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Monday 6th July: Weekly Technical Outlook and Review

Monday 6th July: Weekly Technical Outlook and Review

56750   July 4, 2020 23:29   ICMarkets   Market News  

Key risk events today:

US ISM Non-Manufacturing PMI; BoC Business Outlook Survey.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Weekly gain/loss: +0.24%

Weekly close: 1.1243

Weekly perspective:

Trade on the weekly timeframe, despite numerous upside attempts, remains languishing south of long-standing trend line resistance, taken from the high 1.2555.

Consequently, the 2020 yearly opening level at 1.1222 is under fire.

Any sustained move below the aforementioned barrier this week seats the 2016 yearly opening level at 1.0873 on the hit list, while a EUR/USD bid shifts focus to the possibility of reaching the 2019 yearly opening level at 1.1445.

Daily perspective:

Since the beginning of June, channel resistance, extended from the high 1.1147, and resistance at 1.1349, has capped upside.

Support derived from the 1.1147 27 March high, therefore, could become a reality this week, a level that merges closely with a 38.2% Fibonacci retracement ratio at 1.1155.

Interestingly, breaching 1.1147 reveals the 200-day SMA (orange – 1.1037), closely followed by support at 1.0995 and a 61.8% Fibonacci retracement ratio at 1.0988.

H4 perspective:

Holiday-thinned trading conditions Friday had price action exhibit subdued movement, ranging between 1.1251/1.1219.

As a consequence, much of Friday morning’s briefing remains valid.

The aftermath of Thursday’s upbeat US employment data and declining unemployment rate witnessed the DXY hook a firm bid. This, following a retest at the underside of 1.13 (sited beneath Quasimodo resistance at 1.1340), directed EUR/USD lower, settling around July’s opening level at 1.1235.

Continued selling today may draw in 1.12 and Quasimodo support close by at 1.1185; a break, though, could have price approach a 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146.

Areas of consideration:

Clearing 1.12/1.1185 on the H4 would be interesting this week, potentially unlocking the door to healthy support.

The 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146 not only puts forward a potential H4 support area to consider this week, this base is strengthened further by daily support at 1.1147 and a 38.2% Fibonacci retracement ratio at 1.1155.

Breaching 1.13 to the upside, on the other hand, exposes H4 Quasimodo resistance at 1.1340. This level, given the test on June 23 likely consuming much of the barrier’s liquidity, is possibly brittle. Consequently, should trade establish a presence north of 1.13 this week, long positions may be favourable, targeting H4 Quasimodo resistance at 1.1383 and 1.14.

GBP/USD:

Weekly gain/loss: +1.23%

Weekly close: 1.2481

Weekly perspective:

Snapping a three-week bearish phase, GBP/USD bulls went on the offensive last week and pencilled in healthy upside.

With respect to structure on this timeframe, support resides at 1.2163, a Quasimodo formation. Follow-through buying, nevertheless, may eventually see price shake hands with a 61.8% Fibonacci retracement ratio at 1.2718 and 2019 yearly opening level at 1.2739.

Daily perspective:

Price action on the daily timeframe, meanwhile, formed a shooting star candlestick pattern Thursday, yet limited follow-through selling was realised Friday.

Resistance on this scale can be found at trend line support-turned resistance, taken from the low 1.1409. In terms of support, aside from the 1.2251 June 29 low, there appears room for an approach to 1.2014, sited just south of the 1.2075 May 18 low. Before reaching this far south, nonetheless, weekly Quasimodo support must be absorbed at 1.2163.

H4 perspective:

Volatility diminished considerably Friday in observance of US bank closures. As a result of this, much of the following will echo thoughts put forward in Friday’s technical briefing.

Thursday had GBP/USD test the air above 1.25, fading nearby Quasimodo resistance at 1.2512 on the back of better-than-anticipated US jobs data. The combination of 1.25 psychological resistance and Quasimodo resistance was a noted base to watch in Thursday’s briefing – well done to any readers who managed to latch onto the move lower.

Chart studies reveal scope to explore lower levels on the H4 timeframe, shining the spotlight on 1.24 and April’s opening level at 1.2395.

In the event things turn this week and we takeover 1.25, we could be looking at May’s opening level at 1.2583/1.26 as a probable target.

Areas of consideration:

Technically, as highlighted above on the H4, there’s room to dip as far south as the 1.24 vicinity this week, no doubt a welcomed sight for those short 1.25/1.2512 resistance.

Fracturing 1.25 to the upside, on the other hand, will not only trip breakeven stops from those currently short, the move would likely appeal to breakout buyers, in pursuit of May’s opening level at 1.2583 and 1.26.

AUD/USD:

Weekly gain/loss: +1.19%

Weekly close: 0.6942

Weekly perspective:

Buyers strengthened their grip considerably last week, extending the prior week’s cautious recovery.

Resistance, forged in the shape of a 2020 yearly opening level and a 2019 yearly opening level, at 0.7016 and 0.7042, respectively, continues to offer a central presence nearby. It might also interest traders to note just above the said resistances we have a 61.8% Fibonacci retracement ratio at 0.7128 (green).

In terms of support, crosshairs remain fixed on 0.6677.

Daily perspective:

From the daily timeframe, despite five, albeit mild, consecutive bullish sessions, we remain wandering no man’s land.

Quasimodo resistance at 0.7049 is in sight on this scale, merging closely with trend line support-turned resistance, taken from the low 0.6670. Attention on this timeframe also remains at support coming in from 0.6751. Interestingly, lurking beneath here we also have the 200-day SMA (orange – 0.6668), located close by weekly support mentioned above at 0.6677.

H4 perspective:

The Australian dollar concluded a shade higher against the US dollar Friday, but failed to penetrate Thursday’s high at 0.6952 amidst holiday-thinned sentiment.

In spite of Friday’s lacklustre performance, buyer intent north of the 0.69 handle is visible. This shifts focus to the 0.6976 peaks, as well as the key figure 0.70 and a converging ABCD pattern (black arrows).

Areas of consideration:

With H4 candles establishing a position above 0.69 this has driven interest to higher levels so far.

Breakout buyers already long, are likely to have protective stop-loss orders tucked under the 0.6877 low (red arrow). Conservative traders, though, may have entered on Thursday’s dip to 0.6901 (near-retest at 0.69), also likely slipping protective stop-loss orders under 0.6877.

Regardless of the entry technique, as underlined in previous analysis, H4 upside targets this week rest at 0.6976 and 0.70.

USD/JPY:

Weekly gain/loss: +0.27%

Weekly close: 107.48

Weekly perspective:

The US dollar extended gains against the Japanese yen over the course of the week, but wrapped up considerably off best levels.

Resistance rests reasonably close by in the shape of the 2020 yearly opening level at 108.62, followed by the 2019 yearly opening level at 109.68. Support remains fixed around the 105.98 6th May low, with a break here uncovering long-term support at 104.70.

Daily perspective:

Mid-week pencilled in a top a few pips shy of the 200-day SMA (orange – 108.37), shaped by way of a bearish outside day. While the lack of volatility likely had many traders shy away from executing short positions, the recent top (and candle formation) still draws attention back to Quasimodo support at 106.35 this week, the origin of the recent leg higher.

H4 perspective:

Friday’s movement was almost non-existent, sporting a paltry 15-pip range between 107.56/107.43 due to US banks closing in observance of Independence Day. With that being the case, much of the following offers a similar view to Friday’s technical briefing.

Thursday, lifted on upbeat jobs data, witnessed price movement test waters just ahead of June’s opening level at 107.73. The latter was a watched resistance in Thursday’s briefing, with downside on the H4 scale exhibiting scope to approach May’s opening level at 107.12 as well as the 107 handle.

Areas of consideration:

Sellers south of 107.73, given the recent daily bearish outside day, may take aim at 107.12/107 this week, offering reasonable risk/reward.

