Daily Forex Technical Strategy (Fri 23 Aug)

EUR/USD – Vulnerable for a bearish breakdown

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• 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

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• 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

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• 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

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• 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