Daily Forex Technical Strategy (Fri 23 Aug)

EUR/USD and AUD/USD looks vulnerable for a bearish breakdown.

EUR/USD – Vulnerable for a bearish breakdown

click to enlarge chart

  • The pair has drifted downwards as expected to test the lower limit of a minor range configuration at 1.1065 which now has evolved into a “Descending Triangle” configuration (click here to recap our previous report).
  • No change, maintain bearish bias in any bounces below a tightened key short-term pivotal resistance at 1.1115 for potential bearish breakdown to target the 01 Aug 2019 swing low of 1.1025 in the first step. On the other hand, a break with an hourly close above 1.1115 negates the bearish tone for a squeeze up to retest the next intermediate resistance at 1.1170 (former minor range support).

GBP/USD – Mix elements, watch 1.2300 resistance

click to enlarge chart

  • The pair staged a squeeze up above the 1.2210 resistance in yesterday’s European session to print a high of 1.2273 after German Chancellor Merkel made another “Brexit optimistic” comment that a solution to the Irish “backstop” is possible before the 31 Oct Brexit deadline. The short-term bearish scenario has been invalidated.
  • Right now, the pair is hovering right below the descending channel resistance at 1.2300 which confluences with a Fibonacci retracement/expansion cluster. Mix elements, prefer to turn neutral now between 1.2300 and 1.2170. A clearance above 1.2300 sees an extension of the corrective rebound in place since 12 Aug 2019 low to target the next intermediate resistance at 1.2430.

USD/JPY – 107.00 remains the key short-term resistance to watch

click to enlarge chart

  • The pair has been stuck in a tight sideways range of 55 pips since Mon, 19 Aug within a complex minor range configuration in place since 06 Aug 2019.
  • No clear signs of upside momentum revival at this juncture as indicated by the 1-hour RSI oscillator. Maintain bearish bias with 107.00 as the key short-term pivotal resistance and a break below 106.15 is likely to see a further drop towards 105.60 in the first step.
  • On the other hand, a clearance with an hourly close above 107.00 sees an extended corrective rebound towards 107.80 (former ascending range support from 25 Jun 2019 low)

AUD/USD – Watch the 0.6740 support for a potential breakdown

click to enlarge chart

  • Since 08 Aug 2019, the pair has been stuck in a range of 80 to 60 pips and a series of “lower highs” have been formed when the pair tested the upper limit of the range.
  • Watch the 0.6740 minor range support where an hourly close below it sees a drop to retest the recent 07 Aug 2019 swing low area of 0.6675. On the flipside, a clearance with an hourly close above 0.6795 sees an extension of the corrective rebound towards the next resistance at 0.6865 (also close to the 50% Fibonacci retracement of the recent steep decline from 18 Jul high to 07 Aug 2019 low).

Charts are from eSignal


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.