IvanGlobalPrime
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EUR/USD Setting Up for a Rotational Day, 1.1570 & 1.1630 Extremes to Exploit
VOLUMES & CORRELATIONS (H4)
The first test of a macro resistance exhibited bearish dynamics to reverse a 3-day long bounce, and while the rejection was quite commanding for the interest of sellers, buyers were lined up to join the bid, which as noted would be an expected outcome due to the increasing volume sequence seen last Wed. By the end of Thursday though, the volume saw a slight decrease as buyers attempted to retest 1.1630, suggesting that at the bare minimum, we should expect some downward pressures. As per the correlation against bond yields and gold, it provides conflictive signs, as the 10-yr German vs US bond yield spread saw a tick up while the 2-yr came into more intense pressure. As an extra bearish input, the Italian bond yield saw an increase on Wed, which may add to the case of limiting upside potential. As a reminder, on a 3 month correlation of a 3d performance, both spreads remain over 90% correlated to the EUR/USD. Overall, the macro reading does not show sufficiently apparent clues, although if having to pick one side to be most at risk, it seems as though the sell-side may end up exerting a slightly higher dominance today.
INTRADAY CHART (30m)
The failure to extend its corrective bull cycle ahead of a macro resistance level at 1.1630 has resulted in the early stages of a potential distribution phase as both sides fail to exert a clear control of the price action. As a reference for Thursday, the side in control of the PoC (1.1590-1.16) should be best positioned to aim for short-term buy/sell campaigns towards the edges of a tentative range between 1.1570 and 1.1630. The flattening of the 100 and 200-hourly MA reinforces the idea of range-bound market conditions, in which amid no catalysts, we should expect to extend heading into Friday. What this means is that today’s best areas to engage in trading opportunities to exploit short-term moves include the edges of the developing range for a potential rotational market or engaging around the PoC for a test of the extremes. From a volume profile perspective, buyers have been spending the most time above the PoC building value; should this pattern extend into the European hours, watch for an attempt to retest the 1.1630.
GBP/USD: Well Established Dynamics, Profit-Taking Might be in Store
VOLUMES & CORRELATIONS (H4)
An increase of volume on an impulsive move lower is all it should take to remain overall bearish this market, which comes accompanied with the addition of a move being in line with the overall trend dynamics. That said, the hosts of divergences between GBP/USD spot and a lower DXY and higher UK vs US 10-yr yield spread in the last 24h, coupled with an absence of new snippets of information on the Brexit front, does suggest some profit-taking might be in store. If enough short-term impulse is gathered, a retest of old support-turned-resistance near 1.2920 is possible.
INTRADAY CHART (30m)
The bearish expansion of the 100 & 200-hourly MAs as a consequence of new lows printed depicts an overall well-establish bearish trend. The structure of the volume profile, where most of the volume has been accumulated at the bottom of the daily range does communicate ongoing interest to stay short. However, so far the bids circa 1.2850 are holding up prices, with the emergence of a possible double-bottom taking place, a first prerequisite for the onset of a short-term recovery towards 1.29 round number ahead of 1.2920. Even if an over-extension materializes, 1.2940-50, as an untested PoC from Aug 6th should prove a nut too tough to crack, where a reversal should be expected. On the contrary, a break and hold sub 1.2850 should provide a void area worth over 50p until the next maco support circa 1.28.
AUD/USD Poised to Keep Bullish Dynamics Until the RBA SoMP
VOLUMES & CORRELATIONS (H4)
As a premise, a reminder that the correlations between the Aussie and Gold, DXY (opposite) and AU vs US 10-yr bond yield spreads on a 3 month period of 3-day returns remain very strong, which will allow us to unpack some useful interpretations of the latest market moves seen. Right off the bat, we notice firm and stable buy-side volume for the last 2 days, which should at least retain the prospects of further gains. The rise seen is also in agreement with the appreciation in Gold, the widening of the AU vs US yield spread and a decline in the DXY. Notwithstanding the positive narrative, spot AUD/USD is approaching an area that has been well dominated by leverage specs since mid June, and that alone should make the potential of further upside harder to come by, although attempts are expected, tentatively all the way up towards the 0.7480-0.75 macro resistance.
