Weekly Technical Market Insight: 13th – 17th April 2020

Weekly Technical Market Insight: 13th – 17th April 2020, FP Markets

US Dollar Index:

Despite a recent v-shaped recovery out of demand at 98.18/98.65, the US dollar index, a leading benchmark measuring the value of the greenback relative to a basket of 6 major world currencies, folded over last week.

Topping a few points south of supply at 101.79/101.00, price finished 1.19% in the red. Technically speaking, however, the buck could find itself under pressure again this week, starved of supportive structure until crossing paths with demand at 98.18/98.65.

Technicians will also note the 200-day simple moving average (SMA) closing in on the underside of the aforementioned demand, along with a 61.8% Fib level residing a touch lower at 97.85. Additionally, the RSI, a momentum indicator measuring the scale of recent price changes, ended the week sub 50.00, indicating a potential bearish theme.

Weekly Technical Market Insight: 13th – 17th April 2020, 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 and demand at 1.0488/1.0912.

The technical foundation has April rangebound between the two aforementioned price structures; notably, however, the current monthly candle is nearly 1% lower, testing the upper boundary of 1.0488/1.0912.

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

Daily timeframe:

Partially altered from previous analysis –

Buoyed on the back of a 78.6%/61.8% Fib zone at 1.0745/1.0830 (pink), EUR/USD experienced a surge in demand over the course of the week, adding more than 100 points, or 1.20%.

Northbound, the 200-day simple moving average (SMA) at 1.1060 offers a layer of resistance. Supply at 1.1239/1.1179 also remains a prominent fixture on this timeframe, sited just north of a 61.8% Fib level at 1.1171 and intersecting with trendline resistance (1.0879).

In addition to this, traders may find interest in supply coming in from 1.1323/1.1268, having seen a potential AB=CD correction point terminate at 1.1276 (orange).

H4 timeframe:

Partially altered from previous analysis –

Thursday’s advance ahead of support at 1.0831 came about as the US dollar index folded over and reclaimed 100.00 to the downside, with EUR/USD eclipsing Tuesday’s high at 1.0925.

As you’d expect, Friday put up little in terms of market movement as the majority of banks shut their doors in observance of Good Friday. Price action remains hovering a touch beneath supply at 1.1044/1.0966, accompanied with a nearby 50% retracement at 1.0954 and a 127.2% Fib ext. level at 1.0973.

H1 timeframe:

Intraday flow on the H1 timeframe spent Friday clutching the underside of 1.0950. Understandably, the reaction was reasonably modest in light of holiday-thinned trade.

Moves above 1.0950 this week faces a somewhat large supply at 1.1033/1.0982 that houses the widely watched 1.10 level and a channel resistance (1.0925).

Technicians will also note the RSI momentum indicator recently faded overbought territory and challenged its 50.00 value.

Structures of Interest:

Longer term:

Monthly price rebounding from demand at 1.0488/1.0912, together with buyers latching onto a reasonably strong bid from 1.0745/1.0830 on the daily timeframe, potentially sets the stage for further upside this week. The 200-day SMA rests as an initial upside target on the bigger picture.

Shorter-term:

Having noted higher-timeframe flow echoing a bullish vibe, 1.0950 on the H1 timeframe is perhaps vulnerable. The most traders likely expect off here is a retest at 1.09/channel support (1.0768). However, breakout buyers above 1.0950 not only face H1 supply at 1.1033/1.0982, but also the 50% retracement value at 1.0954 and a 127.2% Fib ext. level at 1.0973 on the H4 timeframe, which envelope the lower boundary of the H4 supply base at 1.1044.

Ultimately, technical studies could see 1.10 brought into view on a breakout above 1.0950. Although a pullback from here is likely, higher-timeframe direction seeks more northerly ground (the 200-day SMA).

Weekly Technical Market Insight: 13th – 17th April 2020, 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. The recovery move reclaimed more than 60% of the month’s losses, drawing the pair to within reasonably close proximity of supply fixed at 0.7029/0.6664, intersecting with a long-term trendline resistance (1.0582).

April currently trades more than 3% in the green. With reference to the market’s primary trend, though, a downtrend has been present since mid-2011.

Daily timeframe:

Partially altered from previous analysis –

In parallel with the RSI indicator toppling its 50.00 value, currently closing in on 60.00, AUD/USD registered its fifth successive daily gain Friday. Notably, price has engaged the upper boundary of a demand-turned supply at 0.6330/0.6245, shifting focus to a 127.2% Fib ext. level at 0.6398, followed by a 61.8% Fib level at 0.6449 and trendline resistance (0.7031).

H4 timeframe:

Brought forward from previous analysis –

The H4 timeframe remains a somewhat busy chart at the moment, highlighting hard-wearing resistance between 0.6433/0.6338.

Converging with 0.6433/0.6338 we have a harmonic Gartley formation, with a defining limit at the 78.6% Fib level from 0.6433. In addition, a local ABCD approach is seen (orange) terminating at around a 161.8% Fib ext. level drawn from 0.6338. Also of note is a 161.8% Fib ext. level coming in at 0.6420.

H1 timeframe:

Lifted by a decline in the USD, Thursday concluded testing channel resistance (0.6207) and the 0.6350 base, which, as you can see, remained in play throughout Friday’s holiday-thinned session.

