Daily Forex Trend Report
-EURUSD range matures
-USDJPY trend nears potentially strong resistance
-USDCAD could break out soon
About the DFX Trend Index
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 -53, which indicates range / early downtrend. Considering that the EURUSD has declined from 1.60 since July and from 1.47 since December, it is unlikely that the EURUSD has just entered a downtrend. For now, trade the range between 1.27 and 1.29. A break above 1.30 would present a breakout opportunity to at least 1.33.
BRITISH POUND / US DOLLAR
The trend index is at 15, which indicates mean reversion. There is no directional bias.
Strategy: none
AUSTRALIAN DOLLAR / US DOLLAR
The trend index is at -43, which indicates range / early downtrend. The AUDUSD is similar to the EURUSD in that it is unlikely that the pair just entered a downtrend. With the pair in the center of the February range, there is little confidence in direction.
Strategy: none
NEW ZEALAND DOLLAR / US DOLLAR
The trend index is at -40, which indicates range / early downtrend. The NZDUSD is similar to the AUDUSD in that it is unlikely that the pair has just entered a downtrend.
Strategy: none
US DOLLAR / JAPANESE YEN
The trend index is at 98, which indicates strong uptrend / potential for a top. Conditions have been strong uptrend for 7 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, which indicates range / early uptrend. The pair could be preparing for a breakout from a triangle.
Strategy: long, against 1.2350, target above 1.30
US DOLLAR / SWISS FRANC
The trend index is at 20, which indicates that the pair has reversed to the mean. Following strong uptrend readings in early February, the USDCHF reversed and most 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 and additional weakness is expected.
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]
