Jump to content
Sign in to follow this  

Dollar Index

Recommended Posts

I'm thinking this 9550 level looks pretty strong support and it may take something out of the ordinary to break it.  From early Feb it has been support then resistance then support again so it is recognised and well respected and the Euro looks settled going into the weekend. US PMI data at 3pm, not much else on the calendar. 

 



 

 

 

Share this post


Link to post

Over all my analysis suggests we can expect USD strength for the foreseeable future.  Despite the likelihood of a stocks rally to fresh all time highs I think there will be sufficient concern about the long term out there to keep USD strong as a safe haven.  Added to this continued weakness of GBP and USD in particular.  As opposed to that I see short term strength in Yen and CAD but when commodities turn, as I expect, then UASCAD will add its weight to the DX rally.  I think the USDJPY still has some little way to go down before it rallies and this will be the last of the DX basket to join the DX rally.

 

In the short term I am still waiting for the current shallow retrace to complete, which coincides with the current EURUSD rally.  GBP has been slow to hand us a retrace rally but I think that will come as EURGBP looks toppy.

 

My approach on FX is to wait for DX retrace ans then seek Long entry.  EURUSD in reverse of DX and Short EURGBP but with close stops and/or cash the first swing as a further leg up cannot yet be ruled out.  I would like to see a stronger retrace on GBP before getting Short but if it looks like breaking the post Brexit low then may consider a Short at that point.

 

For CAD and JPY I am waiting for a clear retrace and rally, not there yet in my view and USDJPY may present a decent short term Short this week if it makes the 62% Fib.

Share this post


Link to post

USD just doesn't seem to be able to break away into the expected rally just yet and perhaps a relief rally is due on GBP and EUR at least.  With Oil going back up USDCAD is also likely to decline a bit.

 

I still see a case for a retrace back down to the lower support zone and maybe the tramline.

 



Share this post


Link to post

DX still lacking direction as seen in the sideways price action of the majors in the last few days. Needs a break of strong resistance around 9680 or break of strong support around 9550. Targets are the weekly support and resistance levels above and below.

 



 

 

Share this post


Link to post

I'm still stalking a retrace drop back towards the previous tramline, or at least the most relevant Fib level before a strong rally.  We have had a small relief rally in Cable and now USDJPY is also turning against USD.  I expect EURUSD to stage a small rally at least to the upper line of the current large Triangle formation, which should all amount to a DX retrace down.

 

Let's see.

Share this post


Link to post

Forgot to mention that CAD is also showing some strength vs USD again now that Oil is rallying.

Share this post


Link to post

Dollar finally breaks out after stalling for 21 days at 9670 as Euro and GBP slip yesterday. 

May see a retest but looking to rise towards clear target at 9850.

 



 

 

 

Share this post


Link to post

I don't know   It is a tricky one to call.  To me it looks like DX could be at a wave 1 end, which is right on the 62% Fib retrace from the previous move high to low (the 3-4 retrace in my long term view).  This would then set up a retrace back towards support zone of 9,500.  It is all about the EURUSD really so depends where you thin that will go.  For sure it is looking Bearish just now but U I can't help feeling we are due a relief rally on multiple crosses with USD.  Yen too.

 

 

Share this post


Link to post

Using the Dollar Index as a filter to view the dollar pairs indicates looking for EURUSD  shorts and suspecting long setups to be possible traps. On the eurodollar weekly chart there is an approx 200 pip target at 10800 corresponding to the DX target of 9850.

If the DX continues it's charge up the chart look for opportunities to get long the dollar on the dollar crosses the exception being USDJPY (daily chart) as Yen strength still looks to out weigh dollar strength though it has bounced off strong support at 10 000 and is now challenging resistance at 10 630.

Beware cable, it remains extremely volatile.

 

 



 

 

 

Share this post


Link to post

None of us can 'know' anything unless it's been stamped on the chart . I'm not too worried because I am happy following and don't believe in the Rune stones anyway lol. I'm happy believing the market will continue to go up and down, in fact I'm relying on it, it's all good to me. DX has made a break finally, will it last? I really don't know but it is moving and while it's moving in one direction I won't tend to bet against it.