INTRADAY CHART (30m)
The technicals looks certainly bullish. After the accumulation of volume above the 0.74 area on Tues, a sharp correction in European hours led to an equally robust bounce, effectively drawing out a V-type shape bullish pattern. This type of formation, when followed by a continuation of the momentum, which has been confirmed and fueled on upbeat Chinese inflation, is a clear statement by market forces that the short-term bias remains up. The resolution above the 0.7440 double top should pave the way for the market to exhibit an extension of the bullish dynamics, with target seen at 0.7450, ahead of 0.7465 and 0.7480, the latter being the immediate macro resistance. As long as the price keeps the bid above 0.7430 (Wed’s PoC), the upward pressure should be maintained. Upon a loss of the high vol area, expect 0.7415 to become the next support area ahead of bids populating the 0.74 vicinity. Note, some profit-taking end of the day might be expected ahead of the RBA’s SoMP on Friday.
USD/JPY Should Encounter Buying Pressure off Macro Support
VOLUMES & CORRELATIONS (H4)
The buying of Yens has come amid higher trading volumes, with the close near lows of the day which is asserting of the confidence by Yen longs to hold into their positions heading into Thursday. On the flip side, the latest decline in USD/JPY exhibits a disagreement with the latest price movements in the VIX, which is making lower lows; besides, the 2-yr US vs JP bond yield spread is also holding up quite well, which comes in contrast with the long-dated yield spread. Note, the correlation with the 2-yr remains much strong from a 3m correlation standpoint. Putting it all together, and based on the latest bullish engulfing pattern on the 4-h chart, coupled with a retest of 110.70 macro support, we would expect the buyers to put up a stiff fight to recover the upper hand.
INTRADAY CHART (30m)
A tentative bullish response off the macro support at 110.70 has taken place, with the breakout of a descending trendline confirmed. The impulsiveness of the bounce should keep fairly high odds of renewed buying interest on any setback. The next milestone by long-sided business is to sustain the price above 111.00 and build value, in which case pressure into the 111.15 intra resistance looms ahead of a further rise into the 111.30-40 area, where an imbalance of supply is expected to cap the upside corrective attempts for the time being. Note, 111.40 has acted as the area of highest volume accumulation for both Tue and Wed. As in the case of the Sterling, should the correction fail, an opportunity to exploit a 50p void area sub 110.70 may see the rate fall towards the next macro support at 110.20.
“Past performance is not a reliable indicator of future performance“
Important Footnotes:
The only Moving Average to apply in the charts will be the 100-hourly exponential moving average, which will assist us on the overall directional bias of the market.
The green, red, and aqua lines are utilized to represent the latest Cycles. Markets tend to move in cycles of 3 followed by a period of distribution and/or accumulation. To consider a cycle valid, we need to see a daily move greater than 75% of the 14-period average daily range.
The magenta rectangles in the chart represent the areas of most interest by trading volume, referred as POC - Point of Control - and should act as walls of bids/offers that may result in price reversals. The rectangles will be drawn as long as the area is not absorbed. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals dominant and/or significant price levels based on volume. This process allows understanding market opacity.
The analysis of Volume activity in the chart provides some great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement.
In the chart we represent Intraday or Macro Support/Resistance levels by drawing them in black colours, via a thinner black line for intraday support/resistance, while the macro levels of support/resistance will be drawn using a thicker black line.
In a thin blue line we will have the most recent Daily Highs and Lows, which play an important role as areas of support and resistance as well.
To reinforce the key area of interest in an attempt to find confluential levels, we will also use Daily Pivot Levels, which include the pivot point (thick orange) and the subsequent 3 levels of support and resistance derived from the pivot calculations.
The analysis will be conducted from a Top-Down Approach by analyzing 2 different timeframes. Firstly, we will look at the H4 chart to analyze the big picture, where attention centers around the price action, macro levels, volume analysis and valuations via yield spread. Secondly, we will break down the analysis from a technical perspective through the 30m chart by studying the most likely directional bias based on all the information gathered as well as the levels of major interest for traders.
The Ultimate Purpose of this report is to equip Global Prime’s existing and future clients with a professional institutional-level daily outlook that can assist one’s trading decisions on a regular basis.
Technical analysis is subject to Fundamental-led News. Any unexpected news may cause the price to behave erratically in the short term, while still respecting the most distant price references given.
