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Recent Economic Indicators & Events Ahead

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Source: Forexfactory

Insights Into FX Majors

EUR/USD has come into contact with an area of prior strong supply imbalance. It therefore becomes a possible turning point for the market, especially judging by the compressive nature of the ascent we are seeing. In other words, every time highs are taken out, the market fails to extend much further up, which is suggestive of a short-building campaign going on. The approach of price on now four drives, with each leg smaller in magnitude than the previous, is also a sign of exhaustion. Note, this is just the prelude and half the equation as to confirm as turnaround, a breakout of structure is what’s needed next to gain more conviction.

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GBP/USD keeps navigating through a daily range, which makes it difficult to assess the next directional bias until a resolution outside of it occurs. In the 4-hour chart, bulls have failed to capitalize on the prior day breakout of the swing high and instead, selling has ensued, taking the price all the way down to retest the pocket of demand and opposite swing. This is an area where buying opportunities may still arise, but be aware that the way the price went up before the decisive sell-off means this market is susceptible to face further selling at the area marked, which is where I expect most long-side risk exposure to be mitigated. This is best visible if the trader goes into lower timeframes such as the 1-hour chart.

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USD/JPY is finding strong bids at a buyers’ stronghold, which is why I have been expecting the re-emergence of bids, precisely what we saw on Wednesday, even if it’s still premature to be jumping the gun to validate a new up-cycle off the H4 chart. If further setbacks, I am still expecting bids at regular sequences down to 109.60, below which big pockets of liquidity are thought to be layered, and possibly acting as an area for shorts to close exposure. This is a market where the long case compels me, but first a shift back to a bullish market structure with momentum via the smart money slope also picking up in the 4-hour chart is necessary.

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AUD/USD continues to be dragged lower, which has led to yet another technical milestone intraday at the 4-hour chart resolves its range by extending way beyond its support level. There is absolutely zero evidence via price action that the market is done selling the pair even if we’ve now reached the 100% projection target, from where the market may temporarily stall. A retest of the backside of the old range up to the prior midpoint offers pristine intraday areas to re-engage in sell-side action with the most well defined trend in G8 FX this year.

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NZD/USD validated a breakout of its range structure by accepting into lower levels, therefore opening the doors to further downside until the next 100% proj target gets met. The approach here, by assessing the daily chart, and by now getting the green light via the 4-hour chart, is to sell this market as the core view if one’s entry trigger shows up. I personally have nill conviction that the Kiwi is going to revert from here as the triggers are not there. Follow price action.

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The Daily Edge is authored by Ivan Delgado, Head of Market Research at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth ...

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