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Talking Points:

- DailyFX Quarterly Forecasts have been updated for Q3, and are available directly from the following link: DailyFX Trading Guides, Q3 Forecasts.

- For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.

- If you’d like more color around any of the setups below, we discuss these in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those session from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Next Week’s Calendar Brings Focus to the Euro, ECB

Next week brings a series of high-impact events to the economic calendar, and this may finally offer a backdrop that can push the US Dollar into a directional trend. Thursday appears to be particularly busy, as a BoE rate decision earlier in the morning is followed by an ECB rate decision. This is the meeting in which the ECB had heavily implied that they’d begin slowing bond purchases; the formal announcement of which could produce a bit of positive drive in the single currency if it does, in fact, take place.

Below we look at two price action setups designed for next week’s trade. It’s important to note that each of these are designed for next week, as a gap-through support or resistance can vastly alter the setup, thereby negating its potential before it even really has a chance to get started. This is especially relevant on GBP pairs, which are not included in this week’s FX Setups, as Brexit headlines have been creating some rather chaotic volatility across Sterling crosses of late and this makes for an undesirable scenario of weekend gap-risk.

Bearish EUR/USD on Hold Below 1.1750, Add on Bearish Break of 1.1500

I’ll keep this one short (pun intended) as I’ve written about it for each of the past four weeks. Early-August saw an aggressive sell-off in the pair, largely on the basis of fears around Turkey. Those fears quickly abated mid-month, and this was followed by a bullish move that erased the entirety of those prior-month losses. But the resistance area that we’ve been following that runs from 1.1709-1.1750 continues to hold the highs, as we’ve seen play out since mid-July.

EUR/USD Four-Hour Price Chart

eurusd eur/usd four hour price chart

This keeps the door opened for Euro downside, and EUR/USD is fast approaching an area of support at 1.1530 that’s had a tendency to quell recent declines. This can make the prospect of short-term entry less attractive, so for traders not yet short, playing a pullback to resistance at prior support appears to be one of the more accommodating ways of approaching the matter at the moment.

Lower-high resistance can be sought around the 1.1600 handle, and if we do see sellers begin to show there, the door can open for bearish strategies with stops lodged above this week’s swing-high. Alternatively, short-side breakouts can be investigated upon a break-below 1.1500.

EUR/USD Hourly Price Chart: Lower-High Resistance Potential

eurusd eur/usd hourly price chart

Chart prepared by James Stanley

Bearish USD/CHF on a Hold Below .9800

On the other side of the US Dollar we have USD/CHF, which has been in the midst of an aggressive bearish run over the past three weeks. USD/CHF weakness really began to show prominently in mid-August, right around the time that DXY began to reverse: But the primary difference is that while DXY has run into support and traded in a rather messy manner, the trend has remained strong in USD/CHF. This makes the pair rather attractive in scenarios of continued USD-weakness, and below, we look at a zone of interest for bearish continuation of this move. Resistance showing within the 30-pip zone that runs from .9724 up to .9754 opens the door for bearish strategies on the premise of lower-high resistance re-opening the door for bearish continuation.

USD/CHF Four-Hour Price Chart

usd/chf four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX