Weekly Technical Market Insight: 27th April – 1st May 2020

Weekly Technical Market Insight: 27th April – 1st May 2020, FP Markets

US Dollar Index:

Having recently pencilled in a v-shaped bottom a few points off demand at 98.18/98.65, the US dollar index (DXY) finished the week in positive territory (+0.58%), though off best levels Friday.

Although reasonably snug above the 100.00 handle, the DXY is closing in on eye-catching supply from 101.79/101.00. On top of this, technical structure reveals a 61.8% Fib level stationed at 101.20, along with a possible ABCD correction (orange) that blends with a 127.2% Fib ext.at 101.75. As such, the said supply may hamper upside attempts this week.

With reference to the 200-day simple moving average (SMA), the value has been drifting higher since attempting to flatten in early March, currently trading within the lower boundary of demand noted above at 98.18/98.65.

Weekly Technical Market Insight: 27th April – 1st May 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.

April has spent the best part of the month feasting on 1.0488/1.0912, threatening the possibility of a move to demand at 0.9581/1.0221 over the coming weeks.

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

Daily timeframe:

Friday staged an impressive comeback off the 78.6% Fib level at 1.0745, reclaiming all of Thursday’s losses and snapping a 4-day losing streak. Despite this, demand at 1.0526/1.0638 calls for attention, an area extended from March 2017.

Additionally, technical research has a potential ABCD correction (orange) lining up around the upper edge of the aforementioned demand. Note this is similar structure to that offered on the DXY (above), only based on opposite areas given its inverse correlation.

The 200-day simple moving average (SMA) continues to roll lower, down since mid-May 2018.

H4 timeframe:

EUR/USD managed to keep its head above water Friday, following a hammer candlestick pattern off lows at 1.0727. This has shifted focus back to resistance priced in at 1.0831, a level not only boasting strong historical significance, but one that intersects with a trendline resistance (1.0990). Failure to cap upside at 1.0831 could invite an approach to another trendline resistance, coming in from 1.1147, positioned close by tops around the 1.0890 neighbourhood.

H1 timeframe:

After overpowering 1.08 Friday, channel resistance (1.0885) came under fire, with price consequently crossing paths with the 100-period simple moving average (SMA) and trendline support-turned resistance (1.0812). Note this structure is also positioned a few pips south of supply at 1.0855/1.0832.

Indicator-based traders will also note the RSI is fast approaching overbought levels, currently testing waters above 60.00.

Structures of Interest:

Long term:

Friday’s rebound from the 78.6% Fib level at 1.0745 on the daily timeframe may lure buyers into the market in early movement this week, though the core focus remains at demand from 1.0526/1.0638, in light of its ABCD confluence.

Short term:

H4 resistance at 1.0831 (and merging trendline resistance), coupled with H1 supply at 1.0855/1.0832, the 100-period SMA and H1 trendline support-turned resistance, may see sellers strengthen their grip this week.

As a result of the above, bearish setups off H4 resistance at 1.0831 could be an option.

Weekly Technical Market Insight: 27th April – 1st May 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, alongside April’s advance so far, has landed the unit within striking distance of supply fixed at 0.7029/0.6664, 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 –

AUD/USD is found holding gains south of a 61.8% Fib level at 0.6449, accompanied by a trendline resistance (0.7031). With the likelihood of price revisiting the said levels this week, pencilling in nearby supply at 0.6618/0.6544, sited just south of a 161.8% Fib ext. level at 0.6642, could be an idea in the event we explore higher ground.

A move to the downside, on the other hand, could refocus the spotlight on demand at 0.5926/0.6062.

H4 timeframe:

Partially altered from previous analysis –

The harmonic Gartley formation, boasting a defining limit at the 78.6% Fib level from 0.6433, remains a focal point on the H4 timeframe as we head into the final week of April. Technicians will also note additional Fibonacci studies around this area in the form of a 127.2% Fib ext. level at 0.6421 and a 161.8% Fib ext. level at 0.6420.

Price action, although reaching lows at 0.6253 last Tuesday, has had a hard time testing demand plotted at 0.6192/0.6247. Striking this zone will likely be enough to tempt short sellers out of the said Gartley formation to reduce risk to breakeven.

Despite the lack of enthusiasm from sellers, the current Gartley pattern remains valid until we break the X-point at 0.6684.

H1 timeframe:

0.6350, along with a trendline resistance-turned support (0.6444), contained downside in early London Friday (a noted area of support in Friday’s analysis), and invited an approach to 0.64 by the close.

Interestingly, above 0.64, there’s little stopping the pair from reaching supply at 0.6461/0.6435 which blends with a three-drive pattern, terminating around the 127.2% Fib ext. level at 0.6438.

Structures of Interest:

Long term:

Monthly supply at 0.7029/0.6664 remains a point of interest to the upside, though in order to reach this far north, traders must first contend with the noted daily resistances.