In the event we make a run for July’s opening level at 107.95 and 108 this week, however, a fakeout scenario could be on the cards as directly above the round number sits the 200-day SMA at 108.37. A fakeout scenario is simply a whipsaw through 108, followed by a test of 108.37 and a H4 close back beneath 108 to setup a bearish theme.

USD/CAD:

Weekly gain/loss: -1.00%

Weekly close: 1.3545

Weekly perspective:

Dipping approximately 140 pips on the week, USD/CAD firmly snapped three consecutive weeks of upside.

This positions the 2017 yearly opening level at 1.3434 in the firing range this week. Beyond 1.3434, channel support, taken from the low 1.2061, can be seen as the next potential floor. Whereas a USD/CAD bid throws the 2016 yearly opening level at 1.3814 in the pot as feasible resistance, with follow-through buying likely to try and tackle a dense block of supply between 1.4190/1.3912.

Daily perspective:

Mid-week had price movement retest the top edge of a breached falling wedge pattern as support (1.3686/1.3504) – so far sellers have outweighed buyers. Interestingly, though, the 200-day SMA (1.3495), seen closing in on the level, may lend a helping hand here this week, in terms of additional support.

Take-profit targets out of a falling wedge pattern can be measured by taking the base value and adding this figure to the breakout point (black arrows), which as you can see in this case, converges closely with the next daily resistance at 1.3807, followed closely by another layer of resistance at 1.3867.

H4 perspective:

After Thursday mildly whipsawed 1.36 to the upside and crossed swords with trend line support-turned resistance, taken from the low 1.3315, and Friday found resistance at July’s opening level drawn from 1.3574, the pair has since emphasised a modestly bearish bias and tested waters south of the 1.3550ish region.

An extension to the downside this week shifts attention to the 1.35 handle, which happens to also offer Quasimodo support (red arrow – left shoulder).

Areas of consideration:

Usually the higher timeframes (daily structure) take precedence over lower-timeframe levels (H4 structure).

Yet, the H4 close below 1.3550 has perhaps sealed the deal for a run to 1.35 early week. As a result, intraday sellers may try their hand and sell short here today.

1.35 is an interesting support. Not only does the number represent a downside target for those short, it also signifies confluent support, joined closely with the 200-day SMA at 1.3495 and the top edge of the daily wedge formation.

USD/CHF:

Weekly gain/loss: -0.40%

Weekly close: 0.9442

Weekly perspective:

Support at 0.9447 remains in motion, but is hanging on by a thread. The lack of enthusiasm led to a minor close south of the aforementioned level last week. Whether this is enough to deter buyers here is difficult to determine.

A recovery has the 2020 yearly opening level at 0.9671 marked as the next resistance target, stationed close by the 2018 yearly opening level at 0.9732. Exploring lower levels this week, nevertheless, could have the unit eventually knock on the door of Quasimodo support at 0.9255.

Daily perspective:

The initial break of weekly support at 0.9447 (11 June) on the daily timeframe threw breakout sellers into a bear trap as daily buyers vigorously defended AB=CD structure (black arrows) at 0.9395. The initial upside target out of the daily AB=CD pattern, traditionally speaking, can be found at the 38.2% Fibonacci retracement ratio at 0.9580 (derived from legs A-D). This is positioned above resistance at 0.9542, which, as you can see, has so far done a superb job in holding back buyers.

In the event we overrun 0.9542 and also 0.9580 we could, according to traditional measures, cross swords with the next AB=CD target at 0.9705, the 61.8% Fibonacci retracement ratio, also taken from legs A-D. This implies a push above trend line resistance, taken from the high 0.9901.

H4 perspective:

Although bolstered by weekly support at 0.9447, Fibonacci support on the H4 timeframe, the 61.8% Fibonacci retracement ratio at 0.9445 and 127.2% Fibonacci extension point at 0.9440, finished Friday under pressure. Note trend line support-turned resistance, extended from the low 0.9420, and July’s opening level at 0.9470 capped upside attempts Friday.

Territory south of the aforementioned Fibonacci structure has the pendulum swinging towards 0.94 as the next downside objective.

Areas of consideration:

Should buyers regain consciousness off weekly support at 0.9447 this week, and by extension, the H4 Fibonacci structure at 0.9445/0.9440, buyers will likely seek a H4 close above July’s opening level at 0.9470 before pulling the trigger, targeting 0.95 as an initial take-profit zone.

Continued downside this week, a sustained move under 0.9445/0.9440, could re-open the door for bearish scenarios to 0.94 as an initial target. Owing to the recent fakeouts seen through 0.9445/0.9440, conservative traders are unlikely to commit unless the latter is retested as resistance, preferably in the shape of a H4 bearish candlestick pattern.

Dow Jones Industrial Average:

Weekly gain/loss: +2.86%

Weekly close: 25751

Weekly perspective:

Buyers elbowed their way into the spotlight last week, establishing firm position.

The 2018 yearly opening level at 24660 remains an important base of support on the weekly timeframe. In the event buyers manage to keep their head above water here this week, we might pull in the 27638 high, followed by the 2020 yearly opening level at 28595. Yet, below 24660, traders’ crosshairs will be fixed on the 2019 yearly opening level at 23313.

Daily perspective:

Since June 15, price action on the daily timeframe has been ranging between the 200-day SMA (orange – 26263) and support from 24934.

Areas of note outside of the aforementioned range fall in at resistance from 27640, with support plotted at 23291, a level that also signifies a Quasimodo formation (black arrow).

H4 perspective:

Major US equity benchmarks cheered a record surge in payrolls Thursday, as investors headed into the three-day weekend. The Dow Jones Industrial Average rallied 92.39 points, or 0.36%; the S&P 500 advanced 14.15 points, or 0.45%, and the tech-heavy Nasdaq 100 concluded higher by 62.64 points, or 0.61%.

Despite leaving Quasimodo resistance unchallenged at 26235, Thursday finished quite a way off best levels, with Friday putting forward a modestly bearish tone that saw July’s opening level at 25761 welcome price action into the close. South of the latter, traders will be looking towards June’s opening level at 25232, closely tailed by Quasimodo support at 25139.

Areas of consideration:

In terms of the weekly timeframe, buyers appear poised to climb further this week. Still, buyers on the H4 and daily timeframes are unlikely to commit until H4 Quasimodo resistance at 26235 and the 200-day SMA (26263) are taken out. As a result, a decisive H4 close above 26235 could be something to keep an eye out for going forward.

Alternatively, traders who have confidence in the weekly timeframe’s position, bullish scenarios off July’s opening level at 25761 could be an option.

XAU/USD (GOLD):

Weekly gain/loss: +0.20%

Weekly close: 1775.0

Weekly perspective:

Over the course of last week, traders observed price grip Quasimodo resistance at 1787.4. Also of interest on the weekly timeframe is a potential ascending wedge pattern forming between 1451.4/1703.6, perhaps serving as a reversal pattern in the coming weeks. A move lower would also see buyers and sellers go toe-to-toe at support coming in from 1738.7.

Breaking 1787.4, as the underlying trend suggests (trending higher since 2016), potentially lays the foundation for continuation buying to resistance stationed at 1882.7.

Daily perspective:

Weekly Quasimodo resistance at 1787.4 also remains central resistance on the daily timeframe for the time being. Daily action, nevertheless, throws across additional structure in the form of a trend line resistance, taken from the high 1747.7.

Support on the daily scale can be found at 1746.4, whereas a breach of 1787.4 will throw a daily Quasimodo formation at 1841.0 in the pot as potential resistance.

H4 perspective:

Despite a number of downside attempts, trend line support, extended from the low 1679.2, survived Thursday and remained afloat Friday amid holiday-thinned trade.

In last week’s analysis, the research team highlighted the possibility of XAU/USD fading weekly Quasimodo resistance at 1787.4, which, as you can see, came to fruition. Should sellers seize control this week and conquer the aforementioned H4 trend line support, this serves as a sign we may be headed for Quasimodo support at 1754.1, followed by daily support at 1746.4. Do bear in mind, the pair has been trading northbound since 2016, therefore shorts are effectively countertrend positions.

