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Caseynotes

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The Merkel news has been dripping through all day but confirmed now she won't run in 2021. Chief economist says the recent regional poor polling results won't make a difference once the dust has settled but he is wrong. It's hard enough to keep a coalition together when there are only 2 of you, but 4 or 5 different parties. Ha.

“Even if Merkel were to be replaced and/or if a new government were to take power in Berlin, with or without new elections, it would not make a major difference once the dust has settled,” Holger Schmieding, chief economist at Berenberg, said in a note. “Any conceivable coalition in Berlin would still be dominated by the mainstream parties CDU/CSU, SPD, Greens and the smaller Liberals.”

https://www.zerohedge.com/news/2018-10-29/merkel-step-down-cdu-leader-after-disastrous-election-results

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Over night (well midnight really) breakouts across the board on USD pairs with EUR,GBP,AUD all breakout of key resistance zones and CAD retesting small Triangle after a breakout last night.  If we see this backed up with a rally away this morning this is very Bullish and the relief rally I have been seeking is on, finally!

AUD is particularly bullish having already made a significant turn last Friday and is approaching a Daily LT channel Upper tram-line.  A breakthrough here will surely seal the rally direction...

I'd like to see a new higher high on the 1 hour chart on CAD to be more confident on this pair but I believe this would be a long term direction confirmation rather than a retrace...

EURUSD-1-hour_011118.thumb.png.b9a8a10e79e555a1660f9504446d4709.pngGBPUSD-1-hour_011118.thumb.png.83df1af0fca5f4b5b734e4a0f34bfc94.pngAUDUSD-1-hour_011118.thumb.png.5ba019a013d7d74c74c6329f9acbd305.pngUSDCAD-1-hour_011118.thumb.png.69fdc591fcf0073fd31cf8cc8c12a234.png

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To complete the USD picture, the DX (which for anyone not familiar with it is comprised of: EUR; GBP; YEN; CAD; CHF & Swedish Kroner, it is a bit arcane but a useful overall USD indicator, not tradeable in my view) looks to have completed a wave 1 up and is now set for an A-B-C retrace.  Likely candidates for completion are the Fib 62% and 76/78%, the latter of which would be a Flag breakout retest zone.

Of note I am predicting EURUSD (over 50% of the DX strength) to move in a single 1-5 wave.  This can only happen if other pairs in the DX have a dampening effect (i.e. move in the opposite direction).  USDJPY is in a rally phase aligned to stocks rally.  USDCAD is setting up for a long term rally (unconfirmed!). So this could easily be the case.  Alternatively there is an EW set up that allows for EUR to also make a wave C move in A-B-C fashion, called a complex retrace but let's see how the price action goes before assessing which it is.  One thing that is tweaking my antennae on this latter set up is that while I am expecting a period of EUR strength vs GBP I then expect EURGBP to dive into a strongly LT Bearish move, which could align to a EURUSD complex retrace.

All a bit complicated and technical so for right now I will just be happy if USD drops and reassess later.

Thoughts on USD anyone? @Caseynotes (you used to major on FX) @elle @PandaFace @TrendFollower, anyone else want to join the party?

DX-Daily_011118.thumb.png.d3beabd800ee5edd88726f3d7b10f4ee.png

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