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Dollar breakout to the up side of the descending triangle on the daily, hourly chart now meets short term resistance. 

Short term struggle ahead? 

All followers of USD pairs should take note.

The daily chart, pre opening Sun Evening GMT.

 



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Agreed,

 

As previously suggested I think we will get a retrace back toward the Triangle upper line (may not touch, there is a tramline pair as well as a Triangle so might touch back on the tramline.  I think this will be driven by strength in the Euro and Yen, not so much GBP, but when it is over then I expect USD to rally away quickly.

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Dollar index daily pulls back to re-test triangle breakout.

Hourly chart show strong 8am opening bear bar, the result of selling pressure? or bull vacuum? as the bulls wait for a cheaper and more likely entry price? Some buying started at triangle resistance. 

So far EUR, GBP, JPY, AUS all up on the morning. Keep a watch.

 



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I agree  

 

I see another small leg down before any jump away though.  I see something similar on USDJPY (with large upside potential) and GBPUSD is reaching a moment of truth in that it will either turn in this current area of power on up (I think the former).  EUR is a little more difficult to pick out though but if DX is to rally strongly then the odds are EURUSD will drop, again maybe after one small leg up.

 

With stock indices putting in a potential retrace before a larger leg down and commodities (not precious metals) faltering a flight to USD would be a reasonable bet.  On indices a see another push up to complete that retrace and similar on Oil and Copper.  This could all take a while and probably wont happen until the US markets open, although watch out for USD beginning its move first.

 



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I'm thinking that the DX is a tricky indicator as it is not nearly as heavily traded as the FX crosses in the basket.  USDJPY has stalled, though I think that is temporary, Oil is on a rally so CAD is stronger just now but the real mover is EUR with a strong rally (going to make the same complex wave pattern as GBP?).

 

I think GBP is reaching it zenit for this rally now and JPY may strengthen but EUR has a bit to go and CAD will drop further in opposition to Oil.  Interestingly the DAX is weak while other stock markets are showing some strength, just now at least, so maybe it is more an ECB thing that an FOMC thing. 

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I would need to check but I think there are only 8 currencies in the basket so we are already looking at most of them. I find DX useful as a guide to short term intentions and look for a strong 1 hour bar at 8am and 1pm.

GBP certainly lead the way early on and now seems to be stalling as EUR tries to catch up. EUR just got a nice bounce off a daily resistance turned support level so you may be right about having another leg up.

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As a guide I agree but because it is a composite of markets it may not obey normal (whatever that is...) market "rules".  Basket contains: EUR (biggest, over 50% weighting); JPY; GBP; CAD; Swiss Franc and Swedish Kroner.

 

Oh and there goes the GBP...

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DX remains inside a Triangle formation with a second kiss back on the lower line still on the cards and therefore a break to the upside is still in play.  Only a break of the blue line would negate this scenario.

 



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I worry about this market because of the complexity of the 6 crosses in the basket but one thing tracking it of late has reminded me of is the need to draw alternatives if using charting techniques for trading analysis.  Previously several of us have had Triangle lines on various time frames but the final (I think...) one is only now apparent and if true shows a strong bounce off the line in a kiss back on the daily chart.  If sustained this lends a lot of weight to a USD rally vs GBP, EUR, JPY and CAD.  Can't bank on it but when taken with analysis on the other crosses plus Oil and Copper and Stock indices falling rapidly then USD as a safe haven is a decent position right?

 



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The dollar index for the average retail trader can only be a gauge as to the relative strength or weakness of the USD, which is of an importance to anyone trading any of the USD pairs. For actual trading it is best left to the big institutions who are looking for generalised moves over large time scales. 

Given that the US economy is the strongest any big move of the USD is like a freight train and must be important information to anyone trading a USD pair over the intermediate or longer time frame.

Sometimes you sit and wonder why your trade is going sideways when one of the pair has had good data and should be moving only to find the other pair is going just as strongly in the same direction.

 

I a good overview is helpful, such as;

http://winnersedgetrading.com/forex-power-indicator/#sthash.DYF6rgdQ.dpbs

or;

https://www.oanda.com/forex-trading/analysis/currency-volatility

 

 

All lines drawn on a chart are subjective and are never exactly the same on anyone else's chart. All lines get redrawn after new information is added. All momentum indicators are lagging and change after new information is added. No one else is looking at exactly the same information as you. The only view that is going to be 100% accurate is hindsight. 

 



 

 

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Of course if you learn from hindsight it may help with future profitability...

 

And if you update your analysis regularly for new price information it may help with current trades in hand.  As such you need to be open to changing your view as new data emerges (i.e. admitting to yourself that you were wrong). 

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I agree, The information in front of you should encourage a bias but not a conviction. This is a game of probabilities and any new information can swing the probability very quickly. Big comeback for the dollar after making a new low at end of month, I wonder if the timeing is significant? Now DX re-testing that breakout zone on the daily chart. 

On the hourly chart I've added some RSI (just for fun).

 



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Makes sense  and I have something similar.  I redrew my Daily chart Triangle, which now registers a kiss back and sharp rally away.  We can expect a retrace in EW1-2 today (or possibly one final leg down but not much beyond the Triangle line I think) and this matches the main FX crosses analysis.  So the order of the day on USD FX crosses is to identify the retrace end and go Short EURUSD & GBPUSD and Long USDJPY & USDCAD (big move on that latter BTW, suggestive of continuing Oil weakness?)

 

 

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DX retrace is underway after a poke above the Daily chart upper Triangle line.  With strong Pos Mom div on the Daily I would expect the main USD basket FX pairs to move swiftly away in USD favour once this retrace concludes.  At present it is setting up to be a shallow retrace (38% Fib on most of the crosses) but have to wait for the wave Cs to fully develop.

 

 

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Yes, the DX continues to intrigue. I switched to the 4 hr and price seems to have nestled back into safety for the time being and could well be setting up for a launch to 9525.

I do enjoy watching this one.

 



 

 

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If the markets teach us anything it is that anything is possible and the longer you look the more scenarios you find.  However this market is only just at Fib 23% so early days in a retrace.  Given the underlying crosses are all in similar retraces I'd look at those too and then decide on the overall USD picture.  As for me I think this is a normal retrace, and should go to about Fib 38% but it's the primary FX crosses that will be more accurate on levels. 

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  • 3 weeks later...

Dollar continues to loiter about this breakout point waiting for something to give it a nudge up or down.

 

Today 13:30 BST US data release NFP, but don't forget the slew of data as usual likely to cause half hour of whipsawing as each figure gets assimilated (at different rates by man and algo).

Also at 13:30;

Average hourly Earnings mom & yoy,

Trade Balance,

Durable goods Orders,

PMI (services & composite).

 



 

 

 

 

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Dollar index trying to stage a recovery off 9400 but looks weak, may well wait for Yellen speech this afternoon before deciding on direction and impetus of next move. Related pairs moving sideways as a result except GBPUSD which is doing it's Brexit Ref thing.

 

 



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GBP/USD moved 183 pips up in a minute then retraced most of it over the following hour....what kind of strategy would prepare you for moves like that?...short or long you're stopped out unless you have huge stop levels

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And the only rationale being touted is a fat finger mistake on an order. Someones going to be very red faced around the office today. Same thing happens when a politician or central banker gets loose tongued. Worse still slippage can mean a huge stop gets taken out even though you placed a tight one. Fortunately these are rare.

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