Areas of consideration:

Traders short the current weekly Quasimodo resistance level, as underlined in Thursday’s writing, likely reduced risk to breakeven at H4 trend line support and maybe even banked a portion of profits.

A break of H4 trend line support this week not only clears the way for current sellers towards the aforementioned H4 supports emphasised above, it also unlocks the possibility of fresh breakout setups.

Conquering weekly Quasimodo resistance at 1787.4, nonetheless, could pin open the door for bullish themes this week. A H4 close above 1787.4 that’s preferably followed up with a retest might be sufficient to lure buyers into the fold. The reason for the retest, rather than simply entering long on the breakout candle’s close, is simply to help avoid getting caught on a fakeout.

 

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Friday 3rd July: Asian markets gain on US non-farm payrolls
Friday 3rd July: Asian markets gain on US non-farm payrolls

Friday 3rd July: Asian markets gain on US non-farm payrolls

56719   July 3, 2020 17:09   ICMarkets   Market News  

Global Markets:

  • Asian Stock Markets : Nikkei up 0.66%, Shanghai Composite up 2.01%, Hang Seng up 0.99%, ASX up 0.42%
  • Commodities : Gold at $1784.00 (-0.34%), Silver at $18.24 (-0.46%), Brent Oil at $42.64 (-1.16%), WTI Oil at $40.16 (-1.21%)
  • Rates : US 10-year yield at 0.669, UK 10-year yield at 0.179, Germany 10-year yield at -0.440

News & Data:

  • (USD) Unemployment Claims 1427K vs 1350K expected
  • (USD) Unemployment Rate 11.10% vs 12.40% expected
  • (USD) Non-Farm Employment Change 4800K vs 3037K expected
  • (USD) Average Hourly Earnings m/m -1.20% vs -0.80% expected
  • Italian service sector downturn continues to ease in June

Markets Update:

Asian stock markets are higher on Friday following the overnight gains on Wall Street after a report by the U.S. Labor Department showed another record spike in employment in the month of June and added to optimism about an economic recovery. Data showing that China’s service sector expanded strongly in June also boosted sentiment.

In Japan, the Nikkei 225 added 0.7% while the Topix index ended its trading day 0.6% higher. South Korea’s Kospi advanced 0.8%. Mainland Chinese stocks were among the region’s biggest gainers on the day, with the Shanghai composite surging 2%. Over in Australia, the S&P/ASX 200 finished its trading day 0.4% higher.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.2 after earlier touching a high of 97.291. Crude oil prices climbed on Thursday, with stronger than expected jobs data and optimism about a potential coronavirus vaccine triggering hopes that energy demand will pick up soon.

Upcoming Events:

  • 08:30 AM GMT – (GBP) Final Services PMI

Saturday, July 04, 2020

  • 10:40 AM GMT – (EUR) ECB President Lagarde Speaks

Full Article


Friday 3rd July: Technical Outlook and Review – US Banks Closed in Observance of Independence Day

Friday 3rd July: Technical Outlook and Review – US Banks Closed in Observance of Independence Day

56643   July 3, 2020 08:51   ICMarkets   Market News  

Key risk events today:

UK Final Services PMI

(Previous analysis as well as outside sources – italics).

EUR/USD:

The aftermath of yesterday’s upbeat US employment data and declining unemployment rate witnessed the DXY hook a firm bid. This, following a retest at the underside of 1.13 on the H4, directed EUR/USD lower, settling 30 pips shy of 1.12 heading into the European close.

Continued selling on the H4 today may eventually surpass 1.12 and Quasimodo support close by at 1.1185 to approach a 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146.

Further afield, trade remains fading long-standing trend line resistance, taken from the high 1.2555, on the weekly timeframe. Consequently, the 2020 yearly opening level at 1.1222 is under fire. Any sustained move below the aforementioned barrier seats the 2016 yearly opening level at 1.0873 on the hit list, while a EUR/USD bid shifts focus on the possibility of reaching the 2019 yearly opening level at 1.1445.

The story on the daily timeframe, since the beginning of June, has price languishing south of resistance at 1.1349. Support derived from the 1.1147 27 March high, therefore, could soon become a reality, a level that merges closely with a 38.2% Fibonacci retracement ratio at 1.1155. Interestingly, breaching 1.1147 reveals the 200-day SMA (orange – 1.1036), closely followed by support at 1.0995 and a 61.8% Fibonacci retracement ratio at 1.0988.

Areas of consideration:

Traders long the 1.12 fakeout, a noted setup in previous writing, hit take-profit at 1.13 yesterday. Well done to any traders who managed to hold overnight.

A break of 1.12/1.1185 would be interesting on the H4, as the 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146 not only puts forward a potential support area to consider, this base also converges with daily support at 1.1147 and a 38.2% Fibonacci retracement ratio at 1.1155.

GBP/USD:

The British pound found thin air above 1.25 against the US dollar Thursday, fading H4 Quasimodo resistance at 1.2512 on the back of better-than-anticipated US jobs data. The combination of 1.25 psychological resistance and Quasimodo resistance was a noted port of resistance to watch in Thursday’s technical briefing – well done to any readers who managed to latch onto the move lower.

Technical studies on the higher timeframes shows the current weekly candle emphasising a bullish tone, despite room to move lower to 1.2163 (Quasimodo support). Follow-through buying is certainly a possibility from here until shaking hands with a 61.8% Fibonacci retracement ratio at 1.2718 and 2019 yearly opening level at 1.2739.

Price action on the daily timeframe, meanwhile, formed a shooting star candlestick pattern yesterday, snapping a two-day bullish phase. Resistance on this scale can be found at a trend line support-turned resistance, taken from the low 1.1409. In terms of downside support, aside from the 1.2251 June 29 low, there appears room for an approach to support coming in at 1.2014, sited just south of the 1.2075 May 18 low. Before reaching this far south, though, weekly Quasimodo support must be absorbed at 1.2163.

Areas of consideration:

Technically, on the H4, room to dip further is visible to as far south as the 1.24 vicinity, a welcomed sight for those short 1.25/1.2512. Therefore, lower-timeframe traders may seek bearish themes off local structure today, ultimately targeting 1.24.

AUD/USD:

AUD/USD pencilled in another wave of modest buying Thursday, in attempt to establish ground north of 0.69 on the H4. This, as underlined in Thursday’s technical briefing, shines the spotlight on the 0.6976 peaks, as well as the key figure 0.70 and a converging ABCD pattern (black arrows).

Resistance, forged in the shape of a 2020 yearly opening level and a 2019 yearly opening level, at 0.7016 and 0.7042, respectively, continues to offer a dominant presence on the weekly timeframe. It might also interest traders to note that just above the said resistances we have a 61.8% Fibonacci retracement ratio at 0.7128 (green). In terms of support, crosshairs remain fixed on 0.6677.

From the daily timeframe, we remain wandering in no man’s land. Despite this, structure is still visible nearby. Quasimodo resistance at 0.7049 is in sight, merging closely with trend line support-turned resistance, taken from the low 0.6670. Attention on this timeframe also remains at support coming in from 0.6751. Interestingly, lurking beneath here we also have the 200-day SMA (orange – 0.6667), located close by weekly support mentioned above at 0.6677.

Areas of consideration:

With H4 candles establishing a position above 0.69, this will likely drive buyers into the market.

Breakout buyers may already be long, with protective stop-loss orders tucked under the 0.6877 low (red arrow). Conservative traders, on the other hand, may have entered on yesterday’s dip to 0.6901 (near-retest at 0.69).

Regardless of the entry technique, upside targets rest at 0.6976 and 0.70.

USD/JPY:

Stellar US jobs data lifted USD/JPY on Thursday, topping just south of June’s opening level at 107.73 on the H4 timeframe.

The latter was a watched resistance in Thursday’s technical briefing, with downside exhibiting scope to approach May’s opening level at 107.12 as well as the 107 handle.

