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Daily Technical Round-up: How will Trump's new tariffs affect the Dow?

Michael Baker, Friday, 2 August 2019

Technical Analysis

GBP/USD

Pivot: 1.2127

Scenario 1: Once again, another yearly low printed again yesterday. Cable not seen these prices in 30 months. Looking back to 2016/17 between 1.2135/2082 had multiple daily lows, with the 2017 low coming in at 1.1987 and the 2016 lows at 1.1777. The way this is dropping we may see these levels trade soon.

Scenario 2: Very heavy with cable at the moment, any signs of strength seeing responsive selling. Small flag pattern developing on the 30 min, if we can get back above 1.2180 then lets look for the break at 1.2229. Between 1.2213/2374 there was a period of rapid selling, will we see a quick unwind? 1.2396/77 is where we broke down last week with the weekly pivot just above at 1.2428.

Chart: Daily chart showing the push down to 30 month lows, no signs of respite. BoE still expecting an orderly Brexit with rate increases to follow shortly after.

2 GBP

EUR/USD

Pivot: 1.1069

Scenario 1: Yearly lows give way and prices pushed further down. May 2017 there is a breakout area at 1.1021 Analysis from Wednesday and yesterday's low got to 1.1027. We have bounced since. 1.0964 is a sloping support line test. A break here could be significant with 1.0839/31 and 78.6% fib not much further.

Scenario 2: That yearly low could now be the subject of possible retests, let's see what happens when we get back up to 1.1101/1111. Above here would be a sign of a false break with the next area of interest 1.1155/81 zone. There is a breakdown point from the 22 July at 1.1200 then there is 1.1281/88 which has held five daily highs, a break here we may push for the 200-day SMA at 1.1300.

Chart: Weekly chart showing the push down to the May 17 breakout area. Sloping support line holding lows since August 17 likely to come into focus, next touch around 1.0964. 

2 EUR

 

Germany 30

Pivot: 12,113

Scenario 1: Pull back looking a little bit more extreme so focus now goes to longer-term fib levels. Before the 38.2% at 11,739 there is an area between 11,884/811 which may attract interest although we have seen a push through here back on 3 June.

Scenario 2: 12,120 is a retest of the broken long-term daily trend channel, a push back up here will take pressure off the downside. 12,226 is amongst a short-term selling area, likely to meet further resistance if we get back up here. Breaking above 12,294 will push us up through a short-term downwards moving trend channel.

Chart: Daily chart showing the continued weakness, are we to test the major fibs? Longer-term target could be the gap left back from the 29 March. 

2 DAX

 

Wall Street

Pivot: 26,756

Scenario 1: Broke out of the flag formation to the downside after the Fed decision. Yesterday saw a bounce back up but met resistance just before the weekly pivot, which coincides with the two previous weekly pivots. We are back down by the late June support between 26,489/403. 38.2% not much further at 26,342 with the 50% at 26,011 which coincides with a much larger 23.61% at 26,054.

Scenario 2: Sell off after fed found support at 26,714/651, but Trump's tariffs pushed it through here. If bulls can get back above then its next target is the 27,000 level and more interestingly the weekly pivots between 27,104/199.

Chart: Four-hour chart showing the break down and test of late June lows. 38.2% fib not far beyond here.

2 Dow

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