-EURUSD in center of choppy downtrend, no bias at this point
-GBPUSD making way towards bottom of 1.35-1.50 range?
-AUDUSD range compressed, watch for a break
-NZDUSD tests trendline resistance
-USDJPY outside day reversal
-USDCAD...waiting for the breakout
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 50 (uptrend) and red if the index is below -50 (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.
50 to 100: uptrend / potential for a top increases the closer the index is to 100
25 to 50: in a range / bullish potential
-25 to 25: price has reversed to the mean
-50 to -25: in a range / bearish potential
-100 to -50: downtrend / potential for a top increases the closer the index is to -100
EURO / US DOLLAR
The trend index is at -43, which indicates range / early downtrend. The wave structure is at odds with classifying current conditions as an early downtrend. The pair is in the middle of a choppy downward sloping channel. This is no way of properly controlling risk at the current juncture.
Strategy: none
BRITISH POUND / US DOLLAR
The trend index is at -54, which indicates downtrend. 1.35-1.50 defines the range at this point. Cable may continue to make its way towards the lower end of the range. Staying below 1.4232 keeps the short term trend down.
Strategy: short, against 1.4240, target 1.3850
AUSTRALIAN DOLLAR / US DOLLAR
The trend index is at -15, which indicates mean reversion. It is best to wait for a break from the compressed range before taking sides.
Strategy: none
NEW ZEALAND DOLLAR / US DOLLAR
The trend index is at -20, which indicates mean reversion. Kiwi is testing trendline resistance , a break through would present a long opportunity.
Strategy: none
US DOLLAR / JAPANESE YEN
The trend index is at 98, which indicates uptrend. The index has been above 90 for 12 days. Today’s outside day reversal should be respected. Let’s wait for consolidation before going short.
Strategy: none
US DOLLAR / CANADIAN DOLLAR
The trend index is at 79. The pair could be preparing for a breakout above 1.30 from a triangle. Stay long.
Strategy: long, against 1.2350, target 1.40
US DOLLAR / SWISS FRANC
The trend index is at 19, which indicates mean reversion. 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). A break below a short term support line near 1.16 would immediately expose 1.13.
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].
