Trading Outlook for USD, Euro, Gold, S&P 500 & More
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The US Dollar Index (DXY) is trading in an area which could result in a meaningful pullback, but interest on this end isn’t so much in catching the short but rather looking for a hold on a drop back lower towards 92.50. With a decline from here a bottoming ‘head-and-shoulders’ could take shape, but of course we will need more time before that can become a reality with the formation of a ‘right shoulder’. But even if a clean pattern doesn’t present itself, given the long-term support zone and underside trend-line below bottoms since 2015, the bias is to look for an opportunity to go long USD at some point.
US Dollar Index (DXY):Daily
In reverse, EURUSD would be set-up to put in a topping pattern of the same variety as DXY. GBPUSD is trying to mount a recovery off of the August highs in the low 13200s, but it would be viewed as just that – a recovery before moving back lower. AUDUSD put in a key reversal bar yesterday at support, which shifts the focus back to the top-side for now. USDJPY is currently caught beneath the underside of a trend-line rising up from September and a downtrend line now as support extending lower from January. We’ll wait for further price action to unfold before drawing any concrete conclusions.
GBPJPY is in the process of carving out a potential descending wedge, which if triggered would act as a continuation pattern from its recent surge. We looked at a set-up in AUDJPY last week which is already outside of a similar formation. CADJPY is trading above the neckline of a long-term bottoming inverse H&S formation, and with the path of least resistance pointed higher we are still searching for a short-term set-up to operate off of.
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Gold still has a bearish sequence of lower lows and lower highs since topping back on September 8. Looking for a drop into the 1250/53 area where solid confluence of support lies. Silver has support down around the 16.07/13 area. Crude oil looks headed lower still after last week’s big rejection. Looking for an eventual move down to the trend-line off the June low which clocks in around 48.
The S&P 500 is trading at a top-side trend-line extending higher since June which has numerous inflection points. The thinking is we will at the least see a pause in the up-move to begin very soon. The DAX gapped to record highs today but is falling back. A correction in both the DAX & CAC could be a healthy development as their trends have become extended. The Nikkei is only a short distance away from the 2015 high near 21k, a break above would lead the highest levels seen in the Japanese index since 1996.
S&P 500: Daily
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.