US$ cracks the 100…now it’s gotta hold!

The US$ has printed a weekly candle close above the key 100 level. Now it will have to prove it can hold this level but, if it can, then the 120 region looks to be the next major stop. However, any failure to hold this level would support a bearish-reversal ‘Double Top’. 

USDX monthly: the monthly candle does not close until after next Monday but any monthly close, and then hold, above 100 would suggest a move up to the region of 120. This is previous S/R and the target for the Bull Flag that is calculated as follows: The height of the Flag pole from the Bull Flag is about 20 units (100 – 80 = 20). Extrapolating up 20 from the Bull Flag, as per Bull Flag breakout technical theory, puts price up in the vicinity of the 117 ~ 120 area. This happens to be a key region for two reasons: Firstly, this is the 50% fib of the 1985-2008 major swing low move and, secondly, this is a previous S/R region with price action reacting here for over a two year period from mid-2000 to mid-2002. Thus, any break and hold above 100 could be expected to target this region for these multiple of reasons.


USDX weekly: there has been a bullish weekly candle close above the key, psychological 100 level. A hold above this level would be bullish but any failure here would support a bearish ‘Double Top’. The pressure is certainly on the US$ to prove itself above this level:


USDX 4hr: onward and upwards:


EURX weekly: this index remains on a Bear Flag breakout. It has printed a bearish coloured ‘Spinning Top/Doji’ candle though but this suggests some indecision ahead of next week’s ECB meeting. The 94 level is the one to watch in coming sessions to see if this can provide any ‘Double Bottom’ support.


Summary: Next week is a huge week for data with releases including Chinese PMIs, the ECB meeting, NFP and quite a few speeches. It is widely expected that the ECB will announce further easing at its final meeting for the year. If so, this would be expected to help support the current price divergence evident between the EUR$ and US$.

The USDX and EURX remains aligned on their Ichimoku charts for long US$ and SHORT EUR$. Both, also, continue to hold out from Flag breakouts on their weekly charts. The USDX has now broken up through another key resistance level but the EURX has yet to break down through its next main support level at 94. This support will be watched next week to see if it can withstand this batch of high impact data. Any break and hold below 94 may launch these two indices on a revitalised path of divergence.  

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