Snapping a two-day bullish phase and shaping a bearish outside day on Wednesday, daily price, albeit leaving behind the 200-day SMA (orange – 108.37), brings attention back to Quasimodo support at 106.35. Meanwhile, on the weekly timeframe, with the recent push ahead of the 105.98 6th May low, price could still potentially advance to the 2020 yearly opening level at 108.62.

Areas of consideration:

Sellers south of 107.73, given the recent daily bearish outside day, are likely taking aim at 107.12/107 today, offering reasonable risk/reward.

USD/CAD:

Price action, in similar fashion to Wednesday, offered a subdued tone Thursday. Of note, however, Thursday had price mildly surpass 1.36 to the upside and shake hands with trend line support-turned resistance, taken from the low 1.3315. As of writing, sellers are attempting to explore lower levels sub 1.36.

As highlighted in Thursday’s technical briefing, the retest at the 1.36/trend line resistance may be problematic for sellers as daily price is also retesting the top edge of the current falling wedge pattern as a support (1.3686/1.3504). Take-profit targets out of a falling wedge can be measured by taking the base value and adding this figure to the breakout point (black arrows), which as you can see in this case, converges closely with the next daily resistance at 1.3807.

From the weekly timeframe, room to advance ahead of the 2017 yearly opening level at 1.3434 remains a possibility. A potential hurdle to be aware of, though, falls in by way of the 2016 yearly opening level at 1.3814, with follow-through buying likely to try and tackle a dense block of supply between 1.4190/1.3912.

Areas of consideration:

Usually the higher timeframes take precedence over lower-timeframe levels. Therefore, the retest at 1.36, although appealing, may still fall flat. A H4 bearish candlestick signal materialising from this region, nonetheless, could still tempt selling.

A H4 close above 1.36, given the daily timeframe’s position, could stimulate a recovery beyond H4 trend line support-turned resistance, from 1.3315, towards at least 1.37, with an ultimate upside target at 1.38ish (higher-timeframe resistances).

USD/CHF:

USD/CHF found itself by-passing Fibonacci support on the H4 timeframe Thursday: the 61.8% Fibonacci retracement ratio at 0.9445 and 127.2% Fibonacci extension point at 0.9440. The pair’s resilience to the downside was reconfirmed yesterday after swiftly reclaiming the aforementioned Fibonacci supports on better-than-anticipated US employment data. Trend line support-turned resistance, extended from the low 0.9420, consequently serves as a potential hurdle to the upside. Overcoming this base has the 0.9493 July 1st high to target, closely shadowed by 0.95.

Elsewhere, weekly support at 0.9447 remains in play. Despite the lack of enthusiasm off the latter so far, in the event we do see things turn here, the 2020 yearly opening level at 0.9671 is marked as the next resistance on the weekly timeframe, stationed close by the 2018 yearly opening level at 0.9732.

On the daily timeframe, our technical outlook remains unchanged. The initial break of weekly support at 0.9447 (11 June) threw breakout sellers into a bear trap as daily buyers vigorously defended AB=CD structure (black arrows) at 0.9395. The initial upside target out of the daily AB=CD pattern, traditionally speaking, can be found at the 38.2% Fibonacci retracement ratio at 0.9580 (derived from legs A-D), positioned above resistance at 0.9542, which, as you can see, has so far done a superb job in holding back buyers. In the event we overrun 0.9542 and also 0.9580 we could, according to traditional measures, cross swords with the next AB=CD target at 0.9705, the 61.8% Fibonacci retracement ratio, also taken from legs A-D. This implies a push above trend line resistance, taken from the high 0.9901.

Areas of consideration:

Thursday’s technical briefing emphasised the following (italics): 

Weekly support at 0.9447 continues to remain a watched level in this market. Consequently, until this level surrenders, bullish strategies may be the way forward.

With H4 displaying bullish intent off the 61.8% Fibonacci retracement ratio at 0.9445/127.2% Fibonacci extension at 0.9440, these levels, coupled with weekly support at 0.9447, puts forward the possibility of a H4 trend line break. This may be enough to lure intraday buyers into the market, in favour of an approach to the 0.95ish base.

Dow Jones Industrial Average:

Major US equity benchmarks cheered a record surge in payrolls Thursday, as investors head into the three-day weekend. The Dow Jones Industrial Average rallied 92.39 points, or 0.36%; the S&P 500 advanced 14.15 points, or 0.45%, and the tech-heavy Nasdaq 100 concluded higher by 62.64 points, or 0.61%.

March’s opening level at 25823, based on the H4 timeframe, as expected, gave way Thursday and threw light on Quasimodo resistance at 26235. North of this base, aside from the 26787 June 16 high, limited resistance is visible, threatening the possibility of eventually reaching as far north as the resistance plotted at 27360.

Further out on the weekly timeframe, the 2018 yearly opening level at 24660 remains an important base of support. In the event buyers manage to keep their head above water here, we may eventually pull in the 27638 high, followed by the 2020 yearly opening level at 28595. Below 24660, however, traders’ crosshairs may be fixed on the 2019 yearly opening level at 23313. 

Since June 15, price action has been ranging between the 200-day SMA (orange – 26263) and support from 24934 on the daily timeframe. Areas of note outside of this area fall in at resistance from 27640, with support plotted at 23291.

Areas of consideration:

In terms of the weekly timeframe, buyers appear poised to climb. However, buyers on the H4 and daily timeframes are unlikely to commit until H4 Quasimodo resistance at 26235 and 200-day SMA are overwhelmed.

As a result, a decisive H4 close above 26235 could be something to keep an eye on today/early next week. Alternatively, for traders confident the weekly timeframe’s position will eventually lift price, bullish scenarios off March’s opening level at 25823 could also be an option.

XAU/USD (GOLD):

Despite a number of downside attempts, H4 trend line support, extended from the low 1668.3, survived Thursday.

In Wednesday’s technical briefing, the research team noted XAU/USD aggressively faded weekly Quasimodo resistance at 1787.4, a noted level to watch for in previous reports. Also interesting on the weekly timeframe is a potential ascending wedge pattern between 1451.4/1703.6, perhaps serving as a reversal pattern over the coming weeks.

Should sellers seize control today and conquer the aforementioned H4 trend line support, this serves as a sign we may be headed for H4 Quasimodo support at 1753.1, followed by daily support at 1747.0. Do bear in mind, however, the pair has been trading northbound since 2016, therefore shorts are effectively countertrend positions.

Areas of consideration:

Outlook remains unchanged.

Traders short the current weekly Quasimodo resistance level, as underlined in Thursday’s writing, have likely reduced risk to breakeven at H4 trend line support and maybe even banked a portion of profits.

A break of H4 trend line support not only clears the way for current sellers towards the aforementioned H4 supports underlined above, it also unlocks the possibility of fresh breakout setups.

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 regarding 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Thursday 2nd July: Investors await US jobs data
Thursday 2nd July: Investors await US jobs data

Thursday 2nd July: Investors await US jobs data

56575   July 2, 2020 16:40   ICMarkets   Market News  

Global Markets:

  • Asian Stock Markets : Nikkei up 0.11%, Shanghai Composite up 2.13%, Hang Seng up 2.71%, ASX up 1.66%
  • Commodities : Gold at $1781.60 (+0.10%), Silver at $18.24 (+0.09%), Brent Oil at $42.48 (+1.07%), WTI Oil at $40.25 (+1.08%)
  • Rates : US 10-year yield at 0.674, UK 10-year yield at 0.204, Germany 10-year yield at -0.399

News & Data:

  • (AUD) Trade Balance 8.03B vs 9.00B expected
  • (USD) ISM Manufacturing PMI 52.6 vs 49.5 expected
  • (USD) ADP Non-Farm Employment Change 2369K vs 2850K expected
  • Fauci: US Faces ‘Serious Situation’ With Coronavirus Pandemic
  • S. House Passes China-Sanctions Bill on Hong Kong Law

Markets Update:

Asian stock markets are rising on Thursday following the mostly positive cues overnight from Wall Street on optimism about a potential coronavirus vaccine as well as on upbeat U.S. manufacturing data. Investors now look ahead to the U.S. Labor Department’s closely watched monthly employment report for June to be released later today.

