Weekly Technical Market Insight: 1st – 5th June 2020

Weekly Technical Market Insight: 1st – 5th June 2020, FP Markets

US Dollar Index:

Following a timid start off best levels a few points ahead of 100.00, buyers fazed into the background last week.

Erasing 1.5%, the US dollar index, or DXY, extended losses for a second successive week and penetrated heavy-duty support on the daily timeframe.

Thursday cut through the lower limit of a bearish pennant configuration (98.27), with Friday taking on the 200-day simple moving average at 98.50 and demand from 98.18/98.65. Clearance of these areas throws light on demand at 96.88/96.60, an area surrounded by a 127.2% Fib ext. level at 97.06 and 78.6% Fib ret level at 96.40. Additionally, traders will note the possibility of moves forming as far south as 93.97, the bearish pennant take-profit target, measured by taking the preceding move and adding the value to the breakout point (yellow).

According to the technical picture, the buck is tipped to browse lower levels this week.

Weekly Technical Market Insight: 1st – 5th June 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 supply at 1.1857/1.1352 (intersects with a long-term trendline resistance [1.6038]) and demand at 1.0488/1.0912.

April spent the best part of the month feasting on the top edge of 1.0488/1.0912, squeezing out a Japanese hammer candlestick pattern, typically viewed as a bullish reversal signal. May, as you can see, recovered off worst levels and wrapped up a few pips shy of monthly highs.

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

Daily timeframe:

Partially altered from previous analysis –

Against the $, the euro voyaged into positive terrain last week, dethroning the 200-day simple moving average at 1.1010.

Supply at 1.1239/1.1179, therefore, may be something to work with this week, stationed under another area of supply at 1.1323/1.1268 and trendline resistance (1.0879). What’s also technically appealing is the 127.2% Fib ext. level at 1.1286 and 78.6% Fib ret level from 1.1310.

H4 timeframe:

Amidst broad dollar losses, Thursday cruised through a well-grounded supply at 1.1057/1.1013 and tackled trendline resistance (1.0968). This unearthed another area of supply coming in from 1.1189/1.1158, a rally-base-drop supply zone that unites closely with a 161.8% Fib ext. level at 1.1154.

As you can see, Friday faced intraday pressure ahead of the aforesaid supply, suggesting retest scenarios may occur at the recently penetrated trendline resistance and 1.1057/1.1013 this week.

H1 timeframe:

Upside momentum slowed as we headed into month-end flow Friday, cementing a peak ahead of 1.1150 before reverting to a defensive play. Late US saw 1.11 enter the field with short-term movement trekking to lows at 1.1081, testing channel support (prior resistance – 1.0991) and swarming sell-stop liquidity. Beyond current supports, 1.1050 may offer a base to consider, a level plotted ahead of demand at 1.1033/1.1016 (prior supply).

Buyers, as you can see, attempted to reclaim 1.11, but failed to register anything noteworthy. In fact, candlestick traders will note the Japanese shooting star candlestick pattern off highs at 1.1108, considered a bearish signal.

Indicator-based traders may acknowledge the RSI oscillator forming support off its 50.00 point.

Structures of Interest:

Long term:

Monthly price displays scope to climb this week, finding a footing out of demand at 1.0488/1.0912.

Daily price also appears to be gearing up for an approach to supply at 1.1239/1.1179 after manhandling the 200-day simple moving average at 1.1010 last week.

Short term:

Before turning higher, traders are urged to note the possibility of a retest developing at H4 trendline support/demand at 1.1057/1.1013, with an upside target resting at H4 supply from 1.1189/1.1158.

Should H1 buyers regain footing above 1.11, however, we could see buyers enter the fold quicker than expected and run for 1.1150 and beyond, according to the bigger picture.

Weekly Technical Market Insight: 1st – 5th June 2020, FP Markets

AUD/USD:

Monthly timeframe:

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

April’s 370-pip advance, together with May’s run higher has, as you can see, landed price at the door of supply fixed at 0.7029/0.6664, an area intersecting with a long-term trendline resistance (1.0582).

Regarding the market’s primary trend, a series of lower lows and lower highs has been present since mid-2011.

Daily timeframe:

Buyers and sellers spent the best part of the week squaring off around the 200-day simple moving average at 0.6654.

However, Friday eked out a modest gain, taking the pair to highs at 0.6683 and shining light on channel resistance (0.6557), a line intersecting closely with supply at 0.6777/0.6736.

Also of note is the RSI nearing overbought territory.

H4 timeframe:

Partially altered from previous analysis –

Addressing both supply at 0.6695/0.6664 and an area of support derived from 0.6528/0.6583 last week, this could force a range into motion should a dip back to 0.6528/0.6583 form.

What’s interesting here is the aforesaid supply is glued to the lower limit of monthly supply at 0.7029/0.6664.

Breaking higher faces supply from 0.6764/0.6738, essentially denoting a similar range to daily supply at 0.6777/0.6736.

H1 timeframe:

Since Wednesday, short-term technicals have been in the process of building an ascending triangle pattern between 0.6675 and 0.6567, regarded as a continuation pattern. The take-profit target, assuming a breakout to the upside, is measured by taking the value of the base and adding this to the breakout point (yellow), seen at 0.6785 – a touch above daily supply.

