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USD Price Action Setups as the Dollar Dithers Near Resistance

USD Price Action Setups as the Dollar Dithers Near Resistance

2018-10-09 19:08:00
James Stanley, Currency Strategist
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In this webinar, we looked at setups across macro markets using price action. While currencies have remained on the move so far in Q4, it’s the dynamics across equities that have really started to get attention. Selling remains prominent in Europe with the DAX approaching a big level of support from March, and this goes along with the rising pressure that has kept Italian bond yields on the move. The backdrop for today’s webinar is punctuated by a light week of economic data and a number of headline themes pushing prices. The scenario around Italy doesn’t look to soon quiet down, and Brexit negotiations remain a key driver of prices in GBP. In this webinar, we looked at a series of price action setups.

US Dollar Talking Points:

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US Dollar Softens from Fresh Seven-Week Highs

The US Dollar came barreling into this morning with a continuation of the same strength that’s driven the currency for much of the past two weeks. Prices perched up to a fresh seven-week-high before pulling back, and as we looked at this morning, a break below yesterday’s low exposes deeper support around prior levels of 95.53 and again around 95.00 (the same levels we looked at last week).

US Dollar Hourly Price Chart

us dollar usd hourly price chart

Chart prepared by James Stanley

EUR/USD Pulls Back into Resistance Potential

Much of that prior strength in the Dollar was emanating from a continuation of the Euro sell-off. We looked at the short-side of the pair coming into this week, and after prices posed a 50-pip run upon a support break, we’ve started to see a pullback. We outlined a zone of resistance potential earlier this morning, and prices are now testing this area. This runs from that prior swing-low up to the 1.1500 psychological level. A hold here keeps the door open for short-side continuation.

EUR/USD Hourly Price Chart

eurusd eur/usd hourly price chart

Chart prepared by James Stanley

GBP/USD Bulls Up to Fresh October High

On the polar opposite side of the US Dollar, we have a move of strength showing in the British Pound and GBP/USD is now trading at fresh October highs. The 1.3117 Fibonacci level has been big in the pair, and we’ve seen a bit of slowdown in the bullish move after prices ran up to fresh October highs earlier this morning. A continued bullish push opens the door for higher-low support around that 1.3117 price, and that support zone can be extended down to 1.3100.

GBP/USD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

EUR/JPY: Descending Triangle Within Longer-Term Bull Flag

We looked at two setups in EUR/JPY coming into this week. There’s a longer-term bull flag that remains intact; but there was also a shorter-term descending triangle formation that had built within the channel. The descending wedge filled-in fairly quickly, and prices have posed a break down to fresh three-week-lows. We’re now seeing a snap back with a bit of resistance showing around the 130.00 handle.

Given the frequency of revisits to resistance, we may see a deeper topside move before the longer-term bearish trend is ready to continue. The area around prior support could be of interest for deeper resistance. This runs from 130.58-130.77.

EUR/JPY Four-Hour Price Chart: Descending Triangle Break Inside of Bull Flag Formation

eurjpy eur/jpy four hour price chart

Chart prepared by James Stanley

DAX Bounce From Six Month Lows

We looked at bearish setups in the DAX coming into this week, and that filled in fairly quickly after the open. Today, however, has produced a pullback that might run a bit deeper. We looked at the area from 12,102-12,150 for lower-high resistance.

DAX Four-Hour Price Chart

DAX four hour price chart

Chart prepared by James Stanley

S&P 500 Trying to Set Higher-Low Support

We looked into this setup ahead of this week’s open, drawing attention to a support zone around the 2860 handle. Yesterday’s low printed just a bit above that price, but the bigger item of interest is higher-low support setting in the zone that runs from 2878-2883.

S&P 500 Four-Hour Price Chart

S&P 500 four hour price chart

Chart prepared by James Stanley

Dow Jones Attempts to Set Higher-Low Support

We looked at a similar strategy ahead of this week’s open in the Dow Jones Industrial Average, and the backdrop here has been a bit cleaner as the support zone we were following elicited the bounce, and the secondary support zone is now helping to hold higher-low support. This keeps the door open for bullish plays in the Dow.

Dow Jones Hourly Price Chart

Dow Jones 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

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

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