The Hang Seng index in Hong Kong led gains among the region’s major markets, rising 2.7%, as of its final hour of trading. Tensions were closely watched after China’s controversial national security law went into effect Tuesday and Hong Kong police announced their first arrests under the measure Wednesday. Mainland Chinese stocks also saw robust gains on the day, with the Shanghai composite rising 2.1% and the Shenzhen component adding 1.3%. Meanwhile, Australia’s S&P/ASX 200 jumped 1.7%. In Japan, the Nikkei 225 rose 0.1%.

The U.S. dollar index, which tracks the greenback against basket of its peers, was at 97.034 following an earlier high of 97.19. Elsewhere, oil prices climbed and gold eased while the dollar was steady as encouraging macro data prompted investors to take on more risk.

Upcoming Events:

  • 12:30 PM GMT – (USD) Average Hourly Earnings m/m
  • 12:30 PM GMT – (USD) Non-Farm Employment Change
  • 12:30 PM GMT – (USD) Unemployment Rate
  • 12:30 PM GMT – (USD) Unemployment Claims

Full Article

Thursday 2nd July: Technical Outlook and Review

Thursday 2nd July: Technical Outlook and Review

56528   July 2, 2020 08:33   ICMarkets   Market News  

Key risk events today:

Australia Trade Balance; US Average Hourly Earnings m/m, Non-Farm Employment Change, Unemployment Rate and Unemployment Claims.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Worse-than-expected ADP and advancing equities dampened USD demand Wednesday, leading to a modest climb in EUR/USD.

For technical traders who read Wednesday’s briefing you may recall the following (italics):

In light of recent support from 1.12 on the H4, buyers have likely tucked protective stop-loss orders under the round number, usually between 10-20 pips. This unlocks the door to a possible fakeout scenario today, involving a dip through 1.12 into H4 Quasimodo support at 1.1185. Not only would this move trip liquidity (stops) below 1.12, it would drag in any willing buyers off the Quasimodo formation. A H4 close back above 1.12 off 1.1185, therefore, would likely be a welcomed sight for buyers, perhaps targeting 1.13.

As evident from the H4 chart, a fakeout through 1.12 occurred yesterday, one that challenged H4 Quasimodo support at 1.1185. Well done to any readers who managed to jump aboard this move.

Further afield, trade remains fading long-standing trend line resistance, taken from the high 1.2555, on the weekly timeframe. Consequently, the 2020 yearly opening level at 1.1222 is also under fire. Any sustained move below the aforementioned barrier seats the 2016 yearly opening level at 1.0873 on the hit list, while a EUR/USD bid shifts focus on the possibility of reaching the 2019 yearly opening level at 1.1445.

The story on the daily timeframe, since the beginning of June, has price languishing south of resistance at 1.1349. Support derived from the 1.1147 27 March high, therefore, could soon become a reality, a level that merges closely with a 38.2% Fibonacci retracement ratio at 1.1155. Interestingly, breaching 1.1147 reveals the 200-day SMA (orange – 1.1035), closely followed by support at 1.0995 and a 61.8% Fibonacci retracement ratio at 1.0988.

Areas of consideration:

Traders long the 1.12 fakeout likely have eyes on 1.13 as an upside target. A break of the latter could lead to H4 Quasimodo resistance at 1.1340, followed by daily resistance at 1.1349.

In the event we eventually break 1.1185 on the H4, traders may wish to acknowledge the 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146 as a potential support area. Notably, this area converges with daily support at 1.1147 and 38.2% Fibonacci retracement ratio at 1.1155.

GBP/USD:

The British pound continued to add to gains against the US dollar Wednesday, latching onto a strong grip following the break of the 1.24 handle on the H4 and June’s opening level at 1.2345, as well as trend line resistance, taken from the high 1.2813. Recent buying has positioned the unit within striking distance of 1.25, closely followed by Quasimodo resistance at 1.2512.

Technical studies on the higher timeframes shows the current weekly candle emphasising a strong bullish tone, despite room to move lower to 1.2163 (Quasimodo support). Following-through buying is certainly a possibility from here, though, until shaking hands with a 61.8% Fibonacci retracement ratio at 1.2718 and 2019 yearly opening level at 1.2739.

Price action on the daily timeframe, meanwhile, closed a touch off best levels yesterday. Resistance can be found at a trend line support-turned resistance, taken from the low 1.1409. In terms of downside support, there appears room for an approach to support coming in at 1.2014, sited just south of the 1.2075 May 18 low. Before reaching this far south, though, weekly Quasimodo support must be absorbed at 1.2163.

Areas of consideration:

Today’s spotlight is focused on the 1.25 handle and H4 Quasimodo formation at 1.2512, as a possible base of resistance. However, in view of the higher timeframes indicating we could push beyond here, caution is recommended. As a result, focus will also likely be on the possibility of a H4 close north of 1.25. This may be enough to prompt another wave of buying, targeting May’s opening level at 1.2583 and the 1.26 handle.

AUD/USD:

AUD/USD pencilled in modest gains Wednesday, largely bolstered on the back of reasonably upbeat risk sentiment and a better-than-expected Chinese Caixin Manufacturing PMI print. Despite this, though, Aussie Building Approvals fell sharply in May.

Intraday flow was messy around the 0.69 handle during Asia and European hours, no doubt causing confusion on the lower timeframes. Nevertheless, we managed to secure ground above the round number amid the US session, shining the spotlight on the 0.6976 peaks, as well as the key figure 0.70 and a converging ABCD pattern (black arrows).

Resistance, forged in the shape of a 2020 yearly opening level and a 2019 yearly opening level, at 0.7016 and 0.7042, respectively, continues to offer a dominant presence on the weekly timeframe. It might also interest traders to note that just above the said resistances we have a 61.8% Fibonacci retracement ratio at 0.7128 (green). In terms of support, crosshairs remain fixed on 0.6677.

From the daily timeframe, we remain wandering in no man’s land. Despite this, structure is still visible nearby. Quasimodo resistance at 0.7049 is in sight, merging closely with trend line support-turned resistance, taken from the low 0.6670. Attention on this timeframe also remains at support coming in from 0.6751. Interestingly, lurking beneath here we also have the 200-day SMA (orange – 0.6666), located close by weekly support mentioned above at 0.6677.

Areas of consideration:

With H4 candles establishing a position above 0.69, this will likely drive buyers into the market.

Breakout buyers may already be long, with protective stop-loss orders tucked under the 0.6877 low (red arrow). Conservative traders, on the other hand, may prefer to wait and see if a retest at the round number emerges before pulling the trigger.

Regardless of the entry technique, upside targets rest at 0.6976 and 0.70.

USD/JPY:

Early trade had H4 surpass 108 to the upside and fold over from highs at 108.16. Throughout the day, sellers made their presence felt and made quick work of June’s opening level at 107.73 and support coming in at 107.57 on the H4. Both structures enter Thursday representing resistance, with downside exhibiting scope to approach May’s opening level at 107.12 as well as the 107 handle.

Snapping a two-day bullish phase and shaping a bearish outside day yesterday, daily price, albeit leaving behind the 200-day SMA (orange – 108.37), brings attention back to Quasimodo support at 106.35. Meanwhile, on the weekly timeframe, with the recent push ahead of the 105.98 6th May low, price could still potentially advance to the 2020 yearly opening level at 108.62.

Areas of consideration:

In recent hours, H4 resistance at 107.57 was recently retested, though sellers currently offer a non-committal tone. This implies a retest at 107.73 (June’s opening level on the H4) may unfold.

Given the daily bearish outside day, 107.57 and 107.73 denote solid levels of resistance today, offering reasonably appealing risk/reward to 107.12/107.