Above the pattern, nevertheless, buyers face possible opposition off 0.67.

Structures of Interest:

Long term:

Monthly supply at 0.7029/0.6664 is a notable base in this market, one which will likely spark a move lower. After crossing the 200-day simple moving average on the daily timeframe, though, this could have price close in on supply at 0.6777/0.6736 before sellers make a show.

Short-term:

While H4 supply at 0.6695/0.6664 may contain upside attempts, the formation of a H1 ascending triangle will interest buyers this week, particularly if a H1 close outside of the pattern forms. However, buyers must then contend with the 0.67 handle and H4, daily and monthly supplies. Therefore, a breakout of the ascending triangle is unlikely to reach target.

Weekly Technical Market Insight: 1st – 5th June 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.

April was pretty uneventful, ranging between 109.38/106.35. May also remained subdued, ranging between 108.08/105.98.

Areas outside of the noted pattern 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 –

Since registering a top from 109.38 at the beginning of April, USD/JPY moulded a falling wedge pattern, which had its upper limit breached on May 11 in strong fashion, boosted by demand at 105.70/106.66. The take-profit target out of the pattern, traditionally measured by taking the value of the base and adding this to the breakout point (purple), sets an upside objective of around 109.30.

In order to reach the noted take-profit target, the 200-day simple moving average at 108.30 must be taken out.

H4 timeframe:

Partially altered from previous analysis –

Structurally, supply at 108.10/107.79 has remained present on the H4 timeframe since mid-April.

Local demand at 107.21/107.41, an area withstanding a number of downside attempts in late May, suffered a minor rupture Friday. Leaving support at 106.91 unopposed, however, the pair swiftly reclaimed earlier losses and revisited current supply. A break of the latter advertises moves to supply coming in from 108.87/108.48, perhaps formed by way of an ABCD approach that completes around 108.44 (orange).

H1 timeframe:

Whipsawing through demand at 107.15/107.23 and testing a 127.2% Fib ext. level at 107.10 heading into Europe Friday caused pain. Buyers out of demand had sell-stops tripped, a move which simultaneously caused a bear trap.

The stronger-than-expected recovery going into US trade sailed through the 100-period simple moving average and scored a high at 107.89. Despite nearby tops around 107.90, 108 commands attention as resistance, while a dip could have the SMA or demand at 107.46/107.56 make a show.

Structures of Interest:

Long term:

As aired in recent analysis, daily price displays room to approach the 200-day simple moving average at 108.30 and the falling wedge take-profit target of around 109.30.

Short term:

H4 traders will be wary of buying this market, thanks to H4 supply at 108.10/107.79. 108 on the H1 timeframe could, therefore, be an angle of interest for sellers in early trade this week.

A violation of the current H4 supply would be interesting. Not only could this have players welcome the 200-day SMA, the H4 ABCD correction at 108.44 marks appealing resistance, as does H4 supply at 108.87/108.48.

Weekly Technical Market Insight: 1st – 5th June 2020, FP Markets

GBP/USD:

Monthly timeframe:

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

Though under pressure, support at 1.1904/1.2235 remains in motion as we transition into June. Neighbouring resistance, should we see an attempt at recovery, can be found in the form of a trendline (1.7191). A violation of support, nevertheless, puts forward a 127.2% Fib ext. level at 1.1297.

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

Daily timeframe:

Brought forward from previous analysis –

A few pips south of supply at 1.2649/1.2799 (prior demand), a double-top pattern formed at 1.2647, with May 13 consuming the neckline (April 21 low 1.2247) and establishing a potential take-profit target (purple) around 1.1855.

Recent trade observed a retest at the double-top neckline at 1.2247 unfold, with buyers, overall, governing action. However, this does not imply the double-top pattern will fail; what it does mean, though, is traders are able to sell this market at a healthier risk/reward ratio, as protective stop-loss orders are generally positioned above pattern peaks: 1.2647.

H4 timeframe:

Partially altered from previous analysis –

After coming within touching distance of healthy demand at 1.2170/1.2204 and trendline support (1.2075), Thursday extended Wednesday’s closing recovery. While Tuesday’s high at 1.2363 has hampered buying, squeezing through here may lay the foundation for a rally to supply at 1.2477/1.2438 this week and trendline resistance (1.2163 prior support).

H1 timeframe:

Friday’s analysis highlighted a possible retest motion off 1.23, forming wave 4 of a potential impulse wave. The piece also underlined a possible wave-5 completion around 1.2378, ahead of 1.24, where wave 1 and 5 may equal.

As you can see, both scenarios came to fruition Friday, with price action retesting 1.23 and holding into the close.

Structures of Interest:

Long term:

As noted in recent analysis, monthly holds 1.1904/1.2235, despite positioned against the major trend.

Sellers on the daily timeframe still have a hand in the fight despite hesitating at the double-top resistance neckline from 1.2247.

Short term:

Further upside is a possibility this week on the H4 timeframe, taking aim at supply from 1.2477/1.2438.

Buyers off 1.23 likely have 1.24 in sight as a possible take-profit target, with a breach closing in on the noted H4 supply. Intraday breakout buyers, therefore, will likely display interest above 1.24 this week.

Weekly Technical Market Insight: 1st – 5th June 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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