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The congestion continues to show across FX pairs as both the US Dollar and EUR/USD have been lacking for trends of recent. This has kept many major pairs in some element of indecision and, at this point, traders would need to choose one of two possible routes for adaptation. Either work with shorter-term themes and a larger number of ranges; or wait for trends to begin to show at which point they can pounce. In this webinar, we looked at a series of price action setups around the US Dollar, and we looked into the Dow Jones Industrial Average near the end of the webinar, as us stocks are one of the few areas where trends have been present.

Talking Points:

- 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.

If you’d like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

US Dollar Retains Slight Upward Bias But Lacks Bullish Momentum

We saw another support test in the US Dollar yesterday shortly after the weekly open, and prices promptly bounced after an approach towards 94.20, which is the 38.2% retracement of the 2017-2018 down-trend in the pair. But, that strength could not hold and the rally was soon quelled when prices reversed shy of the 95.00 level on DXY. That area of 95.00 has provided somewhat of a stumbling block to the Dollar’s upward advance, as we’ve now seen at least eight (depending on the time frame evaluated) separate attempts to break-through, each of which have failed at this point.

Another visit to combined with a show of support at 94.20-94.30 can open the door to short-term bullish positions. If this zone doesn’t hold, look for support on the trend-line projection produced from the June and July swing-lows, currently projecting to the approximate area around 94.08.

US Dollar via ‘DXY’ Four-Hour Price Chart

us dollar four hour price chart usd

Chart prepared by James Stanley

EUR/USD Deeper into Symmetrical Wedge Ahead of ECB

It appears that quite a few folks are expecting Draghi to push the Euro lower later this week at the ECB’s Thursday rate decision. And while we’ve seen a proclivity for the head of the ECB to talk the Euro lower in the past, the big question is how much he may be able to do so here. The bar for rate hikes out of the ECB is already set extremely low, perhaps too low, and the economic backdrop for the Euro-Zone doesn’t look all that bad considering continued strength in PMIs along with inflation that’s getting very close to the bank’s 2% goal.

Nonetheless, prices are digesting right now as shown by the symmetrical wedge that’s built in the pair over the past couple of months. This can keep directional approaches at bay, at least for now, until we get some element of break out of this impasse.

EUR/USD Daily Price Chart

eurusd eur/usd daily price chart

Chart prepared by James Stanley

GBP/USD Longer-Term Bearish but Short-Term Bullish Potential

We had looked into this one yesterday in the technical article entitled, GBP/USD: Cable Correction Continues After Bounce from 1.3000. We looked at the prospect of a short-term zone of prior resistance being re-utilized as support, and this area helped to push prices up towards another area of prior resistance, around 1.3050. This can keep the door open to bullish short-term strategies, particularly if we see a re-test of support around the 1.3117 level. This can be coupled with targets up to 1.3200, at which point the longer-term bearish trend can start to become attractive again.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USD/JPY: Overreaction or Start of Something New?

We had previously looked at the topside of USD/JPY just before prices broke out, and that bullish theme ran with very little pullback. But once prices did start to pullback last Thursday, right around the time those comments from President Trump were circulating, and that pullback hasn’t yet stopped. Coming into this week I tried to catch a bullish entry at a key zone that runs from 111.30-111.50, but was unable to get a fill as prices tested below support on Monday. But since then – we’ve seen buyers come back to offer support around a prior trend-line projection, and that has been followed by a higher-low. A topside push above 111.55 re-opens the door for shorter-term bullish strategies in the pair.

USD/JPY Daily Price Chart

usd/jpy usdjpy daily price chart

Chart prepared by James Stanley

USD/CHF Building Ascending Triangle Like Formation

Resistance above parity is somewhat of an imposing theme in USD/CHF, as there’s been a strong proclivity of traders to push the pair lower on tests above 1.0000. But, as we looked at, bulls have been getting increasingly anticipatory of a topside push as shown by the series of higher-lows that have shown up, and this may eventually open the door for a push above the horizontal resistance that’s constrained the pairs move thus far. The challenge with breakouts in USD/CHF is one of targets, as there have been a number of reversals once prices have traded over parity in the past, and this may not be an area where a trader wants to get ‘caught long’ should another parity-plus reversal show up.

USD/CHF Daily Price Chart

usd/chf usdchf daily price chart

Chart prepared by James Stanley

Dow Jones Bullish Breakout – Fibonacci Support Potential

One area that has been showing trends so far in Q3 has been US stocks. The Dow Jones Industrial Average set another fresh monthly high earlier today before starting to pullback, and this exposes another Fibonacci level for potential higher-low support. We’d previously looked at using the 23.6% retracement for such a purpose, and at this point we can start to look for higher-low suppport from the 14.4% retracement around 25,108.

Dow Jones Hourly Price Chart

dow jones industrial average hourly price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX