Price & Time: Broader USD Decline Next Week
- DJ FXCM Dollar Index Turns at key resistance zone
- Cyclical outlook negative over the next few days
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
We have been writing about a potential turn in the USD around this time for over a week now. The focus for most currency traders today was EUR/USD which fell to just above 1.3500 after the ECB announcement before rebounding sharply by more than a big figure. The reversal in EUR/USD came from a quite a bit below our idealized levels, but the price action is pretty clear and seems to support the cyclical view for USD weakness in the week ahead. Other USD exchange rates have also exhibited price action coincident with a potential reversal with NZD/USD in particular rebounding nicely off a key support level near .8400. We like positioning for this potential broad based USD weakness by going short the FXCM US Dollar Index. If our negative cyclical view is correct on the USD then the index should not trade through today’s high near 10,540 anytime soon.
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DJ FXCM US Dollar Index Chart: June 5, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Sessions Ahead:
LEVELS TO WATCH
Resistance: 10,520 (Gann), 10,541 (Today’s high)
Support: 10,485 (WTD Low), 10,470 (Gann)
Strategy: Sell DJ FXCM US Dollar Index on strength
Entry: Sell DJ FXCM US Dollar Index at 10,509
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.