USD/CAD:

Buyers and sellers were pretty even Wednesday, following Tuesday’s decisive push through 1.36 and trend line support, taken from the low 1.3315. As can be seen from the H4 chart this morning, 1.36 is currently serving as resistance, positioned close by the recently engulfed trend line support.

The retest at the 1.36 resistance may appeal to intraday traders. The problem is daily price is also retesting the top edge of the current falling wedge pattern as a support (1.3686/1.3504). Take-profit targets out of falling wedges can be measured by taking the base value and adding this figure to the breakout point (black arrows), which as you can see in this case, converges closely with the next daily resistance at 1.3807.

From the weekly timeframe, room to advance ahead of the 2017 yearly opening level at 1.3434 certainly remains a possibility. A potential hurdle to be aware of, though, falls in by way of the 2016 yearly opening level at 1.3814, with follow-through buying likely to try and tackle a dense block of supply between 1.4190/1.3912.

Areas of consideration:

Usually the higher timeframes take precedence over lower-timeframe levels. Therefore, the retest at 1.36, although appealing, may fall flat.

A H4 close above 1.36, given the daily timeframe’s position, could stimulate a recovery beyond H4 trend line support-turned resistance, from 1.3315, towards at least 1.37, with an ultimate upside target at 1.38ish (higher-timeframe resistances).

USD/CHF:

Amid a moderate improvement in risk sentiment Wednesday, the US dollar index, or DXY, navigated lower territory nearby the 97.00 handle. Based on the charts, USD/CHF cruised into weekly support drawn from 0.9447, a familiar level since June 11. Despite the lack of enthusiasm off 0.9447 so far, in the event we do see things turn here, the 2020 yearly opening level at 0.9671 is marked as the next resistance target on the weekly timeframe, stationed close by the 2018 yearly opening level at 0.9732.

After leaving 0.95 unchallenged on the H4 timeframe, candle action dipped to the 61.8% Fibonacci retracement ratio at 0.9445, a level shadowed closely by the 127.2% Fibonacci extension point at 0.9440. Note this combination also benefits from weekly support mentioned above at 0.9447.

On the daily timeframe, the initial break of weekly support at 0.9447 (11 June) threw breakout sellers into a bear trap as daily buyers vigorously defended AB=CD structure (black arrows) at 0.9395. The initial upside target out of the daily AB=CD pattern, traditionally speaking, can be found at the 38.2% Fibonacci retracement ratio at 0.9580 (derived from legs A-D), positioned above resistance at 0.9542, which, as you can see, has so far done a superb job in holding back buyers. In the event we overrun 0.9542 and also 0.9580 we could, according to traditional measures, cross swords with the next AB=CD target at 0.9705, the 61.8% Fibonacci retracement ratio, also taken from legs A-D. This implies a push above trend line resistance, taken from the high 0.9901.

Areas of consideration:

As stated in recent reports, weekly support at 0.9447 continues to remain a watched level in this market. Consequently, until this level surrenders, bullish strategies may be the way forward.

With H4 now engaging the 61.8% Fibonacci retracement ratio at 0.9445/127.2% Fibonacci extension at 0.9440, these levels, coupled with weekly support at 0.9447, puts forward active support worthy of attention. Combined, this area will likely see traders enter the market in search of bullish themes.

Dow Jones Industrial Average:

Wednesday had the Dow Jones Industrial Average dip 77.91 points, or 0.30%; the S&P 500 advance 15.57 points, or 0.50%, and the tech-heavy Nasdaq 100 conclude higher by 122.40 points, or 1.21%.

March’s opening level at 25823 remains a port of resistance on the H4 timeframe, albeit suffering a rather vigorous whipsaw to local trend line resistance, taken from the high 26787. Dipping further from current price throws June’s opening level at 25232 in the pot as feasible support today. A bid, on the other hand, will likely have price look for Quasimodo resistance coming in at 26235.

The 2018 yearly opening level at 24660 remains an important base of support on the weekly timeframe. In the event buyers manage to keep their head above water here, we may eventually pull in the 27638 high, followed by the 2020 yearly opening level at 28595. Below 24660, however, traders’ crosshairs may be fixed on the 2019 yearly opening level at 23313. 

Since June 16, the 200-day SMA (orange – 26268) has absorbed upside attempts, with recent trade bringing in support from 24934 on the daily timeframe and rebounding higher. In case buyers struggle here, dipping a toe in waters south of 24934 may see support at 23291 call for attention. Another key observation is a potential AB=CD correction (blue arrows) at 23553.

Areas of consideration:

Having seen buyers attempting to establish a position north of weekly support (2018 yearly opening level) at 24660 and also daily support at 24934, it is questionable whether March’s opening level at 25823 and trend line resistance on the H4 will hold. In the event we do push lower, nonetheless, June’s opening level at 25232 is likely to be welcoming.

Equally uncertain is entering into long positions above current H4 trend line resistance, as the 200-day SMA lurks close by at 26268, along with H4 Quasimodo resistance at 26235. This may be possible if you’re able to drill down to the lower timeframes and secure a position offering a tight stop.

XAU/USD (GOLD):

For those who read Wednesday’s technical briefing you may recall the following (italics):

On all three timeframes, it is clear we’re trading within close proximity of a key resistance, a weekly Quasimodo formation at 1787.4. Also interesting on the weekly timeframe is a potential ascending wedge pattern between 1451.4/1703.6, perhaps serving as a reversal pattern.

Bearish scenarios off weekly Quasimodo resistance at 1787.4 are possible today, targeting H4 trend line support, etched from the low 1668.3. A break of here serves as a sign we may then head for H4 Quasimodo support at 1753.1, followed by daily support at 1747.0.

As evident from the charts this morning, price rebounded strongly from weekly Quasimodo resistance and made its way to H4 trend line support.

Areas of consideration:

Traders short the current weekly Quasimodo resistance level have likely reduced risk to breakeven at H4 trend line support and maybe even banked a portion of profits. The next take-profit targets, as highlighted above, rests at H4 Quasimodo support from 1753.1, followed by daily support at 1747.0.

Additionally, a break of the H4 trend line support unlocks the possibility of fresh breakout setups, targeting the aforementioned H4 supports underlined above.

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 regarding 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Wednesday 1st July:  Asian markets mixed on upbeat Chinese data
Wednesday 1st July: Asian markets mixed on upbeat Chinese data

Wednesday 1st July: Asian markets mixed on upbeat Chinese data

56448   July 1, 2020 16:09   ICMarkets   Market News  

Global Markets:

  • Asian Stock Markets : Nikkei down 0.75%, Shanghai Composite up 1.38%, ASX up 0.62%
  • Commodities : Gold at $1806.95 (+0.36%), Silver at $18.75 (+0.59%), Brent Oil at $42.20 (+2.25%), WTI Oil at $40.20 (+2.37%)
  • Rates : US 10-year yield at 0.682, UK 10-year yield at 0.189, Germany 10-year yield at -0.439

News & Data:

  • (USD) CB Consumer Confidence 98.1 vs 91.6 expected
  • (USD) Chicago PMI 36.6 vs 45 expected
  • (CAD) GDP m/m -11.60% vs -12.50% expected
  • Spanish manufacturing economy moves closer to stabilization in June
  • UK economy: ‘We are battered, bruised, but wiser after lockdown’

Markets Update:

Asian stock markets are mostly higher on Wednesday after Wall Street capped off one of its best quarterly performances in decades and as data showed that the manufacturing sector in China expanded at a faster rate in June.

The latest survey from Caixin showed that the manufacturing sector in China continued to expand in June, and at a faster rate, with a manufacturing PMI score of 51.2. That’s up from 50.7 in May and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Markets in Hong Kong were closed for trading on Wednesday for a holiday. Mainland Chinese stocks led gains among the region’s markets, with the Shanghai composite up 1.4% while the Shenzhen component added 1%. Over in Australia, the S&P/ASX 200 advanced 0.6%. The Nikkei 225 in Japan also closed 0.8% lower while the Topix index fell 1.3%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.373 after touching an earlier low of 97.317.

