The US$ has continued its march higher and looks to have 100 back in its sights. There is some technical resistance coming shortly from the top of the weekly Cloud but, it it clears that, then 100 looks to be the next stop. Next week’s FOMC will be a closely watched event to see how it impacts US$ price action.
NB: this is a brief write up today as we’re off to watch the AFL Swans v Carlton. Celebration with friends into tomorrow means that my other w/e post won’t appear until Monday.
USDX monthly: The July candle is now printing a bullish candle and this is helping to shape up a monthly chart Bull Flag which, if it evolves, might target the 120 region. This has been calculated as follows: the height of the Flag pole of the Bull Flag is about 20 units (100 – 80 = 20). Extrapolating up 20 from the top of the Bull Flag, as per Bull Flag breakout technical theory, puts price up in the vicinity of the 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 back above 100 might be expected to target this region.
USDX weekly Cloud: price action closed higher for the week but is still in the weekly Cloud for now. It is trading above the 4hr and daily Cloud. Watch to see if next week’s FOMC helps this to make or break this region:
USDX daily: on the march up to test the key 100 level?
EURX weekly: closed lower for the week but is still above the weekly Cloud. The index is still above the daily Cloud but below the 4hr Cloud:
Summary: watch to see how next week’s FOMC impacts price action on the US$ index. Traders need to remember that there is policy divergence between Europe and the US with the Eurozone trading within a monetary easing cycle and the US trying to emerge from one and recent price action indicates that this fact seems to be back in focus at the moment.
NB: I’m being more careful with any of my TC signals for now given the FX indices are trading with divergence.
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