Wednesday Worldview: 5th Aug, 2020

Wednesday Worldview: 5th Aug, 2020

Wednesday Worldview: 5th Aug, 2020

We start off this week’s “Wednesday Worldview” as we usually do, by taking a look at the dynamic between the United States and the rest of the world in the economic context. After months of a downtrend, it seems the US Dollar Index (DXY) has finally found, at the bare minimum, a bounce. The DXY has continued to gain since bottoming out on Friday, July 31, and currently sits just a few pips below the 94.00 resistance level. Although some traders may see this as a simple relief bounce, it’s important to remember the last few weeks of DXY trading have been incredibly oversold conditions. Either way, the US dollar has definitely regained some attention and momentum in the financial space, so all traders should be wary when trading USD pairs until a trend for the greenback is established.

Moving onto the British Pound, we can see that GBP/USD has pulled back from multi-month highs around 1.3170 in the last few days. Because of USD’s rally last Friday, GBP/USD saw a volatile trading session and has since fallen to the 1.3070 level. On a fundamental level, it will be imperative to watch the latest Bank of England meeting this Thursday. Some analysts believe this meeting will provide great clarity on the next direction for GBPUSD, so traders can expect people to sit on the sidelines until then. The daily chart remains positive as of now, although a breakthrough of the 1.30 support cannot be discredited, especially with last Friday’s shooting star candle, which is usually a neutral and or bearish candlestick formation.

However, the GBP/USD forex pair doesn’t seem to be the only pair affected by the greenback’s recent strength. Taking a look at the EUR/USD pair, we can see that the Euro also began to drop on Friday, and has since been consolidating around the 1.175 level. Looking at price action in the past, we can see this region has had historical significance on both support and resistance. That being said, we can expect to see EUR/USD make its next move at or around this level. Looking forward, the next significant supports and resistances around 1.15 and 1.20, respectively. Before EUR/USD moves to either of these, though, traders can probably expect to see at least a few trading sessions of consolidation, especially after the Euro’s recent multi-month highs.

Moving onto USDJPY, we can see this pair has been the least affected by the recent USD rally. This indifference is unsurprising, given the fact that USDJPY has been in a downward-sloping consolidation pattern for almost two years now. USDJPY did have a small rally above the ¥106 level, though the pair has had historical resistance past this point.

Hopping right into cryptocurrency and BTC/USD, we see the price has recovered after Sunday’s flash crash, speculating that overleveraged Longs caused it. This bullish recovery back into the 11,000s is something of major significance for BTC/USD, as we see new support regions being formed over the $10,000 mark. If bulls continue to take charge, we could see BTC/USD powerfully break the $11,500 marker and heading into uncharted territories, on the path to a new all-time high of $20,000. Macro trends continue to make BTC/USD look bullish, on the daily, weekly, and monthly.

Lastly, we’re covering ETH/USD, whose price action continues to be as bullish as BTC/USD. The underlying theme of DeFi is pushing the narrative that ETH/USD is here to stay and only growing from here, despite what some “Bitcoin maximalists” may believe. The recent massive ETH/USD rally pushed RSI above 85, and resulted in a slight correction, as we saw in BTC/USD as well, but a recovery rally was quickly in store. As some traders would say, the trend is your friend, but no matter which side of the market you’re on, Overbit.com has you covered.

“The trend is your friend except at the end when it bends.” – Ed Seykota

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