Wednesday 12th June: ECB President Mario Draghi takes centre stage today – remain vigilant.

content provided with permission by IC MArkets

EUR/USD:

Outlook unchanged due to lacklustre movement.

It was a quiet session in the EUR/USD domain Tuesday, with in-line US PPI data doing little to rock the boat.

For folks who read Tuesday’s briefing you may recall focus was on further buying from 1.13, targeting 1.1347 (last Friday’s peak) and ultimately 1.14/1.1374 (green – comprised of the round number 1.14, a 78.6% Fibonacci resistance at 1.1375 and two 161.8% Fibonacci extension points at 1.1376 and 1.1374). The research team were specifically interested in the nice-looking H4 bullish engulfing candle off of 1.13 (red arrow) as a way of confirming buyer intent.

The key justification behind supporting a long from 1.13, aside from the bullish candlestick confirmation, however was the unit’s location on the higher timeframes:

EUR/USD bulls remain underlining an offensive state out of a long-standing weekly demand zone at 1.1119-1.1295. Despite the overall trend still facing a southerly bearing since topping in early 2018, the recently formed near-full-bodied weekly bull candle displays scope for extension to as far north as the 2019 yearly opening level at 1.1445.

Cutting through to the daily timeframe, the research team notes price action is testing a trend line resistance-turned support extended from the high 1.1569. Overhead resistance can be seen in the form of a 200-day SMA (1.1366) and a Quasimodo formation at 1.1419.

Areas of consideration:

For those who remain long this market, as highlighted above, the next upside target can be seen around 1.1347 and ultimately 1.14/1.1374 (which, should we reach this high, is also a useable sell zone given its local confluence and nearby 200-day SMA).

Today’s data points: ECB President Draghi Speaks; US CPI m/m; US Core CPI m/m.

GBP/USD:

Up 0.28% vs. the buck, the pound was among the top performers Tuesday, reclaiming a large share of Monday’s losses. Healthy UK job’s data and a somewhat uninspiring dollar elevated the GBP/USD’s H4 candles back above the 1.27 handle, consequently opening up the possibility of another potential test of Quasimodo resistance at 1.2757, which held price action lower last Friday.

Higher up on the curve, daily support remains in the fold at 1.2697, though faces resistance in the form of a trend line support-turned resistance taken from the low 1.2960. Beyond here, the unit exhibits scope for a run towards resistance coming in at 1.2839. The story on the weekly timeframe has the current candle shaking hands with the underside of its 2019 yearly opening level at 1.2739, following a recovery from demand at 1.2365-1.2615 last week.

Areas of consideration:

Having seen weekly price flirting with resistance at 1.2739, a retest at 1.27 on the H4 timeframe for longs is tricky. On that note, 1.2757, the H4 Quasimodo resistance, is a somewhat appealing sell zone to have eyes on today, due to its convergence with the daily trend line support-turned resistance mentioned above, and also because weekly selling interest may develop a little lower on the curve around 1.2739.

Therefore, H4 or H1 bearish candlestick confirmation forming off of 1.2757 today is, according to our technical studies, sufficient to consider selling this market, targeting 1.27 as the initial take-profit zone. Remember, traders, 1.27 also represents daily support at 1.2697.

Today’s data points: US CPI m/m; US Core CPI m/m.

AUD/USD:

Outlook unchanged due to lacklustre movement.

Following Monday’s correction lower, the AUD/USD pair punched to a session low of 0.6947 Tuesday, though swiftly recovered amid US hours to end the day marginally in the green, up 0.07%.

The Aussie, as evident from the H4 timeframe, consolidates around the top edge of a support area at 0.6935-0.6952 (and intersecting trend line support taken from the low 0.6864), ahead of tomorrow’s employment report.

For traders who read Tuesday’s briefing you may recall the spotlight was firmly positioned on the H4 support area emphasised above at 0.6935-0.6952 for potential long opportunities, having seen it align closely with daily demand marked with a green arrow around the 0.6935ish region.

What’s also notable from a technical perspective is the number of H4 hammer formations formed off the top edge of the said H4 support area yesterday. This is likely enough to draw in buyers and potentially target a run towards the key figure 0.70, which happens to align closely with daily resistance at 0.7003.

