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Foreign Currency, Discussion
early birds
post Posted: Today, 08:43 AM
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US Dollar volatility should lighten ahead of FOMC

If one is only a US Dollar pairs trader, make sure to not “force a trade” ahead of the FOMC meeting. [ lmaosmiley.gif i reckon any forced trades should be avoid ]

The US Dollar had a good deal of volatility earlier in the session, with the DXY opening near 90.39 and moving to a high of 90.61, only to reverse sharply to a current low of 90.11. Stocks opened the day and pushed higher, which resulted in the move lower in DXY (stocks and the US Dollar are inversely related). However, tomorrow is the first FOMC meeting of 2021. DXY volatility should begin to slow ahead of the meeting as traders square up positions and reduce exposure before the potential volatile event.

DXY

Day in and day out, traders look for standout volatility in currency pairs for which they can profit. Since January 11th, there has been some good intra-day volatility, although it has been hard to find US Dollar pairs to hold onto for long. Since breaking out of a descending wedge on a 240-minute timeframe on January 7th, the index has been moving in a sideways channel between 90.00 and 90.75, with a false breakout to either side. Heading into the FOMC, one should consider that we will maintain this range.


GBP/USD

Yesterday, we considered the volatility in stocks, and if it could cause a move higher in the US Dollar. Included in the article, we looked at GBP/USD. The pair sold off early in today’s session (blowing off good employment data), only to reverse and move from a low of 1.3609 to a high of 1.3744, a 135-pip move! If the US Dollar volatility is to quiet down, strong resistance and divergence between price and the RSI could cause the pair to drift lower towards intraday support at 1.3675 ahead of the FOMC meeting.

NZD/USD

On a 240-minute timeframe, NZD/USD appears to be trying to break out of a continuation inverse head and shoulders. Price spiked higher just above resistance to 0.7747, only to pull back. However, if the US Dollar volatility is to die down ahead of the FOMC tomorrow, NZD/USD should begin to drift lower towards support at 0.7200.

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early birds
post Posted: Jan 21 2021, 08:06 AM
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The Pound is at important levels vs several currencies, and GBP pairs need to be watched closely

Inflation data released earlier was stronger than expected, as the headline inflation rate was 0.3% vs 0.2% expected (MoM). In addition, the core inflation rate moved to 0.3% vs 0.1% expected (MoM). The result was a move higher in the GBP/USD into strong resistance near 1.3700. However, price pulled back throughout the US session, and late in the day, the UK released their daily coronavirus deaths: 1,820. This is a new daily high since the pandemic began. UK Prime Minister Boris Johnson said the number was “appalling” and “there will be more to come.” Does this mean more stimulus? If so, will GBP move lower? The Pound is at important levels vs several currencies, and GBP pairs need to be watched closely.

GBP/USD

GBP/USD has been in an upward sloping channel since putting in a low of 1.2675 on September 23rd as Brexit deal was priced into the market. The pair reached a post-Brexit high of 1.3703 on January 4th. That level has been tested 4 times since then, including today, and has failed to push higher each time. Today, GBP/USD put in marginal new highs to 1.3719, and quickly reversed, creating a shooting star candlestick formation, which indicates the pair may be ready for a reversal.

On a 240-minute timeframe, a megaphone formation has emerged, indicating the possibility for some volatility. Buyers will be looking at the shorter-term upward sloping trendline near 1.3550 to add to longs. If price breaks from there, the 1.3450 horizontal support will be key, as it is also near the bottom trendline of the upward sloping channel.

GBP/JPY
Much of the same can be said for GBP/JPY, which on a daily timeframe is approaching a downward sloping trendline (red) from early 2018 near 1.4350. However, just ahead of that is horizontal resistance at 142.70. Buyers will be looking for dips to the upward sloping trendline near 138.00 to add to longs, hoping price will test the long term trendline

GBP/NZD

GBP/NZD has been moving lower since the pandemic highs on March 6th, however the pair has been moving in a sideways channel since early December. GBP/NZD is approaching the horizontal resistance of the recent channel, just below 1.9200. Today, GBP/NZD spiked through that level and reversed, forming a bearish engulfing pattern. The high also corresponds with the downward sloping trendline (red) from the March 6th highs. Bears are in control now, looking for a move to the bottom trendline near 1.8528. while bulls will be looking for a move back to that level to reload long positions.

EUR/GBP

EUR/GBP has already broke lower out of its longer-term symmetrical triangle on the daily timeframe. However, today, it spiked lower through horizontal support at 0.8865 before bouncing back above it. This level appears to be the line in the sand for EUR/GBP traders. A break below today’s lows of 0.8837 could Pave the way to horizontal support from April 30th, near 0.8670. However, GBP buyers will be looking for a bounce in the pair to the symmetrical triangle trendline near 0.8918 to add to short EUR/GBP positions.

Although the inflation data today from the UK was better than expected, increasing daily deaths from the coronavirus and its variants could lead to longer lockdowns, and therefore, more stimulus. This, in turn, would theoretically push GBP lower. As several GBP pairs are at or near key decision making levels, that time me be soon!

