Technical Outlook for US Dollar, Cross-rates, Gold & More

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The US Dollar Index (DXY) continues to solidify and develop what could be a powerful bottoming pattern (inverse head-and-shoulders). On that, the euro, which is a large portion of the index’s weighting, is putting in a top of the same type. The patterns have yet to trigger, but the right shoulders could very well be in place with 11880 as the recent swing-high in EURUSD. (For more, see trade set-up details here.) GBPUSD has backed off in recent sessions, but leaves something to be desired from a trading perspective. USDJPY is showing for the first time this year that following a sizable rally it doesn’t want to turn and burn. This change in character with a hold of support in the 11100s appears likely to lead to higher prices. If USDCHF can make a move into the mid-9800s it will be clearing several hurdles by way of trend-line, horizontal resistance, and the 200-day MA. This will bode well for an extended move higher.

US Dollar Index:Daily

In the cross-rate realm, GBPAUD could be building a descending wedge after another failure to cross above the 17100s, and if the pattern matures it could lead to a nice breakdown below support in the 16780s.

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GBPAUD: Daily

Yen-crosses are generally a mystery on this end with the exception of CADJPY. Not long ago we examined the large bottoming formation it triggered a few weeks ago on a weekly closing basis and said our focus would turn towards finding a shorter-term set-up on the daily chart. Following a rejection of the neckline of a broad inverse H&S pattern the other day it could be on the verge of breaking out of a bull-flag under development for the past month.

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Gold is coming off with vigor after a head-fake above 1300. Looking for it to drop towards a confluence of support near 1260. Silver to follow suit, with support coming in the low-16s (See today’s post for more details.)

Equity indices remain strong and without indications yet of wanting to give up their bullish ways. We won’t look for the script to flip until we see a strong reaction lower suggesting a pullback, at the least, wants to set in. We took a look at the DAX, CAC 40, FTSE, and S&P 500.

For full technical considerations, please see the video above…

---Written by Paul Robinson, Market Analyst

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