Currency markets shifted to a risk-off mood, with the trade-sensitive Australian dollar slipping and the yen gaining. The yield on benchmark 10-year U.S. Treasuries edged higher to 0.6709% on Wednesday, but had finished last quarter steady while U.S. stocks had their best three months in two decades.

Upcoming Events:

  • 11:00 AM GMT – (GBP) MPC Member Haskel Speaks
  • 12:15 PM GMT – (USD) ADP Non-Farm Employment Change
  • 02:00 PM GMT – (USD) ISM Manufacturing PMI
  • 06:00 PM GMT – (USD) FOMC Meeting Minutes

Full Article

Wednesday 1st July: Technical Outlook and Review

Wednesday 1st July: Technical Outlook and Review

56392   July 1, 2020 08:45   ICMarkets   Market News  

Key risk events today:

MPC Member Haskel Speaks; US ADP Non-Farm Employment Change; US ISM Manufacturing PMI; FOMC Meeting Minutes.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Led by a USD (DXY) decline across the board, Tuesday watched EUR/USD stage a rebound from territory just south of 1.12 on the H4 timeframe.

Higher-than-anticipated US consumer confidence failed to offer any respite. The Conference Board noted, the Consumer Confidence Index increased in June, after virtually no change in May. The Index now stands at 98.1 (1985=100), up from 85.9 in May.

1.12, therefore, remains a reasonably dominant intraday floor. H4 Quasimodo support at 1.1185 also remains in the crosshairs south of the round number, as does the 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146.

Further afield, trade is seen fading long-standing trend line resistance, taken from the high 1.2555, on the weekly timeframe. Consequently, the 2020 yearly opening level at 1.1222 is under fire. Any sustained move below the aforementioned barrier seats the 2016 yearly opening level at 1.0873 on the hit list, while a EUR/USD bid shifts focus on the possibility of reaching the 2019 yearly opening level at 1.1445.

The story on the daily timeframe, since the beginning of June, has price languishing south of resistance at 1.1349. Support derived from the 1.1147 27 March high, therefore, could soon become a reality, a level that merges closely with a 38.2% Fibonacci retracement ratio at 1.1155. Interestingly, breaching 1.1147 reveals the 200-day SMA (orange – 1.1034), closely followed by support at 1.0995 and a 61.8% Fibonacci retracement ratio at 1.0988.

Areas of consideration:

In light of recent support from 1.12 on the H4, buyers have likely tucked protective stop-loss orders under the round number, usually between 10-20 pips. This unlocks the door to a possible fakeout scenario today, involving a dip through 1.12 into H4 Quasimodo support at 1.1185. Not only would this move trip liquidity (stops) below 1.12, it would drag in any willing buyers off the Quasimodo formation. A H4 close back above 1.12 off 1.1185, therefore, would likely be a welcomed sight for buyers, perhaps targeting 1.13.

In addition, traders may also wish to acknowledge the 127.2% Fibonacci extension point at 1.1150 and 50.00% retracement ratio at 1.1146 on the H4 as a potential support area, in the event 1.1185 fails to hold. This area converges with daily support at 1.1147 and 38.2% Fibonacci retracement ratio at 1.1155.

GBP/USD:

Sterling witnessed buyers strengthen their grip against the buck Tuesday, aided by the DXY dipping lower, as well as month-end rebalancing.

It was a one-sided market as GBP/USD overthrew the 1.23 handle and June’s opening level at 1.2345, structure based on the H4 timeframe. This led to a near-test of 1.24, a level merging with April’s opening level at 1.2395 and two trend line resistances (1.2075/1.2813).

Technical studies on the higher timeframes shows buyers making an appearance on the weekly timeframe, despite room to move lower to 1.2163 (Quasimodo support). To the upside, resistance continues to rest at a 61.8% Fibonacci retracement ratio at 1.2718 and 2019 yearly opening level at 1.2739.

The daily timeframe, meanwhile, closed a touch off best levels yesterday and snapped a two-day bearish phase. Resistance can be found at a trend line support-turned resistance, taken from the low 1.1409. Despite Tuesday’s upside bias, similar to the weekly timeframe, there’s room to explore lower levels towards support coming in at 1.2014, sited just south of the 1.2075 May 18 low. Before reaching this far south, though, weekly Quasimodo support must be absorbed at 1.2163.

Areas of consideration:

1.24 is an interesting resistance on the H4 timeframe right now. As mentioned above, the round number dovetails closely with April’s opening level at 1.2395 and two trend line resistances (1.2075/1.2813). Conservative sellers from this region, having seen the base offer little in the way of higher-timeframe confluence, may position protective stop-loss orders above 1.2437 (black arrow) – a supply zone resting on top of 1.24.

AUD/USD:

AUD/USD bottomed in early London Tuesday, reversing earlier declines to set fresh pinnacles above 0.69, based on the H4 timeframe.

With 0.69 recently entering the fight, it’s worth reminding ourselves downside also remains contained at 0.6850ish. Sidestepping 0.6850, the highway south seems clear until the 0.68 juncture. Technically speaking, this figure also throws across a Quasimodo support (black arrow denotes the left shoulder).

Despite recent movement, higher-timeframe action remains pretty much unchanged:

Resistance, forged in the shape of a 2020 yearly opening level and a 2019 yearly opening level, at 0.7016 and 0.7042, respectively, continues to offer a dominant presence on the weekly timeframe. It might also interest traders to note that just above the said resistances we have a 61.8% Fibonacci retracement ratio at 0.7128 (green). In terms of support, crosshairs are perhaps fixed on 0.6677.

From the daily timeframe, Quasimodo resistance at 0.7049 is in sight, merging closely with trend line support-turned resistance, taken from the low 0.6670. Attention on this timeframe also remains at support coming in from 0.6751. Interestingly, lurking beneath here we also have the 200-day SMA (orange – 0.6665), located close by weekly support mentioned above at 0.6677.

Areas of consideration:

For those who read Tuesday’s technical briefing you may recall the following (italics):

A retest at the underside of 0.69 (red arrows), one that preferably holds by way of a H1/H4 bearish candlestick pattern, would likely appeal to sellers, targeting the 0.68 neighbourhood.

As evident from the H4 chart, we are retesting 0.69 and holding for the time being. An alternative to waiting for additional candlestick confirmation off 0.69 may see some traders enter at current price and position protective stop-loss orders above 0.6922 (blue arrow), the top edge of a local supply resting above 0.69.

USD/JPY:

USD/JPY regained consciousness as we transitioned into US hours Tuesday, establishing a position off H4 support located at 107.57. Price action swiftly moved through June’s opening level at 107.73, consequently marking the 108 handle as the next visible upside target. Space above 108, according to the H4 timeframe, shows room to approach resistance at 108.48, closely shadowed by another layer of resistance at 108.70.

With the recent push north, ahead of the 105.98 6th May low, weekly price continues to climb its way back towards the 2020 yearly opening level at 108.62.

Quasimodo support at 106.35 on the daily timeframe nudged its way into the limelight last week and has so far delivered healthy upside. The possibility of further buying remains, with crosshairs fixed on the 200-day SMA (orange – 108.37) as an upside objective.

Areas of consideration:

Traders who read Tuesday’s technical briefing may recall the following (italics):

Having noted room for buyers to stretch their legs on both the weekly and daily timeframes, targeting 108.37 (daily) and 108.62 (weekly), the H4 support at 107.57 could hold ground and provide a platform to consider buying opportunities from. This would, of course, entail going up against H4 resistances at 107.73 and 108.

Well done to any readers who managed to jump aboard the rebound off 107.57.

Going forward, breaching 108 appears a likely route today, as daily buyers take aim at 108.37, and weekly buyers at 108.62. As such, intraday bullish scenarios north of 108 could be an option today.

USD/CAD:

1.37 on the H4, despite numerous upside attempts, managed to hold off buyers and send USD/CAD to lower ground Tuesday. Price action shook hands with 1.36, marginally dipping a toe beneath the round number to trend line support, extended from the low 1.3315. On the date front, Canadian GDP data had little impact.

