Today, we started out by looking at what appears to be the dollar nearing the end of a corrective up-move, with focus on USD/CHF trading lower soon. Yen-crosses could be in for another wave of selling, GBP/JPY has an appealing set-up. Also examined rising volatility in key indices such as the DAX & S&P 500.
Technical Highlights:
- Dollar could soon end corrective price action, trade lower (USD/CHF on radar)
- Yen-crosses at further risk to the downside (GBP/JPY bear-flag)
- Global indices getting beat up, focus is on DAX and S&P 500
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Dollar could soon end corrective price action, trade lower (USD/CHF on radar)
The US dollar has been chopping its way sideways in what appears to be an overall corrective move of the leg lower which ended last month. The climb in USD/CHF has formed one of the cleaner looking corrective patterns in the USD-spectrum.
A clean break of the lower-side trend-line is deemed as the initiator for a leg lower to commence, with the area around 9100 targeted. For more details on this, check out this morning’s USD/CHF short trade idea.
USD/CHF Daily Chart
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Yen-crosses at further risk to the downside (GBP/JPY bear-flag)
The Yen rally continues to further itself along against most currencies as ‘risk-off’ grips equity markets. Most of the pairs have been trading lower, with GBP/JPY as a holdout due to a strong sterling. However, recent price action suggests that could rollover in-line with the others.
A bear-flag is emerging, but has yet to trigger. Should it trade below the lower trend-line, look for GBP/JPY to drop towards the April 2017 trend-line down near 14600, but if selling gets aggressive a broader decline to sub-14000 looks to be in the cards.
GBP/JPY Daily Chart
In FX, we also checked in on USD/JPY, GBP/USD, EUR/USD, NZD/USD, AUD/USD, USD/CAD, AUD/JPY, EUR/JPY, CAD/JPY, EUR/CAD, and AUD/NZD…
Global indices getting beat up, focus is on DAX and S&P 500
Global equities are in ‘risk-off’ mode, with sharp declines taking shape across the board. The DAX is currently bouncing off the monthly low, but look for that to be undercut with more risk aversion. The lower-side of the bearish channel dating back to February is targeted (~11650).
DAX Daily Chart (Working towards lower-end of bearish channel)
The S&P 500 is quickly approaching a very important juncture. The February 2016 trend-line and 200-day MA are in confluence with one another and viewed as extremely important support. Watch how price action behaves around this threshold should the market trade down there. The S&P may initially hold it on a test, but should it fail look for another big leg lower.
S&P 500 Daily Chart (Watch trend-line, 200-day MA)
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---Written by Paul Robinson, Market Analyst
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