In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key levels that matter heading into the yearly open. Review the Weekly Strategy Webinar for an in-depth breakdown of these setups and more.

DXY Weekly Chart

DXY Price Chart - Weekly Timeframe

Notes: The dollar index opens the year just above support at 91.93 with the 2017 low-week close just lower at 91.33- the immediate downside bias is at risk near-term while above this threshold with initial resistance eyed along the median-line (blue) around 93.10 backed by 93.89. This level is defined by the 2016 low-week reversal close and converges on the 200-week moving average into the close of the week.

Bottom line: Expect side-ways to higher price action while above 91.33 - ultimately we’ll be looking for a more sizeable recovery to offer better entries on the short-side targeting 89.62. Broader bearish invalidation for the downtrend stands at 95.90-96.00.

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GBP/USD Weekly Chart

GBP/USD Price Chart - Weekly Timeframe

Notes: We’ve been tracking this well-defined ascending pitchfork formation since last year and heading into the yearly open there are some levels to know. Interim resistance stands at the 2016 high-week reversal close at 1.3675 with bullish invalidation for the broader uptrend now raised to the 1.33-handle, where the December lows converge on basic slope support.

Bottom line: The immediate focus is on a break of the 1.33-1.3675 range with the topside bias vulnerable while below. A break lower would shift the focus lower towards 1.3036 and the 52-week moving average at 1.2950s- areas IF reached would be of interest for exhaustion / long-entries. In the event price breaks higher, look for subsequent topside objectives into the median-line near the 38.2% retracement at 1.3952.

It’s worth noting that seasonal tendencies are pretty bearish for Sterling heading into the yearly open with COT data (Commitment of Traders) showing a considerable build in long-exposure on large speculators- suggests bearish.

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AUD/USD Weekly Chart

AUD/USD Price Chart - Weekly Timeframe

Notes: Aussie’s reversal at key slope support was well-documented last year and heading into 2018 the broader focus does remain higher. That said, prices are now testing the long-term 200-week moving average and a weekly close above this threshold is needed to keep the immediate advance viable targeting the 2017 high-day close at 8059.

Bottom line: The immediate advance may be at risk here sub-7886/98 but the trade remains constructive while above 7630. Interim support eyed at 7749. From a trading standpoint, I’m looking lower into the monthly open but ultimately a larger set-back would offer favorable long-entries within this confines of this broader uptrend.

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Previous Weekly Technical Perspectives

- Written by Michael Boutros, Currency Strategist with DailyFX

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