Share this post


Link to post

Hi , can't say you are wrong but opposing views are great for a decent debate.  On the large time frame charts I agree with you, USD is good for a strong rally against all currencies (even the Yen but only after a strong retrace I think).  However it is possible that we are not yet at lift off for that USD rally.  I am long Cable at this mornings low and already B/E so a free bet.  I have a break of a down-sloping trend line on the hourly.  Could easily get a retrace back to test this break point before a strong run up in retrace mode before a top out and then the wave 3 drop begins.

 

It is just an alternative scenario.

 



Share this post


Link to post

Exactly and that is what I see on Cable, a move up.  It is all about getting in on a good move for me and I try to identify turning points not necessarily to jump in (at least not until confirmed or a high probability/low risk bet) but to make sense of the trends.

Share this post


Link to post

Nice call the cable, Did you suspect strong jobs data released at 09:30 would give it a boost?

Share this post


Link to post

No I just used the runes LOL!

 

Seriously though , the analytical methods seek to map human behaviour as driven by human nature (principally fear and greed in this case).  It is not about believe in the esoteric nature of maths (with Fibonacci or the golden ration), although such things are remarkably consistent in the wider world.  Even if you just believe it because you think everyone else does (which isn't true or there would be no edge on offer) then at least one has to accept consistency over a long time.

 

You and I have completely different methods of analysis and trading and yet we very often wind up agreeing, this is actually very comforting to me.  When we disagree it is worthy of debate and close consideration.

 

WRT to the current topic, GBP is on a charge, will it last as I have forecast?  Who knows but, like you, I will let the market decide and adjust my approach accordingly.  If GBP does go on a charge then EUR will too, I can't see those 2 diverging just now.  We agree USDJPY is likely drop therefore we have the 3 biggest parts of the DX basket signaling USD down.  I firmly believe this is a short term retrace and then at the right moment USD will soar.  I believe this will coincide with stock markets topping out.

 

I am looking forward to the resumption in the long term trends of USD up and other down, that is so much easier to trade than the post Brexit conditions so far.  It has been tough trading since Brexit.  Will be interesting to see how the rest of July goes but in terms of strategy I am keeping my power dry and waiting for the big moves.

 

 

Share this post


Link to post

I see  GBP also got a lift from the just published BoE survey showing Brextit has not caused any discernible downturn in business and the economy (project fear?).

 

Regards analysis, I have been studying it for many years and know just how subjective it can be, all looks sweet in hindsight, which is why I put my faith in price action with support and resistance (which is based on supply and demand, accumulation and distribution), as well as the relative strength of currencies. There are plenty of services out there offering professional technical analysis but none seem able to make you millions. 

 

I don't bother predicting because I don't know when an institution(s) is going to start placing big orders that will move a market but I do know their decisions are bases on fundamentals and that is based on news (so not really predictable) while the progressive execution of the orders is based on technicals (you can't just dump a massive order on the market)

 

A clearer chart for me makes for better understanding and too much information leads to confusion so after looking at the wide variety of indicators I did return to basics. I know what I would like to see and when and where I would like to see it which is what every trader does no matter what you use.

 

Share this post


Link to post

Horses for courses , whatever works for ya...  I don't day trade so won't disrespect your approach, especially when I agree with the result.  My approach is not designed for day trading as you know.

 

 

Share this post


Link to post

If you trade any of the dollar crosses you should always know what the dollar index is doing. It will give an indication as to the relative strength of your potential trade, 2 strong currencies = a sideways chart. One strong, one weak will lead to a quick profit target or a quick stop out. The DX daily can also help decide if you should be scalping or swinging (swing with, scalp against) any set up in the dollar crosses. 

 

Does price always respect support and resistance levels? Not at all but they are there for a reason, they are the levels the big players have acted at in the past and may well do so again.

 is right to point out there are differences between intraday, intraweek and intramonth charting which is a reason for the chop of charts as different traders see things from a different perspective but dollar strength/weakness influences them all.

 

 



Share this post


Link to post

OK, I go on holiday for a bit and you guys have completely mucked up my DX chart!

 

So what happened, price was drifting up fine until being slapped down first on the 27th and then again on the 29th. There is only one technical analysis tool you need to discover the cause and it's called a calendar.