Areas of consideration:

Aside from the current long out of 0.6935-0.6952, the research team sees little else to hang their hat on today.

Today’s data points: RBA Assist Gov. Ellis Speaks; US CPI m/m; US Core CPI m/m.

USD/JPY:

Outlook unchanged due to lacklustre movement.

USD/JPY movement remains in a quiet state, recording its second consecutive unchanged day yesterday.

Since the beginning of the week, whereby market participants witnessed the US dollar gap more than 30 points in opening trade, price action remains consolidating between June’s opening level on the H4 timeframe at 108.27 and a trend line resistance extended from the high 112.40.

Long-term flow remains loitering around weekly support at 108.13. Having seen a lack of enthusiasm from this barrier, though, traders may want to acknowledge Quasimodo support at 105.35 in the event we press for lower ground in the weeks to come.

Daily demand at 107.98-108.59 is struggling to maintain a presence, as yesterday’s action produced another indecision candle, albeit with a slight inflection to the downside. Despite boasting a connection to weekly support mentioned above at 108.13, the odds of daily price rushing the lower edge of the said demand this week is high, targeting a 61.8% Fibonacci support value at 107.60.

Areas of consideration:

Longer term, the research team visualises further downside due to a possibly fragile weekly support and lacking daily demand.

Shorter term, on the other hand, a long from June’s opening level on the H4 timeframe at 108.27 could be worth considering, targeting the current H4 trend line resistance. On the same note, a sell from the trend line resistance could also be a consideration.

Irrespective of which level one selects today, if any, additional confirmation should be targeted prior to initiating a position. This could be anything from a bearish/bullish candlestick configuration, a lower-timeframe MA crossover or even drilling down to the lower timeframes and attempting to trade local (price action) structure.

Today’s data points: US Core PPI m/m; US PPI m/m.

USD/CAD:

In an overall quiet market, the USD/CAD pair offered a surprise move to the upside amid a decline in WTI prices. The move, as can be seen on the H4 timeframe, chalked up a nice-looking 127.2% AB=CD (red arrows) bearish formation just south of the 1.33 handle. So far, price action is respecting the said resistances and trades at a low of 1.3280 as we transition into Asia Pac hours. The next port of call to the downside, aside from Monday’s opening low at 1.3238, falls in around the 1.32 handle, followed by a Quasimodo support level coming in at 1.3150 (not visible on the screen).

Supporting H4 flow to the downside, we can also see weekly price recently engulfed a long-standing trend line support extended from the low 1.2247. The break of this trend line formation is significant, given the length of time this barrier has been in motion. Therefore, a move to the 1.3068 Jan 28 2019 low could be in store.

The only drawback to additional downside it seems is the daily timeframe: the 200-day SMA and merging 61.8% Fibonacci support value at 1.3260.

Areas of consideration:

Well done to any of our readers who shorted the underside of 1.33 as this was a noted level to watch.

Taken from Tuesday’s briefing:

In H4 terms, a retest to the underside of 1.33 appears a reasonable possibility, with the expectation of a move lower. This is further bolstered by the weekly timeframe’s position below trend line support. However, seeing daily price testing reasonably strong support around 1.3260ish, we could potentially overthrow 1.33 and head for April’s opening level on the H4 timeframe at 1.3315.

For those who still favour the 200-day SMA combination on the daily timeframe, the research team also wrote this in yesterday’s briefing:

On the other hand, traders who feel the daily 200-day SMA combination with 61.8% Fib support at 1.3260 is enough to draw in buyers, the next upside target on this scale is resistance at 1.3382. Folks concerned by the recent break of weekly trend line support, however, might opt to wait and see if daily action prints a bullish candlestick pattern before pulling the trigger. This not only helps identify buyer intent, it also provides traders entry and risk levels to work with.

Today’s data points: US Core PPI m/m; US PPI m/m.

USD/CHF:

Despite in-line US PPI data doing little to rock the boat, the US dollar rose higher vs. the Swiss franc Tuesday, up 0.26% at the close of trade.

The 0.99 handle positioned on the H4 timeframe remained in the fold, with the candles poised to approach April’s opening level at 0.9952 as well as a 38.2% Fibonacci resistance value at 0.9948. If the H4 candles fail to hold 0.99, however, Quasimodo support at 0.9814 is in sight as the next viable floor (not seen on the screen), which is located within the lower boundary of daily demand coming in at 0.9800-0.9845. On the subject of daily structure, it is also worth reminding ourselves daily action found a ceiling off its 200-day SMA around 0.9960 last week.

