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US Dollar Price Action Setups: Playing Pullbacks, Bulls Continue to Run

US Dollar Price Action Setups: Playing Pullbacks, Bulls Continue to Run

2018-08-16 19:13:00
James Stanley, Currency Strategist
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In this webinar we used price action to look at FX markets as centered around the US Dollar and major currency pairs. We’d previously looked at the US Dollar testing higher-low support earlier this morning, and a strong bullish response began to show in the Greenback just ahead of our webinar start. In this session, we looked at the prospect of continuation in this bullish theme, drawing setups across various currency pairs to work with. We also took a look at price action in Gold, WTI Oil and the Dow and S&P 500 for US equity bourses.

Talking Points:

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- 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.

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US Dollar Finds Support at Prior Resistance as Bulls Push Ahead

We looked at the US Dollar interacting with a key resistance level on Tuesday, as prices had started to resist when encountering the 96.47 Fibonacci level. This is the 23.6% retracement of the 2011-2017 major move, and this is taken from the same study from which the 50% marker helped to form the three-year low in DXY in mid-February.

US Dollar Four-Hour Price Chart: Support at Prior Fibonacci Resistance

us dollar usd four hour price chart

Chart prepared by James Stanley

We discussed this theme again this morning in our article entitled, US Dollar Strength Pulls Back, EUR/USD Bounces From Yearly Lows. At the time, DXY was continuing to dig in to 96.47, and we shared a bullish short-term view that remains active as prices remain above 96.15.

On a longer-term basis, the area around 98.00 is the next (and final) target from our Q3 Technical Forecast on the US Dollar, and a bullish move up to this level could be made more attractive by a pullback in DXY to the prior zone of resistance from 95.00-95.53.

US Dollar Daily Price Chart: Target at Confluent 98.00, Support Potential 95.00-95.53

us dollar daily price chart usd

Chart prepared by James Stanley

EUR/USD Bullish Before Bearish Continuation

We looked at EUR/USD bouncing from the 1.1300 level after a quick test yesterday morning. This happened after prices failed to move up to the resistance level that I was looking for in bearish setups, starting around the 1.1448 level.

EUR/USD Hourly Price Chart: Bulls Trying to Make a Short-Term Move

eurusd eur/usd hourly price chart

Chart prepared by James Stanley

But – we looked at shorter-term price action to denote the potential for a continued topside move up to one of those levels, which could soon re-open the door for bearish continuation in the pair.

EUR/USD Four-Hour Price Chart: Deeper Retracement Potential for Bearish Continuation

eurusd eur/usd four hour price chart

Chart prepared by James Stanley

GBP/USD Hits 23.6% Fibonacci Support

Another longer-term level has come into play in Cable. We’d previously looked at short-side setups on Monday, and with bears remaining in control, prices have continued to be offered-lower. This has brought a bit of support off of the 23.6% retracement of the ‘Brexit move’ in the pair, and this is something that could constrain bearish continuation potential in the near-term.

GBP/USD Daily Price Chart: Support from 23.6% Retracement of the ‘Brexit Move’

gbpusd gbp/usd daily price chart

Chart prepared by James Stanley

AUD/USD Hits Long-Term Confluent Support at .7200

Aussie has continued to run-lower and prices have run into a key zone of support around the .7200 handle. There are two long-term Fibonacci levels there, as the 61.8% retracement of the 2001-2011 major move is at .7185 while the 76.4% retracement of the 2008-2011 major move is at .7205.

AUD/USD Weekly Price Chart

audusd aud/usd weekly price chart

Chart prepared by James Stanley

This zone had helped to turn-around two rather vigorous bearish advances in 2016, and this can be used to base in to short-term bullish positions up to the bearish trend-line that’s built in the pair over 2018 price action.

AUD/USD Daily Price Chart: Can Support Bring on Another Trend-Line Test of Resistance?

audusd aud/usd daily price chart

Chart prepared by James Stanley

USD/JPY Still Trying to Pick a Direction

USD/JPY continued to seek-out direction on longer-term charts after the bullish extension from July started to come into question into August. The door wouldn’t quite yet be open for short-side plays, but that could be soon nearing. We looked at the 111.50 level again, and if bulls are able to test-above, this could re-open the door for longs. But, until that happens, there are plenty of reasons to be dubious around Yen-weakness showing in a matter similar to what we had become used to.

USD/JPY Four-Hour Price Chart: Long-Term Signals, Short-Term Mess – 111.50 Re-Opens for Longs

Please add a description for the image.

Chart prepared by James Stanley

EUR/JPY For Bearish Euro Plays

We looked at focusing bearish Euro plays against the Japanese Yen as opposed to the US Dollar, and a big zone of potential resistance lurks above current prices, around the approximate zone from 127.24 up to 127.50. If prices break above this zone, the same potential exists around the prior support area of 128.52 that we had looked at last week for bearish breakout plays in the pair.

EUR/JPY Daily Price Chart

eur/jpy eurjpy daily price chart

Chart prepared by James Stanley

US Stocks Continue to Rally

We had looked into the Dow Jones Industrial Average again earlier this morning, and this happens after a rather robust response from a support level that we were looking at on Tuesday. At this stage, the door remains open to bullish strategies in the Dow Jones, and we looked at how that theme could still be worked with even in this late stage of the trend.

Dow Jones Four-Hour Price Chart: A Vigorous Bounce from 25k Support

Dow Jones DJIA DIA YM Four-Hour 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

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

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