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FX analysis

Short-term FX Technical Strategy (5 Jul 2022)

foreign exchange

EUR/USD – Drifted down to key medium-term range support

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EUR/USD has broken below the 1.0450 key short-term pivotal support as per highlighted in our previous report dated 27 June 2022 and dropped towards the alternate scenario target/support of 1.0370/1.0350 (printed an intraday low of 1.0365 on 1 July 2022).

Short-term downside momentum has started to abate as the hourly RSI oscillator has flashed a bullish divergence at its oversold region and the price actions of EUR/USD has almost reach its 16 June 2022 and 12 May 2022 swing low areas of 1.0350.

Watch the 1.0350 key medium-term pivotal range support for a potential push up towards the intermediate resistance at 1.0530 in the first step and a break above it opens up scope for 1.0600 next. However, a break with a 4-hour close below 1.0350 invalidates the bounce scenario for another impulsive down move sequence towards the next support at 1.0200.

GBP/USD – Mixed elements, oscillating within triangle range

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GBP/USD has staged a bearish breakdown below the 1.2185 key short-term pivotal support as per highlighted in our previous report dated 27 June 2022 and tumbled towards the alternate scenario target/support of 1.1935 (printed an intraday low of 1.1975 on 1 July 2022).

Prefer to turn neutral between the 1.2240 and 1.1975, the upper and lower limits of the minor “Symmetrical Triangle” range configuration. A break with an hourly close above 1.2240 sees a corrective rebound towards the next resistance at 1.2410/2460.

On the flipside, a break with an hourly close below 1.1975 opens up scope for another impulsive down move sequence to target the next supports at 1.1850 and 1.1680.

USD/JPY – Potential push up towards upper limit of “Ascending Wedge”

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Since 22 June 2022, the price actions of USD/JPY have started to oscillate within a bearish “Ascending Wedge” configuration which implies that the steep and swift up move from 5 March 2022 low is coming close to an exhaustion point to see a potential end of the major uptrend phase in place since 5 January 2021 low.

In the short-term, its price actions may have some residual up move left. Watch the 134.80 key short-term pivotal support for a potential push up towards 137.20/50 resistance (upper limit of the “Ascending Wedge” & a cluster of Fibonacci extension levels).

On the other hand, a break with an hourly close below 134.80 kickstarts a multi-week corrective decline scenario for a drop towards the next support at 133.60 in the first step.

AUD/USD – Reintegrated back above 13 May 2022 low, downside momentum abated

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AUD/USD has broken below the 0.6830 key short-term pivotal support as per highlighted in our previous report dated 27 June 2022 and dropped towards the alternate scenario target/support of 0.6760 (printed an intraday low of 0.6764 on 1 July 2022).

Yesterday’s price actions have started a bounce right above 0.6760 and reintegrated back above the 13 May 2022 swing low of 0.6830 that suggests a lack of follow through in downside momentum. In addition, the hourly RSI oscillator, a gauge of momentum has staged a bullish breakout above a key corresponding descending resistance at the 52% level.

Watch the 0.6760 key short-term pivotal support for a potential corrective rebound towards the intermediate resistance at 0.6990 and break above it sees an extension towards 0.7065 next. However, a break with an hourly close below 0.6760 opens up scope for another impulsive down move sequence towards the next support at 0.6670/6640 (also a cluster of Fibonacci extension levels) in the first step.  

Time stamped: 5 July 2022 at 8.30am SGT

Source: CMC Markets

 

 


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