In terms of weekly positioning, here’s what Tuesday’s report had to say:

The greenback’s retreat against the Swiss franc from the 2019 high 1.0236 set towards the end of May continued last week, strengthening its position beneath weekly resistance at 1.0110, and now beyond trend line support (etched from the low 0.9187). The break of this long-standing trend line has traders’ crosshairs likely fixed on possible support derived from the 2018 yearly opening level at 0.9744.

Areas of consideration:

Having witnessed weekly price engulf trend line support and potentially unlock the path lower for further downside, traders are also urged to keep a tab on H4 resistance at 0.9952 for possible sells, which, as already highlighted, boasts a connection with a 38.2% Fibonacci resistance value at 0.9948. It might also interest some traders to note the 200-day SMA merges close by 0.9952.

Conservative stop-loss placement can be found around 0.9968, with an initial downside target posted at 0.99.

Today’s data points: US Core PPI m/m; US PPI m/m.

Dow Jones Industrial Average:

Outlook unchanged due to lacklustre movement.

US equities traded lower Tuesday, with the Dow Jones Industrial Average (DJIA) snapping a six-day win streak, as investors digested a new round of posturing on the US/China trade standoff. The Dow Jones Industrial Average closed 28 points lower, or 0.11%; the S&P 500 also lost 0.03%, though the tech-heavy Nasdaq 100 advanced 0.16%.

From a technical perspective, H4 action remains fading fresh supply drawn from 26367-26207, which happens to converge with the lower edge of a daily resistance area at 26539-26200 (also note the two back-to-back shooting star patterns) and also comes with RSI overbought confirmation (green). The next downside objective on the H4 scale can be seen around April’s opening level at 26026, shadowed closely by support present at 25957.

Weekly flow, nevertheless,recently snapped back more than three weeks’ worth of losses last week off its 2018 yearly opening level at 24660, consequently producing a bullish engulfing pattern. Additional upside from this point has resistance in view at 26667 this week.

Areas of consideration:

Focus remains around the aforementioned daily resistance area, more specifically the H4 supply zone at 26367-26207, for potential shorting opportunities. Well done to any of our readers currently short this market, as price recently engaged with its next downside target: April’s opening level at 26026. For that reason it might be an idea to consider reducing some risk and taking partial profits off the table.

Beyond 26026, traders’ crosshairs are likely fixed on H4 support at 25957, followed by H4 support at 25687, as the next support targets.

Today’s data points: US Core PPI m/m; US PPI m/m.

XAU/USD (GOLD):

For traders who read Tuesday’s briefing you may recall the following:

Judging by the lack of enthusiasm out of the H4 support area at 1328.8-1325.4, a test of the H4 support level at 1320.4 could be on the cards today. This will likely trip sell stops and thus provide liquidity to traders looking to buy. To be on the safe side, the research team recommends waiting for additional confirmation to form before committing funds to a position. 

As is evident from recent movement, the unit whipsawed through the noted H4 support area and did indeed draw in buyers from the H4 support level at 1320.4. Well done to any of our readers who managed to pin down some form of confirmation off 1320.4 and enter long.

Another point Tuesday’s piece made clear was daily support entered the fold around 1326.3, seen plotted within the said H4 support area. Further adding to this was the weekly timeframe fading the 1346.7 Feb 18 high, though also showing room to press beyond this point to resistance at 1357.6.

Areas of consideration:

In the event we continue pushing for higher ground, the H4 Quasimodo resistance level at 1344.0 is a logical upside target, followed by the area between 1357.6 and 1350.7 (comprised of the weekly resistance level, the daily Quasimodo resistance level and also the H4 Quasimodo resistance level). The latter also makes for an ideal sell zone, too.

As 1357.6/1350.7 is somewhat small in range, traders are recommended to wait for additional confirmation before committing funds to any short positions, should we reach this high. This could be anything from a H4 bearish candlestick configuration, a lower-timeframe MA crossover or even drilling down to the lower timeframes and attempting to trade local (price action) structure within the zone.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability with regard to financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com.au, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.

IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.