Mid-Week Technical Outlook: Pivot Points & Breakouts

– A sense of unease lingered in the air on Wednesday as recession fears, jitters around soaring inflation, and concerns about aggressive monetary tightening left investors on edge.

Global stocks slipped amid the risk-off mood and growing caution ahead of today’s highly anticipated panel discussion at the ECB forum in Sintra, Portugal. In the currency space, the dollar was on standby while the euro appreciated against most G10 currencies. Oil benchmarks extended gains, lifted by supply worries while gold rose in range-bound trading with prices eyeing $1830.

As we head into the new trading month and second half of 2022, this could present fresh opportunities across the FX space. Today, we will use pivot points and moving averages among other technical tools to unearth potential setups on various currency pairs.

A pivot point is a technical analysis indicator used to determine the overall trend of the market over different timeframes. Pivot points have predictive qualities, so it is considered a leading indicator to traders. The FXTM pivot point indicator can be downloaded HERE.

GBPUSD breakdown on horizon

If you are looking for a bearish trend, then look no further.

The GBPUSD is under pressure on the weekly and monthly charts as there have been consistently lower lows and lower highs. Bears seem to be making a move on the daily charts as prices wobble above the 1.2150 support level. Given how the currency pair is trading below the weekly pivot and has already hit the weekly support level, further downside could be on the cards. A strong daily close below 1.2150 could trigger a selloff towards the S2 at 1.2088 and S3 at 1.2016.

The bearish trend is already defined on the weekly charts. A strong weekly close below 1.2150 could trigger a selloff towards 1.1930 and potentially lower.

A similar theme can be observed in the monthly timeframe. The GBPUSD has shed roughly 3.5% this month with the bearish candle likely to encourage further downside. Should 1.2150 prove to be tough support to crack, prices have the potential to rebound towards 1.2400 before bears re-enter the scene.

USDJPY bulls relentless

The USDJPY is on a path to hitting a new 24-year high beyond 136.70.

Prices are firmly bullish on the daily charts and have already hit the first weekly resistance level at 136.504. A daily breakout above 136.70 could inspire a move higher towards 137.831 which is where the second weekly resistance level resides. Should bulls run out of steam, prices could decline back towards the weekly pivot at 135.377.

Zooming out to the weekly charts, the USDJPY seems to be gearing up for another breakout. A strong push above 136.70 could trigger an incline towards 138.00.

AUDUSD ready to breakdown?

The AUDUSD weekly chart says it all. Prices are under pressure and trading below the 50,100- 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 the 0.6850 support could trigger a selloff to 0.6650. If prices manage to push back above 0.7000, then the next resistance will be at the 200-week SMA at 0.7130.

EURJPY eyes 144.00 level

A possible breakout opportunity could be forming on the EURJPY. On repeated occasions, bulls have attempted to conquer the 144.00 resistance level with no luck. The currency pair could be waiting for a fresh directional catalyst before making its next major move. If bulls are able to secure a solid move above 144.00, this could trigger a rally to levels not seen since December 2014 around 146.50. Sustained weakness under 144.00 may encourage a decline towards 142.50 and 141.50, respectively.

NZDUSD destined to tumble?

All eyes will be on how prices behave around the 0.6220 support level which has been held on a couple of occasions. A strong breakdown below this point could encourage a selloff towards 0.6100 and 0.6030. A move back above 0.6300 may suggest an incline back towards 0.6370 and 0.6450.