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Trading the Majors - Price Action Setups (Oct. 17, 2017)

Trading the Majors - Price Action Setups (Oct. 17, 2017)

James Stanley,

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- In this webinar we looked at major FX markets as the U.S. Dollar has showed a steady stream of strength after initially showing weakness after last week’s CPI report.

- We started off by looking at the British Pound, which is in an interesting spot as short-term price action is bearish; but long-term price action may have bullish connotations given that we’re currently trading within a large zone of bigger-picture support. At the time of the webinar, we were seeing short-term resistance at the top-side of the zone around 1.3187. If support does show before the bottom of the zone is reached, the longer-term bullish stance will look considerably more attractive as we approach a rate decision in which the BoE may actually hike rates (on November 2nd).

- We then looked at the U.S. Dollar, which has been fairly bullish since the aftermath of last Friday’s CPI report. Inflation came-in above the Fed’s 2% target, and this has firmed rate hike bets with eyes towards the FOMC rate decision scheduled for December. The big question here is what happens at resistance of 94.08-94.30 in DXY? Is this recent driver of strength enough to take out that resistance, thereby leading to fresh three month highs? If not, short-side continuation remains in order.

- We then looked at EUR/USD, which has started to test the long-term zone of confluent support that we’ve been following. Near-term price action is bearish, and traders looking to impose a bullish stance will likely want to wait for some element of confirmation. This can be seen with higher-highs and lows on the hourly chart. If we don’t see that, then short-side continuation appears to be in order for shorter-term perspectives, with eyes on the bottom side of the zone at 1.1685. The big question is whether sellers can take out the higher-low that printed as the September swing-low.

- We then looked at Aussie. AUD/USD continues to hold some bearish qualities, particularly for those looking at long-USD continuation strategies. The zone that runs from .7929-.7950 could be accommodative for stops on short-side positions, with eyes on .7750 for an initial target/break-even stop move.

- We also looked at the short-side of USD/CHF. Swissy is currently testing multi-month highs after budging above an area of prior resistance at .9770. If sellers respond ahead of the multi-month high at .9738, the door is opened for short-side exposure under the expectation that the Swissy range will continue.

- USD/CAD continues to trade within a bullish channel, albeit a bit less enthusiastically from what we saw last week. The big level here appears to be at 1.2660, which was the September swing-high that was set just before the swoon seen in USD/CAD as the BoC hiked rates. A break above this level opens the door for bullish continuation in the pair, while prices breaking back-below 1.2500 opens the door for the short-side of the pair.

--- Written by James Stanley, Strategist for

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