Short-term:

From a shorter-term perspective, the H4 harmonic Gartley pattern around 0.6433 remains credible resistance. Should H1 price connect with supply at 0.6461/0.6435 and complete the three-drive pattern around 0.6438, intraday sellers may make an appearance and target 0.64 as initial support.

Weekly Technical Market Insight: 27th April – 1st May 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 so far has been pretty uneventful, ranging between 109.38/106.92.

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:

Brought forward from previous analysis –

Leaving demand from 105.70/106.66 unopposed, USD/JPY seems to be in the process of forming a double-bottom pattern from 106.87 (black line). Although the 200-day simple moving average (SMA), currently circulating around 108.29, could hamper upside, pattern traders will still be watching/hoping for a break above the 109.38 April 6 high (red arrow) to confirm the double-bottom pattern this week. This potentially preps the ground for moves to 111.30ish based on the double-bottom’s take-profit target (usually measured from the lowest trough to the peak and then adding the value to the breakout point).

H4 timeframe:

Partially altered from previous analysis –

Demand at 106.75/107.22 remains a feature on the H4 timeframe, capping downside since the beginning of the month and sited just ahead of daily demand underlined above at 105.70/106.66.

Interestingly, since mid-April the candles have been compressing within a bearish pennant pattern between 106.92/108.07, with Friday observing a bearish close form beneath the pattern’s lower limit. This may be enough to overrun current demand and potentially make a run for demand at 105.75/105.17. Traditionally, take-profit targets out of the noted pennant pattern are formed by measuring the preceding move (109.38-106.92) and adding this value to the breakout point.

H1 timeframe:

US hours pulled price action beneath 107.50 Friday, with the pair establishing resistance off the level by the close. While a number of lows are seen to the left of current price, the core focus appears to be around demand from 106.99/107.16, holding the 107 handle within. Another constructive development is a possible ABCD approach (orange) that aligns with the said demand.

Structures of Interest:

Long term:

Monthly price could effectively pop either way, while daily price, although showing signs of a potential double-bottom pattern at 106.87, may be hindered by the 200-day SMA at 108.29 and forced to demand at 105.70/106.66.

Short term:

The H4 close out of the current bearish pennant pattern suggests we may head lower this week, though most traders will want to see H4 demand at 106.75/107.22 cleared before moving forward. However, do bear in mind that even with the said H4 base taken out, sellers must also contend with daily demand at 105.70/106.66.

Intraday action, based on the H1 timeframe, is likely to complete the ABCD correction into demand at 106.99/107.16. As such, shorting opportunities may exist off 107.50 in early trade.

Weekly Technical Market Insight: 27th April – 1st May 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 in play as we head into the closing stages of April, despite recent moves to said lows. Neighbouring 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:

After establishing a position beneath demand-turned supply at 1.2649/1.2799, an area that aligns with a 200-day simple moving average (SMA) at 1.2645, price has travelled from a peak of 1.2647 to a low at 1.2247.

However, heading into the later stages of last week, downside momentum diminished, leaving the unit somewhat directionless ahead of demand from 1.2212/1.2075.

H4 timeframe:

Last Tuesday had demand at 1.2147/1.2257 welcome price action into the fold, which, so far, has been able to withstand any downside attempts. Supply rests close by at 1.2496/1.2437; this is a reasonably dominant supply with notable downside momentum out of its base, seen just ahead of another layer of supply at 1.2622/1.2517.

H1 timeframe:

Friday’s session opened with London approaching 1.23, bolstered by a nearby trendline resistance-turned support (1.2647). A rally to highs at 1.2376 took shape, though was delayed by a trendline support-turned resistance (1.2247).

We ended the week marginally above the 100-period simple moving average (SMA), threatening to potentially overthrow the said trendline support-turned resistance and make a play for supply at 1.2422/1.2397, which holds the 1.24 handle within.

Structures of Interest:

Long term:

Monthly price is holding north of support at 1.1904/1.2235, albeit in the shape of a bearish candle. Daily price, on the other hand, suggests scope for a move to demand from 1.2212/1.2075.

Short term:

H4 price could effectively pop in either direction this week. Supply at 1.2496/1.2437 is a worthy contender, as is demand from 1.2147/1.2257.

H1 price is currently testing a trendline support-turned resistance, though sellers have yet to show much meaning from here. Both H4 and daily timeframes show scope to push lower, however, so a move to 1.23 could still be in store.

H1 supply at 1.2422/1.2397 also holds appeal, but faces the possibility of being whipsawed in favour of H4 supply at 1.2496/1.2437 directly above.

1.23 is also a support worthy of note, having seen it merge closely with H1 trendline resistance-turned support.

Weekly Technical Market Insight: 27th April – 1st May 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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