The US$ closed lower for the week but is still holding above a recent support trend line and has yet to break the upward pattern of higher Highs and higher Lows. This trudge-like behavior may plague price action until after next week’s Trump Inauguration though and so patience is required.
USDX monthly: there is a Bull Flag in play on the monthly chart but price is struggling to break free from the 100 level and so this remains the level to watch for any make or break in coming sessions. A hold above this level following the Trump Inauguration would support bullish continuation but any new move below 100 would suggest there could be further weakness ahead:
USDX daily: a recent support trend line is still intact. I’m also still waiting to see whether this upward pattern continues or if some reversal might evolve. The clues to look for with any reversal is a break of the trend line or for the print of a lower High or lower Low.
FX Index Alignment: the FX Indices are currently out of alignment with implications for trading best found through this link. However, the EURX is close to tipping into alignment for LONG EUR$ and any further US$ weakness could tip the USDX into alignment for SHORT US$ and, if these evolve, this would trigger a situation that I refer to as classic style ‘risk on‘.
USDX daily: above the daily Cloud for now so watch for any make or break here as the 4hr chart has price already below the Cloud:
USDX 4hr Cloud: below the 4hr Cloud:
EURX daily Cloud: price is in the daily Cloud for now but watch for any make or break at the top of this resistance zone as price on the 4hr is already above the Cloud:
EURX 4hr Cloud: already above the Cloud:
Summary: Watch for clues of any US$ continuation or for new weakness in the lead up to, and following, the Trump Inauguration. A close and hold above 104 would support bullish continuation. Support levels to watch though include:
- the recent support trend line on the daily chart.
- the daily chart’s Ichimoku Cloud.
- for the print of any new lower Highs or lower Lows.