As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.
My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.
LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
VOLUMES & CORRELATIONS (H4)
The first test of a macro resistance exhibited bearish dynamics to reverse a 3-day long bounce, and while the rejection was quite commanding for the interest of sellers, buyers were lined up to join the bid, which as noted would be an expected outcome due to the increasing volume sequence seen last Wed. By the end of Thursday though, the volume saw a slight decrease as buyers attempted to retest 1.1630, suggesting that at the bare minimum, we should expect some downward pressures. As per the correlation against bond yields and gold, it provides conflictive signs, as the 10-yr German vs US bond yield spread saw a tick up while the 2-yr came into more intense pressure. As an extra bearish input, the Italian bond yield saw an increase on Wed, which may add to the case of limiting upside potential. As a reminder, on a 3 month correlation of a 3d performance, both spreads remain over 90% correlated to the EUR/USD. Overall, the macro reading does not show sufficiently apparent clues, although if having to pick one side to be most at risk, it seems as though the sell-side may end up exerting a slightly higher dominance today.
INTRADAY CHART (30m)
The failure to extend its corrective bull cycle ahead of a macro resistance level at 1.1630 has resulted in the early stages of a potential distribution phase as both sides fail to exert a clear control of the price action. As a reference for Thursday, the side in control of the PoC (1.1590-1.16) should be best positioned to aim for short-term buy/sell campaigns towards the edges of a tentative range between 1.1570 and 1.1630. The flattening of the 100 and 200-hourly MA reinforces the idea of range-bound market conditions, in which amid no catalysts, we should expect to extend heading into Friday. What this means is that today’s best areas to engage in trading opportunities to exploit short-term moves include the edges of the developing range for a potential rotational market or engaging around the PoC for a test of the extremes. From a volume profile perspective, buyers have been spending the most time above the PoC building value; should this pattern extend into the European hours, watch for an attempt to retest the 1.1630.
GBP/USD: Well Established Dynamics, Profit-Taking Might be in Store
VOLUMES & CORRELATIONS (H4)
An increase of volume on an impulsive move lower is all it should take to remain overall bearish this market, which comes accompanied with the addition of a move being in line with the overall trend dynamics. That said, the hosts of divergences between GBP/USD spot and a lower DXY and higher UK vs US 10-yr yield spread in the last 24h, coupled with an absence of new snippets of information on the Brexit front, does suggest some profit-taking might be in store. If enough short-term impulse is gathered, a retest of old support-turned-resistance near 1.2920 is possible.
INTRADAY CHART (30m)
The bearish expansion of the 100 & 200-hourly MAs as a consequence of new lows printed depicts an overall well-establish bearish trend. The structure of the volume profile, where most of the volume has been accumulated at the bottom of the daily range does communicate ongoing interest to stay short. However, so far the bids circa 1.2850 are holding up prices, with the emergence of a possible double-bottom taking place, a first prerequisite for the onset of a short-term recovery towards 1.29 round number ahead of 1.2920. Even if an over-extension materializes, 1.2940-50, as an untested PoC from Aug 6th should prove a nut too tough to crack, where a reversal should be expected. On the contrary, a break and hold sub 1.2850 should provide a void area worth over 50p until the next maco support circa 1.28.
AUD/USD Poised to Keep Bullish Dynamics Until the RBA SoMP
VOLUMES & CORRELATIONS (H4)
As a premise, a reminder that the correlations between the Aussie and Gold, DXY (opposite) and AU vs US 10-yr bond yield spreads on a 3 month period of 3-day returns remain very strong, which will allow us to unpack some useful interpretations of the latest market moves seen. Right off the bat, we notice firm and stable buy-side volume for the last 2 days, which should at least retain the prospects of further gains. The rise seen is also in agreement with the appreciation in Gold, the widening of the AU vs US yield spread and a decline in the DXY. Notwithstanding the positive narrative, spot AUD/USD is approaching an area that has been well dominated by leverage specs since mid June, and that alone should make the potential of further upside harder to come by, although attempts are expected, tentatively all the way up towards the 0.7480-0.75 macro resistance.
