We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • $USDZAR: A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. Get your $USDZAR technical analysis from @PaulRobinsonFX here:https://t.co/TNsQ4JJu6E https://t.co/I4yCjs2ja0
  • The US dollar continued to sell-off this week and the greenback’s future will be decided by commentary from the White House and not the Federal Reserve over the coming days and weeks. Get your #currencies market update from @nickcawley1 here: https://t.co/lpHneO3s2h https://t.co/bZ5klohLNd
  • #Gold prices have continued to push higher as expectations have built for global Central Banks to remain very loose and passive with monetary policy for the foreseeable future. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/h5tF3kAZfd https://t.co/VAYy9FGHcQ
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/YvoHlUsdVr
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/X15k6b4ZyB
  • The month of May saw equities rise across the board. The #Dow Jones and #DAX 30 will look to hold above nearby support while the #Nasdaq 100 may look to attack all-time highs. Get your #equities market update from @PeterHanksFX here: https://t.co/dQxkG68R0I https://t.co/cgfcOs14qG
  • There is a dramatic departure between yield curve pricing for a recession and other measures of near-term growth; the Q2’20 Atlanta Fed GDPNow is extremely alarming.Get your market update from @CVecchioFX here: https://t.co/eMd3T8EwDO https://t.co/56oUP6we9U
  • The #DAX has now closed the gap from the beginning of March with the index breaking above 61.8% fib at 11592. Get your DAX market update from @JMcQueenFX here: https://t.co/wr67nkxc8z https://t.co/CkxPZn1v3t
  • Emerging market currencies haven’t been treated equally by the effects of global contagion, even if most have suffered to some degree. However withdrawal of investment flows could hit them all. Get your market update from @DavidCottleFX here:https://t.co/QzNoNYgMgP https://t.co/9CV6iZt40j
  • My weekend trading video: 'S&P 500 Rises on Trump China Presser, #NFPs and Rate Decisions Ahead' https://www.dailyfx.com/forex/video/daily_news_report/2020/05/30/SP-500-Rises-on-Trump-China-Presser-NFPs-and-Rate-Decisions-Ahead.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/ZvoGoibzj1
US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

2016-05-09 16:45:00
Tyler Yell, CMT, Currency Strategist
Share:

Talking Points:

US Dollar Bears have a right to be worried, as a relatively weak-Non-Farm Payroll on Friday didn’t slow down the US Dollar bid. Last week, the US Dollar capped off its best week since early November. The Dollar downtrend has had a lot of fans including hedge funds who have sold the USD aggressively after the March & April FOMC meetings, but the recent rebound may cause institutional speculators to cover their short positions that could make the rebound more aggressive than many expect.

If US Dollar is taking cues from 2015, then US Dollar Bulls have many reasons to be encouraged. After a rough April, May started off and ended very strong, and that trend continued until January 29. The interesting disparity of the Fed & Market in 2016 shows that a strong snap –back higher should be watched for, especially after New York Fed President William Dudley told the New York Times after the rather disappointing Non-Farm Payroll that two rate hikes this year remain a “reasonable expectation.” Whether this comes true or not is hard to tell, but if it does, it will mark a potential double bottom off the May 15, 2015, price range.

We’ve Just Bounced Aggressively From the May 2015 Low-Day Price Range

US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

The above chart shows a little over a year’s worth of price data on the US Dollar Index. One of the valuable technical tricks I’ve picked up over the years was to keep an eye on the price range of an extreme day for a potential pivot in price. The bottom rectangle shows the price range for the May 2015 low, with a price low of 11,634. Looking to the far right of the chart, you’ll see that we came to that price range while within the corrective channel (red) and then aggressively move higher by ~2% or ~230 points on the index.

While the US Dollar remains hotly contested as to where it will end the year, with Hedge Funds still favoring lower, a retracement could favor a longer-term floor is being tested a move higher may be building steam. The chart below shows a Multi-Year Polarity Point where the Dollar has either stopped advancing or declining over the scope of many years. If a potential floor is in place, a move back toward the prior high could have May 2016 picking up where May 2015 left off.

Long-Term USDollar Chart Showing Multi-Year Polarity Point

US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

Shorter-Term US Dollar Chart Favors Focus on April Pivots of 11,953 & 11,907

US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

In the chart above, you’ll note that the top line of the short-term bearish (red) channel was recently broken. Today’s move was the first touch since the late-February high where the channel was originated. The upper channel line aligned with the 21-DMA around 11,847, and now that level has given way; attention turns to the lower-highs of April at 11,953 & 11,907.

As of mid-day Monday, the price high is 11,906. Recently, we spoke about the significance of an opening range breakout for the month of May. Now, the rally above the 21-DMA may be the first significant bull move as the price of the USDollar had failed to sustain itself above the 21-DMA since early March. The Friday/ NFP-day morning low of 11,807 aligned nicely with prior resistance and can now be looked to as short-term support in the current move alongside the 21-DMA at 11,830.

Below the NFP-low of 11,807, the current 2016 low on May 3 of 11,672 can be used as major support. Naturally, below both of these levels, the May 15 low of last year of 11,634 would take on significance. Lastly, you’ll note that we’ve been able to compile the Speculative Sentiment Index for the composite US Dollar. The SSI currently shows a percentage long decrease as the pair moves higher. Should we move into the net-negative territory, it would be helpful to remember that we use our SSI as a contrarian indicator to price action, and the fact that the majority of traders would be short gives a signal that the US DOLLAR may continue higher. This has yet to trigger, but it’s worth watching.

Shorter-Term US Dollar Technical Levels

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

US DOLLAR Technical Analysis: Was That a Double-Bottom in USD?

Interested In our Analyst’s Longer-Term Dollar Outlook? Please sign up for our free dollar guide here.

T.Y.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.