 

cal2.PNG

 

Share this post


Link to post

Welcome back  and agree with your first post holiday post, although it must be said that this is going according to my medium term projection and the market turned on the 62% Fib resistance zone.  You may recall that I was stalking a retrace and duly cashed in that but am now seeking a turn back into what I believe will be a longer term rally.  This is consistent with the set up on EURUSD I believe.  We are not there yet so some further drops in USD are likely with EURUSD not yet finished it rally and USDJPY and USDCAD looking bearish for now.  No idea what GBPUSD is doing, although I do anticipate a rally before a return to the long drop...

 

In terms of DX I see 2 potential turning points, one quite near and possible therefore not as likely as the lower one but actually it probably all depends on EURUSD.  As we know the market rarely travels is nice straight lines so I do see an interim rally before a final retrace drop but even if that doesn't happen the 2 turning points remain valid potential retrace terminus points.  Given that USDJPY and USDCAD seem intent of further drops then it makes sense to watch EURUSD closely for correlations with DX in general.  That strong DX rally is likely to only take place once the other pairs resolve their current moves.

 



 

 

Share this post


Link to post

So the Dollar is rallying right?  NFP gives rise to USD rate rises right? Err maybe or maybe not just yet.  I don't think rate rises in the US in the face of so much central bank stimulus elsewhere, now with the BoE also getting back into the stim game, is a real scenario any time soon.  From a technical point of view so far the A-B bounce that I was seeking has happened, albeit a little later than I had mapped out but actually it makes more sense.  I am currently expecting a drop out of the resistance zone just above Friday close, which, if it does turn, should drop in a 1-5 pattern to a termination point around the 62% Fib and the 2 price gaps in June.  This also means that EURUSD and possible GBPUSD should also rally.  I expect USDJPY and USDCAD to fall further regardless but EURUSD is clearly the biggest factor (see separate post).

 

I would love to hear if anyone has a different view.

 



Share this post


Link to post

Related to recent EURUSD posts here is my current take on DX and so far it is following my road map so I have no reason to change my views.  Of course we could be seeing a EWT 1-2 retrace after a turn at 9,500 so  is right that this is significant support and will likely produce a turn but that may be a EWT3-4 preparatory to a final wave down to complete the retrace, quite possibly with a retest of the lower support level where there is also a price gap and a second set of gaps that produced a reversal pattern known as an island.  This will be particularly strong support should price move into that area.

 

So net I expect a bounce off the 9500 area but then a retest and break through to the lower level, which will produce the USD rally we have all been waiting for... 

 



Share this post


Link to post

The problem the DX has at the moment is it's dependency on rate rise speculation. On the calendar there is US retail sales tomorrow but more important (re rates) is the FOMC minutes from the last meeting released next Wednesday.

The 9530 level proved significant yet again, the prospect of good retail sales may encourage a retest of 9650 pressuring the basket currencies. GBPUSD retail has turned short for the first time since Aug 4th (Dailyfx SSI). Yen remains out of sync.

 



 

 

 

 

 

 

Share this post


Link to post

Although central bankers are supposed to be separate from ongoing politics, I think most of us realise, that really is not the case, however the odds are a rate hike will not happen until after the elections in the US. But if we do see a rally as the charts suggests that possibility, then as Mercury pointed out, we would see a rally in dollar currency pairs. Of course countries like Japan and others will use every excuse to praise their so called radical monetary policy and neg interest rates as an attribute to their weakening currency. 

US Dollar Basket (DFB).png 

Share this post


Link to post

I wouldn't care to trade on the basis of what central banks may or may not do .  For my money the market will dictate things in due course and there will be nothing the Fed or anyone else can do about it.  I remain long term bullish the USD from both a fundamentals and technicals point of view.

 

In the meantime the technicals are telling me that my road map for DX is being followed with a likely A-B-C retrace in play to a wave 2 conclusion.  In the current move I have a break of support (now resistance) followed by a double retest and fail followed by a pennant formation (traditionally a trend halfway indicator) with a retest of the pennant lower edge and fail (so far).  If this all plays out then the Wave 2 conclusion should be around the Daily chart 62% Fib, where I have annotated.

 

Let's see if we get a corresponding rally in GBP and EUR...

 



Share this post


Link to post

Much more interesting day today ahead of the FOMC minutes.  Seemed like some doubts creeping in about that Fed rate rise perhaps dropping the USD but also the consumers are not doing what the Fed want...  Could also be seeing the first blink on the stock indices too.

