Technical Analysis 2 August: Markets Await News Catalyst
EURUSD, Daily timeframe
Pair in Uptrend
On Tuesday, the euro decreased by 35 pips which is a minor movement for the day. The market is awaiting further market news for move definitive action. The uptrend is intact, so our stance on riding the major market move along with bulls remains unchanged. The scenarios we monitor are:
Scenario 1: We could witness a brief retracement. This could be an opportunity to participate in the uptrend from better prices. The immediate support, which is a round number level, is located at 1.1600. If we see a positive price action moving away from that area, this will be a valid confirmation for rejoining the Uptrend. The rejection should be on at least the 4-hour timeframe.
Scenario 2: The candle formed on Tuesday, if it doesn’t cover the previous bullish day candle, we’ll be looking at an inside bar formation. This means that the whole day is just a brief weakness, awaiting further bullish action. Potential targets above are 1.1800, next one is 1.1850 and then we’ll be looking at 1.1900.
Scenario 3: If price closes below the support at 1.1600, we could see further weakness in price action. Next level is 1.1500 and if price passes by it without showing signs (on Daily timeframe) of bullishness, then next support to look out for is the level at 1.1300. It’s important to remember that we shouldn’t fight the market if it’s moving against us. What is best is to await price action to show candle formations confirming bullishness from keys levels (those mentioned here).
GBPUSD, Daily timeframe
Pair in Uptrend
The British pound gained briefly about 33 pips and then weakened and reached at the level of opening price for the day trading around 1.3210. It’s useful to remember that price doesn’t move in a vertical manner all the time. There are ebbs and flows. Currently, we might be witnessing a time of consolidation or even a correction (we’ll have further evidence in the days ahead).
Scenario 1: If we see today’s price action closing below 1.3120, this could lead to a retest of the support at 1.3050. A suitable place for long entries, as long as a bullish 4-hour rejection occurs. Targets to look out for are 1.3200, next one is 1.3250 and 1.3300.
Scenario 2: A closure on the daily timeframe below 1.3050 will likely drive price further down toward 1.2800. This could be the time to set alarms in case price bounces from the level. Since we’re looking to ride the Uptrend, we’ll be looking for a bullish confirmation. 4-hour timeframe is best but if you await a daily candle, you will not be late to the action. This would just be a more conservative approach.
Scenario 3: Price could start moving sideways, especially before the number of Nonfarm payrolls on Friday comes out. This means investors are staying on the sidelines, preferring to take action after the noise has passed.
AUDUSD, Daily timeframe
Pair is in an Uptrend
The pair dropped 28 pips and continues to consolidate. Similarly to other pairs not moving decisively, we see range bound action on the 1-hour. For traders who are looking to capitzalize on rangebound movements, this could present an opportunity. However, the focus should be on the reason why this happens. Friday will very likely put an end to the consolidating market. We’re looking to trade trading markets (this one is into positive bullish territory), so, it’s best to avoid lack of active price movement.
Scenario 1: The immediate support that could be tested if price continues to drop, is located at 0.7900. If we see a rejection from that level, that could offer an opportunity to go long. Target levels are located at 0.8000, next one is 0.8050 and then 0.8100.
Scenario 2: Price could continue to wiggle sideways before the awaited catalyst appears. Not a good time to trade. We need direction to position ourselves correctly. A bullish daily candle that covers entirely a negative price action from the previous day could offer a buying signal. It’s best to await a daily confirmation.
Scenario 3: If price closes below 0.7900, it could move further down to reach the deeper support at 0.7750. This support area could be a stop for the bears. If we see positive price action from 0.7900, this means we could join the Uptrending movement once again but from better (i.e. weaker prices).
Gold (in a wide range)
We had yet another bullish day from Gold. In fact it rejected the level that was once a resistance at 1260.10. Now, this level is a support and it could be touched more than once before the precious commodity takes off.
Scenario 1: The bulls continue to charge and the immediate target which is also a resistance level that we’re looking at is located at 1300.36. It would be a good time to capitalize on profits made once price reaches 1300.36 because it is also a level of strong resistance.
Scenario 2: Due to Friday’s Nonfarm payrolls, price could drop if investors pull out their money temporally. We could see another retest of 1260.10. If price closes below it, price action could drop as low as 1239.41. This level could offer another opportunity to go long. Best to await rejection on the Daily timeframe.
Wishing you Happy and Successful Trading!
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