing enough fuel for price to dethrone support at 1.1841.
Under current levels, trendline support (1.1254) is in the firing range, situated just ahead of demand at 1.1682/1.1716. Brushing aside demand this week unlocks the risk of a return to another area of demand from 1.1582/1.1621.
H1 timeframe:
The value of the euro fell sharply against the US dollar heading into US trade on Friday, following a brief rally in consideration of the US headline payrolls rise and unemployment rate both beating consensus.
The down move tumbled through the 100-period simple moving average and also the 1.18 level, crossing paths with demand at 1.1752/1.1775. The move also momentarily drove the RSI value into oversold terrain. The 1.17 level is likely to call for attention should the aforesaid demand give way; a break back above 1.18, nevertheless, has the 100-period simple moving average to contend with, as well as local trendline resistance (1.1916).
Structures of Interest:
Long term:
The monthly timeframe urges traders to consider the possibility of a long-term trend change after overrunning trendline resistance. Clearing monthly supply at 1.1857/1.1352 would help confirm this.
The daily ABCD bearish pattern at 1.1872, however, is seen hampering upside at the moment, as Friday witnessed strong selling emerge from the level.
Short term:
Interestingly, the H4 trendline support (1.1254) is positioned just under H1 demand at 1.1752/1.1775. This could prompt an attack at the lower edge of the aforesaid demand this week, tripping sell-stops and filling H4 buyers to potentially explore higher levels.
Still, do bear in mind that daily sellers are active, although a move higher, based on the monthly timeframe, would not surprise.
AUD/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
May’s extension, together with June and July’s follow-through, witnessed supply at 0.7029/0.6664 and intersecting long-term trendline resistance (1.0582) relinquish ground. Concluding July higher by 3.5 percent, buyers appear free to explore as far north as 0.8303/0.8082, a supply zone aligning closely with trendline resistance (prior support – 0.4776).
Despite recently taking trendline resistance, the market’s primary trend still points south, demonstrating a series of lower lows and lower highs since mid-2011.
Daily timeframe:
By way of a bearish outside day, AUD/USD snapped a three-day winning streak after responding from supply at 0.7264/0.7224 (stationed underneath another supply at 0.7346/0.7282) on Friday.
This throws light on an approach forming towards support at 0.7067 this week.
With reference to the RSI indicator, we have been toying with overbought status since July 20, with the value recently nudging back beneath 60.00.
H4 timeframe:
Despite Wednesday’s response out of supply at 0.7246/0.7227 failing to offer sellers much to work with, Friday’s retest of the area unwound price to within a stone’s throw from demand at 0.7115/0.7144 (unites with trendline support [0.6832]).
In light of the current uptrend, a reaction from the aforesaid demand is possible this week, with a break of supply at 0.7246/0.7227 throwing light on supply at 0.7300/0.7282, an area associated with daily supply at 0.7346/0.7282.
H1 timeframe:
Buyers, as you can see, attempted to establish a base off 0.72 early Friday, though follow-through buying lacked enthusiasm, unable to even reach supply at 0.7246/0.7227 (the H4 zone).
Decisively sailing through 0.72 as we moved into US trading, and defeating the 100-period simple moving average, led to 0.7150 support welcoming price action, a barrier that prompted a mild pullback into the close.
Pulled lower as a consequence of recent selling, the RSI indicator tested oversold water.
Structures of Interest:
Long term:
Monthly price sweeping through supply and associated trendline resistance has likely aroused interest from longer-term buyers. However, the fact we’re fading daily supply at 0.7264/0.7224 could lead to a 0.7067 support retest forming this week.
Short term:
Rebounding from 0.7150 support on the H1, given H4 is close to connecting with demand at 0.7115/0.7144, could attract intraday buying strategies early trade. This is in line with monthly price forecasting higher levels.
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 carving out a descending triangle pattern between 118.66/104.62.
April, May and June were pretty uneventful, with the latter wrapping up indecisively in the shape of a neutral doji candlestick pattern. July, nonetheless, sunk nearly 2 percent, consequently testing the lower boundary of the descending triangle.
August currently trades unchanged.
Areas outside of the noted triangle 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 –
Having monthly support at 104.62 make a show, daily price spent the week engaging with supply from 105.70/106.66. Selling pressure, as you can see though, has so far been relatively uninspiring.
