Pivot Points and Breakouts :: InvestMacro


Unease was in the air on Wednesday as recession fears, nervousness over rising inflation and worries about strong monetary tightening left investors on edge.

Global stocks retreated amid increased risk aversion and caution ahead of today’s highly anticipated discussion session at the European Central Bank Forum in Sintra, Portugal. On the currency front, the dollar was on standby while the euro rose against most of the G10 currencies. Oil benchmarks extended gains, supported by supply concerns while gold rose in range-bound trading with prices expected at $1,830.

As we approach the new trading month and the second half of 2022, this may present new opportunities across the FX space. Today, we will be using pivot points and moving averages among other technical tools to discover potential setups on different currency pairs.

Pivot Point is a technical analysis indicator used to determine the general trend of the market on different time frames. Pivot points have predictive qualities, so they are considered as a leading indicator for traders. The FXTM Pivot Point Indicator can be downloaded over here.

GBPUSD breakdown on the horizon

If you are looking for a downtrend, look no further.

The GBP/USD pair is under pressure on the weekly and monthly charts as there have been lower lows and lower highs constantly. Bears appear to be moving on the daily charts as prices are swinging above the 1.2150 support level. Given how the currency pair is trading below the weekly pivot and has already reached the weekly support level, there could be more downside on the cards. A strong daily close below 1.2150 may lead to selling towards S2 at 1.2088 and S3 at 1.2016.

The downtrend has already been identified on the weekly charts. A strong weekly close below 1.2150 may lead to a sell-off towards 1.1930 and possibly to the downside.

A similar theme can be observed in the monthly time frame. GBPUSD has shed about 3.5% this month, and the bearish candle is likely to encourage more downside. If the 1.2150 level proves to be a strong support for the breakout, prices have the potential to rebound towards 1.2400 before the bears return to the scene.

USDJPY bulls are relentless

USDJPY is on its way to a 24-year high, surpassing 136.70.

Prices are strongly bullish on the daily charts and have already reached the first weekly resistance level at 136.504. A daily break above 136.70 could inspire a higher move towards 137,831, where the second weekly resistance level resides. Should the bulls run out of momentum, prices could fall back towards the weekly pivot at 135,377.

Zooming down to the weekly charts, it appears that USDJPY is preparing for another breakout. A strong rise above 136.70 could lead to a rise towards 138.00.

AUDUSD ready to crash?

The AUDUSD weekly chart says it all. Prices are under pressure and trading below 50100 and 200 week simple moving averages. Support can be found at 0.6850 while resistance can be seen at 0.7000. A strong weekly close below 0.6850 support may lead to a sell-off to 0.6650. If prices can rise above 0.7000, the next resistance will be at the 200-week SMA at 0.7130.

EURJPY looks to 144.00

There may be a potential breakout opportunity for the EURJPY. On frequent occasions, bulls tried to overcome the resistance level 144.00 with no luck. The currency pair may wait for a new trend catalyst before making its next major move. If the bulls manage to secure a strong move above 144.00, it could lead to a rally to levels not seen since December 2014 near 146.50. Continued weakness below 144.00 may encourage declines towards 142.50 and 141.50 respectively.

NZDUSD headed for a crash?

All eyes will be on how prices behave around the 0.6220 support level that has been held on two occasions. A strong break below this point may encourage selling towards 0.6100 and 0.6030. A return to above 0.6300 may indicate a slope towards 0.6370 and 0.6450.



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