Motion creates emotion, and VIX, Treasury Yields and Equities have all started to really get into motion of late. But – does this spell doom and gloom? And how might a currency trader look to respond?
- If you’re looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.
- If you’re looking for a primer on the FX market, we can help. To get a ground-up explanation behind the Forex market, please click here to access our New to FX Trading Guide.
To receive James Stanley’s Analysis directly via email, please sign up here.
The biggest event around markets right now is the recent pullbacks that have been seen in equity markets, with the S&P taking a punch in the past couple of trading days. That sell-off took a step back today as a bit of support began to show in American equity indices, but it’s still far too early to call this ‘game over’ on the sell-off. Instead, we looked at ways to position around the Dollar across a series of major currency pairs.
USD Failed Breakout at 90.00
- The US Dollar attempted to pose a bullish breakout this morning but was soundly re-buffed off of the psychological level of 90.00 on DXY. That resistance hit helped to soften price action, but as we looked at on the hourly chart, a bit of short-term support was showing around prior resistance, which leaves the door open for bullish strategies, depending on the counter currency; while weakness is still favored against currencies such as the Swiss Franc or perhaps even Canadian Dollar.
EUR/USD with Deeper Retracement Potential
- Earlier this morning we remarked about support in EUR/USD and how it appeared to be ‘hanging by a thread’. That support, so far, has held, and prices moved back up to 1.2400. But with sellers re-emerging, we now have the prospect of lower-highs, which keeps the door open for bearish continuation in short-term strategies. For longer-term strategies, there are a series of support levels around 1.2280, 1.2213 and 1.2167 that could offer bullish potential should support actually show up there.
GBP/USD Looks Rough Ahead of Super Thursday
We talked about the technical setup here yesterday, looking to buy support off of the Fibonacci level at 1.3837. So far, that has worked beautifully as prices popped-up by 140 pips after that support came into play. But – sellers weren’t done yet, as a bit of lower-high resistance began to show below the prior swing around 1.4000. This keeps the door open for short-side strategies as we approach Super Thursday.
AUD/USD for USD-Strength Scenarios
A few weeks ago we started to look at the short side of the Aussie, right around the time the pair put up a fresh high. Since then, strength has begun to dissipate and short-term AUD/USD charts look downright nasty. We looked at a potential area of resistance around .7930-.7950 that could be usable for bearish continuation strategies.
USD/CHF for USD-Weakness Scenarios
On the polar end of the Dollar-spectrum we have USD/CHF. This looks attractive for short-side USD setups, as the trend that’s developed here has been very smooth; even more so than what’s shown up in EUR/USD. We looked at a resistance zone in yesterday’s technical article on the pair, and we looked at it again during the webinar with prices tip-toeing closer to that zone.
NZD/USD Ahead of RBNZ
Later this afternoon (morning in New Zealand, Asia) we get an RBNZ rate decision. The pair is devoid of any attractive technical indications at the moment, but the prices of .7335 is very attractive for short-side setups should resistance actually show up there.
USD/CAD Working on a Lower-High
Another area for continuation in USD-weakness is USD/CAD. A couple of extremely clean trends showed up here last year, with the bearish side of the move being the most attractive. We looked at a Fibonacci level that appears to be helping to set a lower-high, and this could be workable on the short-side of the setup.
Gold Head and Shoulders Pattern
We wrote about the head and shoulders formation that’s showed up in Gold prices in yesterday’s technical article entitled, Gold Prices Put in Head and Shoulders Pattern After NFP Sell-Off. That setup still remains as the neckline has yet to be taken-out, at least as of the time of this writing.
--- Written by James Stanley, Strategist for DailyFX.com
To receive James Stanley’s analysis directly via email, please SIGN UP HERE
Contact and follow James on Twitter: @JStanleyFX