INTRADAY CHART (30m)
The technicals looks certainly bullish. After the accumulation of volume above the 0.74 area on Tues, a sharp correction in European hours led to an equally robust bounce, effectively drawing out a V-type shape bullish pattern. This type of formation, when followed by a continuation of the momentum, which has been confirmed and fueled on upbeat Chinese inflation, is a clear statement by market forces that the short-term bias remains up. The resolution above the 0.7440 double top should pave the way for the market to exhibit an extension of the bullish dynamics, with target seen at 0.7450, ahead of 0.7465 and 0.7480, the latter being the immediate macro resistance. As long as the price keeps the bid above 0.7430 (Wed’s PoC), the upward pressure should be maintained. Upon a loss of the high vol area, expect 0.7415 to become the next support area ahead of bids populating the 0.74 vicinity. Note, some profit-taking end of the day might be expected ahead of the RBA’s SoMP on Friday.
USD/JPY Should Encounter Buying Pressure off Macro Support
VOLUMES & CORRELATIONS (H4)
The buying of Yens has come amid higher trading volumes, with the close near lows of the day which is asserting of the confidence by Yen longs to hold into their positions heading into Thursday. On the flip side, the latest decline in USD/JPY exhibits a disagreement with the latest price movements in the VIX, which is making lower lows; besides, the 2-yr US vs JP bond yield spread is also holding up quite well, which comes in contrast with the long-dated yield spread. Note, the correlation with the 2-yr remains much strong from a 3m correlation standpoint. Putting it all together, and based on the latest bullish engulfing pattern on the 4-h chart, coupled with a retest of 110.70 macro support, we would expect the buyers to put up a stiff fight to recover the upper hand.
INTRADAY CHART (30m)
A tentative bullish response off the macro support at 110.70 has taken place, with the breakout of a descending trendline confirmed. The impulsiveness of the bounce should keep fairly high odds of renewed buying interest on any setback. The next milestone by long-sided business is to sustain the price above 111.00 and build value, in which case pressure into the 111.15 intra resistance looms ahead of a further rise into the 111.30-40 area, where an imbalance of supply is expected to cap the upside corrective attempts for the time being. Note, 111.40 has acted as the area of highest volume accumulation for both Tue and Wed. As in the case of the Sterling, should the correction fail, an opportunity to exploit a 50p void area sub 110.70 may see the rate fall towards the next macro support at 110.20.
“Past performance is not a reliable indicator of future performance“
Important Footnotes:
The only Moving Average to apply in the charts will be the 100-hourly exponential moving average, which will assist us on the overall directional bias of the market.
The green, red, and aqua lines are utilized to represent the latest Cycles. Markets tend to move in cycles of 3 followed by a period of distribution and/or accumulation. To consider a cycle valid, we need to see a daily move greater than 75% of the 14-period average daily range.
The magenta rectangles in the chart represent the areas of most interest by trading volume, referred as POC - Point of Control - and should act as walls of bids/offers that may result in price reversals. The rectangles will be drawn as long as the area is not absorbed. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals dominant and/or significant price levels based on volume. This process allows understanding market opacity.
The analysis of Volume activity in the chart provides some great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement.
In the chart we represent Intraday or Macro Support/Resistance levels by drawing them in black colours, via a thinner black line for intraday support/resistance, while the macro levels of support/resistance will be drawn using a thicker black line.
In a thin blue line we will have the most recent Daily Highs and Lows, which play an important role as areas of support and resistance as well.
To reinforce the key area of interest in an attempt to find confluential levels, we will also use Daily Pivot Levels, which include the pivot point (thick orange) and the subsequent 3 levels of support and resistance derived from the pivot calculations.
The analysis will be conducted from a Top-Down Approach by analyzing 2 different timeframes. Firstly, we will look at the H4 chart to analyze the big picture, where attention centers around the price action, macro levels, volume analysis and valuations via yield spread. Secondly, we will break down the analysis from a technical perspective through the 30m chart by studying the most likely directional bias based on all the information gathered as well as the levels of major interest for traders.
The Ultimate Purpose of this report is to equip Global Prime’s existing and future clients with a professional institutional-level daily outlook that can assist one’s trading decisions on a regular basis.
Technical analysis is subject to Fundamental-led News. Any unexpected news may cause the price to behave erratically in the short term, while still respecting the most distant price references given.
As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.
My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.
LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/