 

DX is still proceeding according to my road map so the support level between 9350-9400 is looking good as the turning point up into that strong rally.  FOMC tomorrow could be the catalyst so a hard one to trade but let's see.

 

What is interesting on this is that for a DX rally almost certainly EURUSD has to drop.  GBPUSD could continue to rally thought, after a short drop and with EURGBP coming to a potential turning point down this all seems to stack.  I think USDJPY will continue down for a little while yet with Stock indices uncertainty.

 



 

 

Share this post


Link to post

Dollar index finally breaks 9500/30 after holding for over 6 weeks. Recent terrible retail sales data and revised down GDP predictions caused a rapid slide but price rallied on Fed member Dudley's comments yesterday that a September rate hike was still very much on the cards.

 

Last FOMC meeting minutes released today at 7:00 pm but watch out for Fed member Bullard speaks at 6:00 pm.

 



 

Share this post


Link to post

Back to Fed double speak with contradictory speeches and indecipherable minutes.  Will the Fed do a BoJ and flat out lie then reverse their position?  I don't see any rate rise in the face of soft consumer spending and BoE reentering the QE ZIRP/NIRP rush to the bottom.  I wouldn't trust any of them to run a bath much less the economy.  How long can it be before the markets decide to simply ignore them?  Even the data is not helping the central bankers now, good ol' Mr/Ms consumer is voting with their wallet, I predict more of that to come...

 

It will be an interesting market reaction to FOMC, these are the minutes of the last meeting right?  A lot has happened since then so what real significance can such minutes really have?

Share this post


Link to post

Hi , as you know it is all a bit of a game with these minutes and speeches, they are always couched in a language to give clues, hints and misdirection but don't actually say anything for fear of being accused of pre-empting actual data releases.

But the Fed does control US interest rates and if they were to cut them (as an example) and you had your multi-million/billion? pile in US dollars you would be just as quick to bale as everyone else hence big market moves lasting days or weeks on an actual event. The cat and mouse foreplay will always be important and will usually spark a reaction. I think I saw yesterday betting for a September rise go up to around 50/50.

 

Share this post


Link to post

Yes I agree .  I tend to ignore most data releases unless they coincide with a potential turning point or pattern break out (as with Gold at today's FOMC perhaps) and certainly a rate change either way will be a big event but minutes with hints just delivers short term volatility (to be watched but not traded for me but then I am not a day trader).

 

I find it hard to see a rate rise but can't count it out as it would certainly support my LT analysis conclusion of a long and strong rally in USD.  However if there was a cut (in you example) where would the multi billion dollar people put their billions?  In an uncertain financial world, with other major economies at ZIRP or NIRP?

Share this post


Link to post

Good question re; what to do with my non-existent multi-billion pile in prep for down turn, neg rates. There would seem to be only 2 options,

1/ take the lost (insurance payment) of negative rates (soon to be here as everywhere else) for the safety of Govt bonds, hence the BoE recent failed bond buying round (no one wanted to sell), or,

2/ spread it thin and wide (world wide) with as much diversity as possible. A blanket hedge.

 

Not so keen on everything into gold, makes for a lumpy mattress.

 

I see Soros continues to load up on indices shorts but god knows how deep his pockets are? I doubt he has a stop, just waits for a margin call and organises another loan.

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Member Statistics

    • Total Topics
      13,147
    • Total Posts
      66,741
    • Total Members
      89,465
    Newest Member
    TomD123
    Joined 30/11/20 11:38
  • Posts

    • Would this be useful to anyone, Prevailing market sentiment graphs?  I have found a lot of good success using this method trading stocks. It makes use of the Hull Moving Average. Not just using the Hull Moving average however but I have found that it is surprisingly accurate.  Would this be useful to anyone? I will update these graphs most days if people find it interesting for both the FTSE100 and FTSE250 with general market sentiment. I have annotated the graphs so that if the prevailing sentiment is up/long it will show in green and if it's down/short then it will show as red.   I can produce other graphs for individual stocks if there is enough interest. Feel free to fork, update, message me for any questions etc.  Graphs
    • LOL.....No. It's the new safe haven asset. It might be the new mans gold. But ... no. 
    • Dax and Dow M15 chart levels;
×
×