From the weekly timeframe, room to advance north of the 2017 yearly opening level at 1.3434 certainly remains a possibility. A potential hurdle to be aware of, though, falls in by way of the 2016 yearly opening level at 1.3814, with follow-through buying likely to try and tackle a dense block of supply between 1.4190/1.3912.

A closer examination of price action on the daily timeframe reveals the recent bout of selling has thrown a possible retest at the top edge of the current falling wedge pattern in the pot (1.3686/1.3504). Take-profit targets out of falling wedges can be measured by taking the base value and adding this figure to the breakout point (black arrows), which as you can see in this case, converges closely with the next daily resistance at 1.3807.

Areas of consideration:

Intraday players are likely licking their lips at the thought of a rebound occurring from 1.36, having seen H4 trend line support (1.3315) also coincide closely with the base.

Failure to hold 1.36 could draw in H4 trend line resistance-turned support, derived from the high 1.3686 (represents the upper edge of the daily failing wedge pattern).

USD/CHF:

Tuesday observed the DXY hand back a large portion of earlier gains, unable to sustain upside north of session highs at 97.80. This helped guide USD/CHF lower from H4 Quasimodo resistance at 0.9525, ultimately engulfing 0.95 to the downside and throwing the 61.8% Fibonacci retracement ratio at 0.9445 and 127.2% Fibonacci extension point at 0.9440 in the pot as viable support today.

According to the weekly timeframe, price action recently made contact with support at 0.9447. Despite the lack of enthusiasm so far (current candle action trades indecisively), in the event we do see things turn around here the 2020 yearly opening level at 0.9671 is marked as the next resistance target, stationed close by the 2018 yearly opening level at 0.9732.

On the daily timeframe, the initial break of weekly support at 0.9447 (11 June) threw breakout sellers into a bear trap as daily buyers vigorously defended AB=CD structure (black arrows) at 0.9395. The initial upside target out of the daily AB=CD pattern, traditionally speaking, can be found at the 38.2% Fibonacci retracement ratio at 0.9580 (derived from legs A-D), positioned above resistance at 0.9542, which, as you can see, has so far done a superb job in holding back buyers. In the event we overrun 0.9542 and also 0.9580 we could, according to traditional measures, cross swords with the next AB=CD target at 0.9705, the 61.8% Fibonacci retracement ratio, also taken from legs A-D. This implies a push above trend line resistance, taken from the high 0.9901.

Areas of consideration:

As stated in recent reports, weekly support at 0.9447 continues to remain a watched level in this market. Consequently, until this level surrenders, bullish strategies may be the way forward.

With H4 exhibiting room to engage with the 61.8% Fibonacci retracement ratio at 0.9445 and 127.2% Fibonacci extension at 0.9440, these levels, coupled with weekly support mentioned above at 0.9447, puts forward active support worthy of attention. Combined, this area will likely see traders enter the market in search of bullish themes.

Dow Jones Industrial Average:

Major US stock indexes wrapped up higher Tuesday amid upbeat economic data. The Dow Jones Industrial Average added 217.08 points, or 0.85%; the S&P 500 jumped 47.05 points, or 1.54%, and the tech-heavy Nasdaq 100 concluded higher by 195.69 points, or 1.96%.

Following Monday making quick work of June’s opening level at 25232 on the H4, Tuesday’s extension ran into resistance, shaped by March’s opening level at 25823, closely followed by trend line resistance, taken from the high 26787.

The 2018 yearly opening level at 24660 remains an important base of support on the weekly timeframe. In the event buyers manage to keep their head above water here, we may eventually pull in the 27638 high, followed by the 2020 yearly opening level at 28595. Below 24660, however, traders’ crosshairs may be fixed on the 2019 yearly opening level at 23313. 

Since June 16, the 200-day SMA (orange – 26274) has absorbed upside attempts, with recent trade bringing in support from 24934 on the daily timeframe and rebounding higher. In case buyers struggle here, dipping a toe in waters south of 24934 may see support at 23291 call for attention. Another key observation is a potential AB=CD correction (blue arrows) at 23553.

Areas of consideration:

Having seen buyers attempting to establish a position north of weekly support (2018 yearly opening level) at 24660 and also daily support at 24934, trying to fade March’s opening level at 25823 and trend line resistance on the H4 may be difficult.

Equally difficult, though, is entering into long positions above H4 trend line resistance, as the 200-day SMA lurks close by at 26274.

As a result of the above, neither a long nor short appears attractive at this time.

XAU/USD (GOLD):

Against the US dollar, gold finished higher Tuesday amid month-end flows, adding 0.63% by the close and recording fresh multi-year highs at 1786.0.

On all three timeframes, it is clear we’re trading within close proximity of a key resistance, a weekly Quasimodo formation at 1787.4. Also interesting on the weekly timeframe is a potential ascending wedge pattern between 1451.4/1703.6, perhaps serving as a reversal pattern.

Areas of consideration:

Bearish scenarios off weekly Quasimodo resistance at 1787.4 are possible today, targeting H4 trend line support, etched from the low 1668.3. A break of here serves as a sign we may then head for H4 Quasimodo support at 1753.1, followed by daily support at 1747.0.

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Tuesday 30th June: Asian markets gain on positive uptick in sentiment
Tuesday 30th June: Asian markets gain on positive uptick in sentiment

Tuesday 30th June: Asian markets gain on positive uptick in sentiment

56338   June 30, 2020 16:17   ICMarkets   Market News  

Global Markets:

  • Asian Stock Markets : Nikkei up 1.33%, Shanghai Composite up 0.78%, Hang Seng up 0.55%, ASX up 1.43%
  • Commodities : Gold at $1785.85 (+0.26%), Silver at $18.13 (+0.38%), Brent Oil at $41.45 (-0.96%), WTI Oil at $39.23 (-1.18%)
  • Rates : US 10-year yield at 0.635, UK 10-year yield at 0.152, Germany 10-year yield at -0.473

News & Data:

  • (NZD) ANZ Business Confidence -34.4 vs -33 previous
  • (CNY) Non-Manufacturing PMI 54.4 vs 53.3 expected
  • (CNY) Manufacturing PMI 50.9 vs 50.4 expected
  • (USD) Pending Home Sales m/m 44.30% vs 18.90% expected
  • RBA’s Debelle: Bond Purchases Not Posing Excessive Inflation Risk
  • Powell says recovery path is ‘extraordinarily uncertain’ amid efforts to control virus

Markets Update:

Asian stock markets are in positive territory on Tuesday following the strong gains overnight on Wall Street as investor sentiment was bolstered by upbeat U.S. housing data and hopes of more stimulus measures, which offset worries about the sharp spikes in new coronavirus cases in the U.S. and other parts of the world. Data showing that China’s manufacturing sector expanded more than expected in June also boosted stocks.

The Japanese market is notably higher and the safe-haven yen weakened following the overnight gains on Wall Street. The Nikkei 225 in Japan rose 1.3%, following its more than 2% slide on Monday. Mainland Chinese stocks were also higher on the day, with the Shenzhen component jumping 2% while the Shanghai composite was up 0.8%. Hong Kong’s Hang Seng index advanced 0.6%. The Australian market is rising following the positive cues from Wall Street.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.66 after earlier touching a low of 97.389.

In currency markets, the dollar held onto gains against the yen and the Swiss franc as the recent increase in coronavirus infections supported safe-haven demand for the greenback. The yield on benchmark 10-year Treasury notes was little changed at 0.6348% in Asia as traders braced for U.S. non-farm payrolls data on Thursday, which is forecast to show an improving labour market.

Upcoming Events:

  • 12:30 PM GMT – (CAD) GDP m/m
  • 01:45 PM GMT – (USD) Chicago PMI
  • 02:00 PM GMT – (USD) CB Consumer Confidence
  • 04:30 PM GMT – (USD) Fed Chair Powell Testifies

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