While the RSI indicator makes its way south of overbought territory, the noncommittal tone from sellers at the moment shifts focus to possible upside this week, with the 0.64 handle in view, followed by supply at 0.6461/0.6435. Nevertheless, if we do make a play for lower levels, 0.63 offers feasible support, as does channel support from 0.5991.

Structures of Interest:

Longer term:

Price action on the monthly timeframe displays scope to approach supply at 0.7029/0.6664. Daily movement also penetrated the upper boundary of a demand-turned supply at 0.6330/0.6245, though faces notable Fib resistance around 0.6449/0.6398.

Shorter-term:

Although monthly and daily price threaten higher moves, H4 action brings reasonably stacked resistance to the table. Therefore, a dip lower is still not out of the question this week, with sellers perhaps eyeing 0.63 as an initial target.

Weekly Technical Market Insight: 13th – 17th April 2020, 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.

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:

Partially altered from previous analysis –

The 200-day simple moving average (SMA), currently mixing in around the 108.33ish region, nudged into the limelight Thursday following a modest sell-off. USD/JPY trekked lower in lockstep with the US dollar index, with Friday marginally extending losses, though remaining north of the said SMA.

Skies are relatively clear to the upside in terms of resistance until nearing the 111.30 region this week, along with familiar supply at 112.64/112.10. Yet, a break to the downside potentially charts the way to demand coming in from 105.70/106.66.

H4 timeframe:

Brought forward from previous analysis –

Supply at 109.71/109.20, coupled with a 50% retracement level at 109.30, stepped up to the plate in recent trading and capped upside attempts. Thursday observed the candles tunnel through local support from 108.53 and a trendline support (101.18). Both structures now represent resistance.

Owing to the above, technical elements reveal a push to demand at 106.75/107.22 could be in store (positioned just ahead of daily demand at 105.70/106.66).

H1 timeframe:

Early trade witnessed USD/JPY overpower 108.50 Friday, though fell into a phase of consolidation south of the figure given the majority of the market closing their desks in observance of Good Friday.

Holding beneath 108.50 may prep the ground for a move to 108 and channel support (108.67). A move higher, on the other hand, has the 100-period SMA to target around 108.74, followed by trendline support-turned resistance (108.50) and the 109 handle.

Structures of Interest:

Longer term:

Monthly price is open to either direction at current prices, meandering mid-way between its descending triangle. Daily price, however, is testing the 200-day SMA. This dynamic value can generate strong S/R at times, given its popularity.

Shorter-term:

The combination of 108.50 on the H1 timeframe and H4 resistance at 108.53 may encourage sellers into the market this week. Traders, however, are likely threatened by daily price testing the 200-day SMA and, therefore, may consider waiting for a daily close to form beneath the said SMA before taking action to the downside.

With respect to buying, the 200-day SMA has yet to generate much to the upside. As a result, traders will possibly seek moves above 108.50 before considering long positions.

Weekly Technical Market Insight: 13th – 17th April 2020, 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 relevant in April, despite recent moves to said lows. Nearby resistance can be seen in the form of a trendline formation (1.7191).

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

Daily timeframe:

Brought forward from previous analysis –

Supply at 1.2509/1.2372 and demand coming in from 1.2212/1.2075 remain dominant fixtures on this timeframe, with the former handling price action in the later stages of the week.

Outside of the current formation, demand-turned supply forms at 1.2649/1.2799, an area that aligns with a 200-day simple moving average (SMA) at 1.2648. A breach to the downside, nonetheless, could eventually have candles test the 1.15 neighbourhood: trendline supports.

The RSI indicator continues to hover around its mid-way point at 50.00.

H4 timeframe:

Partially altered from previous analysis –

Sterling chalked up its fifth successive daily gain Friday amid a declining buck, topping just ahead of supply fixed at 1.2622/1.2517 which merges with a 61.8% Fib level at 1.2499 (green).

A rotation from the said base could lead to a pullback to familiar demand at 1.2147/1.2257.

H1 timeframe:

Partially altered from previous analysis –

After a to-the-point retest at 1.24 Thursday, GBP/USD bulls went on the offensive, leaping to supply at 1.2520/1.2455 which houses the 1.25 handle. The remainder of the session produced little, confined within a narrow range between 1.2481/1.2439, which was also respected into Friday.

Should buyers regain consciousness, 1.25 will have its mettle tested, with a break exposing another layer of supply posted at 1.2610/1.2549, an area containing the 1.26 handle within its upper limit.

Structures of Interest:

Longer term:

Monthly buyers are attempting to regain a foothold off 1.1904/1.2235, while daily price attacks the upper limit of supply at 1.2509/1.2372.

Shorter-term:

H4 shows room to pop higher before reaching supply at 1.2622/1.2517 and H1 price is meandering within the walls of supply at 1.2520/1.2455, a few points beneath 1.25.

Sellers may make a showing if we test H4 supply this week (specifically H1 supply 1.2610/1.2549 as this area is contained within), though as of current price levels, buyers appear to have the upper hand given what we see on monthly, daily and H4 timeframes.

Weekly Technical Market Insight: 13th – 17th April 2020, 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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