Eliminating 105.70/106.66 this week, therefore, may be seen, perhaps pulling in supply at 107.58/106.85.
The RSI value remains under 50, albeit recently recovering from oversold ground.
H4 timeframe:
Since Wednesday, candle action entered a narrow range between resistance at 105.68 and demand at 105.06/105.30 (prior supply), fastened together with median line support (Andrew’s Pitchfork – 108.16).
Friday, following a brief NFP-induced flicker of activity, had buyers bounce back and strip 105.68, taking aim at resistance derived from the Andrew’s Pitchfork (107.54). Space beyond this line brings light to supply at 106.39/106.64 (previous demand).
H1 timeframe:
The broad dollar bid Friday (DXY) tugged USD/JPY above the 100-period simple moving average and supply at 105.80/105.63, an area restraining upside since Wednesday.
The move greeted 106 (held strong into the day’s end) and drew the RSI value into overbought position. What’s appealing here, from a technical perspective, is the 106 level shares space with resistance derived from the Andrew’s Pitchfork (107.54) on the H4.
Above 106, nonetheless, technical eyes are possibly drawn to 106.49/106.35, a supply zone boasting a connection with H4 supply at 106.39/106.64. The local tops (green – previous double-top formation) may also be worth noting at around 106.19.
Structures of Interest:
Long term:
With monthly support at 104.62 making a show in recent days, coupled with a lack of selling interest seen from daily supply at 105.70/106.66, this implies a break higher could come to fruition this week.
Short term:
Scope for manoeuvre beyond 106 is seen on the H1 timeframe, tipped to press for at least H1 supply at 106.49/106.35, fastened to the lower base of H4 supply at 106.39/106.64. Breaking 106, as a result, may ignite breakout strategies.
GBP/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
GBP/USD finished higher by 5.5 percent in July, leading to long-term trendline resistance (1.7191) abandoning its position. The move follows support at 1.1904/1.2235 withstanding downside attempts during April and May.
Despite the primary trend facing lower since early 2008, rupturing current trendline resistance could have buyers work towards another prominent trendline resistance (2.1161) over the coming weeks.
August has so far offered little movement, trading lower by 0.20 percent.
Daily timeframe:
Brought forward from previous analysis –
After squeezing through the 200-day simple moving average, currently fluctuating around 1.2705, and toppling supply at 1.3021/1.2844, price action revisited the latter as a demand and fuelled modest upside into mid-week trading.
Thursday finished a touch south of resistance at 1.3201, recording five-month peaks ahead of a 161.8% Fib ext. level at 1.3264. Friday, as you can see, responded by collapsing back to 1.3021/1.2844 demand.
The RSI oscillator, for those following momentum indicators, will note the value exited overbought status Friday, after the week witnessed values as far north as 80.00.
H4 timeframe:
Friday witnessed sellers extend their position south of daily resistance at 1.3201, landing price action within shouting distance of familiar demand from 1.2945/1.2989 (part of stacked demand [1.2948/1.2910]). Also particularly noteworthy on this timeframe is trendline support (1.2259).
H1 timeframe:
In the early stages of London Friday, the value of the GBP/USD dipped through 1.31 and converging 100-period simple moving average, and retested the latter levels as resistance heading into the US session.
This led to a vigorous push through 1.3050 support to lows ahead of the widely watched figure 1.30, joined by demand coming in from 1.2977/1.3000. This demand is considered significant on this timeframe, due to it being an area where a decision was made to break above 1.30.
In regards to the RSI oscillator, we recently connected with oversold levels and modestly rebounded to 36.00.
Structures of Interest:
Long term:
Monthly breaking trendline resistance emphasises an optimistic tone for GBP this month.
A moderately positive stance also took shape following a retest at daily demand from 1.3021/1.2844, though it appears buyers were recently chased off ahead of daily resistance at 1.3201, concluding the week retesting 1.3021/1.2844.
Short term:
H4 demand at 1.2945/1.2989 is likely watched by many traders today/this week, along with connecting H4 demand at 1.2948/1.2910. Having noted the 1.30 figure inhabits territory just above H4 demand at 1.2945/1.2989, a whipsaw through the round number into the aforesaid demand (as well as H1 demand at 1.2977/1.3000) could be seen this week. This, assuming a H1 close back above 1.30, could appeal to intraday buyers.
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