-EURUSD strong rally from range low favors additional strength...support at 1.2550-1.2600
-AUDUSD and NZDUSD support at .64 and .50
-USDJPY may reverse at 100.50-101
The DFX Trend Index ranges from -100 to +100 and is updated everyday at 5 pm eastern US time. On the charts, bars are painted blue if the index is above 75 (strong uptrend) and red if the index is below -75 (strong downtrend). Readings between -25 and +25 result in a green bar to indicate that price has reversed to the mean. The spreadsheet shows the index values for the last 15 days.
75 to 100: strong uptrend / potential for a top
25 to 75: in a range / early uptrend
-25 to 25: price has reversed to the mean
-75 to -50: in a range / early downtrend
-100 to -75: strong downtrend / potential for a bottom
EURO / US DOLLAR
The trend index is at -50, which indicates range / early downtrend. The wave structure is at odds with classifying current conditions as an early downtrend. Today’s rally may be the beginning of a larger turn.
Strategy: none
BRITISH POUND / US DOLLAR
The trend index is at -47, which indicates range / early downtrend. 1.35-1.50 defines the range at this point. The GBPUSD is closer to the bottom than the top of the range, but conditions do not warrant a long position against the bottom of the range…yet.
Strategy: none
AUSTRALIAN DOLLAR / US DOLLAR
The trend index is at -6, which indicates mean reversion. Yesterday, the index flipped to positive for the first time since December 15th. Today’s strong rally will probably be followed by some consolidation, then there will be an opportuinity to buy.
Strategy: none
NEW ZEALAND DOLLAR / US DOLLAR
The trend index is at -19, which indicates mean reversion. Expect some consolidation prior to additional strength.
Strategy: exit short (entry was .4975)
US DOLLAR / JAPANESE YEN
The trend index is at 99, which indicates strong uptrend / potential for a top. Conditions have been strong uptrend for 11 days now, so beware of a reversal. 100-101 is a resistance zone.
Strategy: none
US DOLLAR / CANADIAN DOLLAR
The trend index is at 73. Due to the trend index no longer indicating ‘strong uptrend’, it is wise to cut down position size. The pair could be preparing for a breakout above 1.30 from a triangle.
Strategy: long, against 1.2350, target 1.40
US DOLLAR / SWISS FRANC
The trend index is at 37, which indicates early uptrend. Following strong uptrend readings in early February, the USDCHF reversed and recent readings have indicated mean reversion. Notice that there were not strong uptrend readings at the top of the recent range. This indicates a weak market (divergence).
Strategy: short, against 1.19, target 1.0950
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
Please send comments about this report to [email protected].