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I'm not in focus on GBP but just thought some of you guys might interested other " pro" 's idea. just some second or third opinion . tongue.gif

DYOR as always!!































2


 
early birds
post Posted: Jan 20 2021, 08:32 AM
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US Dollar
With today’s decline, last week’s breakout attempt looks like a bull trap. What would change this? If the Dollar now logs another higher low.

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Janet Yellen’s dovishness can’t push the US Dollar lower:



Tomorrow Joe Biden will be inaugurated as President of the United States. However today, former Fed chairman Janet Yellen had her Senate Confirmation hearing to become Treasury Secretary for the Biden administration. During her tenure at as Fed chairman, from 2014 to 2018, Janet Yellen was seen as “more dovish”. Listening to her testimony today, she still is singing the same tune. And, she seems fully onboard with Biden’s $1.9 trillion economic stimulus package presented last week. With more fiscal stimulus, Janet Yellen is hoping to keep the value of the US Dollar low. She has indicated that now is the time to provide relief, not raise taxes. In addition, although she is no longer Fed Chairman, she said “low interest rates are likely for a long time” . Therefore, she seems to be inferring that the Treasury, and assumingly the Federal Reserve, will be in full stimulus mode. Will the US Dollar head lower in the short term or is the stimulus/easy money already priced into the value of the US Dollar?

DXY

We have been discussing the US Dollar Index a great deal since the beginning of 2021, as it has been near key support levels and driving the level of USD pairs. With all the dovish language during Yellen’s testimony, the S&P 500 rose from 3772.25 to as high as 3795.25, however, the DXY barely moved. Last week, we showed the DXY breaking out of a descending wedge and forming a flag pattern. DXY rose to the target area for the descending wedge near 90.95, however pulled back to the 50% retracement level from the low on January 6th to the high on January 18th, near 90.45. Prices rarely move in a straight line, and this is no exception. However, with all the dovish talk from Janet Yellen today, one would expect the DXY to have moved lower (especially as stocks were moving higher). However, on a very short term 15-minute chart, we can see that price didn’t move! Does that mean that all the dovishness and stimulus is already priced into the market? Perhaps the next bigger move may be higher. 90.75 is the first level of short-term resistance.
It appears the currency market is looking past the new administration’s talk and wants to see action. Biden can have congress on his side. He can propose a $1.9 trillion economic recovery plan. And Janet Yellen can be as dovish as she wants. But until the FX market see action from the new administration, US Dollar traders may be ambivalent to talk.

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not much of "conviction" out there , seems most of marketers on the fence to see what will happen in USA political new policies!!! a lot " educated guess" these days!! no pressure !!




 
mullokintyre
post Posted: Jan 15 2021, 09:16 AM
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According to The Economist
based on the Big Mac Index, the Russian Rouble is the most undervalued currency in the world.
Based on the cost of a Big Mac, which is essentially the same thing in every country, there are only three currencies, the Swiss Franc, The Swedish Krona, and Norwegian Krona that are overvalued against the US dollar.

QUOTE
The big mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of dozens of academic studies. For those who take their fast food more seriously, we also calculate a gourmet version of the index.

Just as a side note, the index suggests that the AUD is 12% undervalued compared to the USD.
What more do we need to work out that the USD still has a long way to fall before some level of evenness is reached.

Mick



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sent from my Olivetti Typewriter.
 
early birds
post Posted: Jan 15 2021, 07:57 AM
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President-elect Joe Biden will be sworn in on Wednesday as the 46th President of the United States. However, later today he will present his economic stimulus package to help troubled Americans deal with effects of the coronavirus. The plan is said to be in the $1.5-$2 trillion area, with a focus on distributing vaccines and increasing stimulus checks to $1,400 per person. The US Dollar Index began the day moving higher; however, it has reversed sharply. Fed Chairman Powell’s dovish remarks that the time to raise interest rates was “no time soon” also encouraged the US Dollar to push lower.

DXY

As mentioned, the US Dollar index began the day near 90.27 and pushed as high as 90.57 midway through the US morning session. The index reversed entering the UK fix and traded as low as 90.16. Later, on Powell’s comments, the index traded down to 90.07! Yesterday, on a 240-minute timeframe, the DXY appeared to be heading higher out of a flag pattern. However, with today’s volatile price action, the DXY may have made a false breakout above the flag. Of course, nothing moves in a straight line, but if price closes below 90.19, it would invalidate the flag patten and DXY could make another push lower towards the psychological 90.00, where bulls will be looking to reenter longs. Today’s highs of 90.57 acts as resistance.


USD/JPY

USD/JPY traditionally has traded with SPX 500. However, as you can see from the correlation below, USD/JPY has been trading more in line with DXY as of late. The correlation coefficient is +0.83 between the 2 assets. A correlation coefficient of +1.00 means the 2 assets move in perfectly together. +0.83 is strong correlation coefficient. On a 240-minute timeframe, the pair has been in a descending wedge since mid-November 2020 but broke above the downward sloping trendline on January 7th. Price traded lower with the DXY today, from a high of 104.20 down to 103.56, just ahead of horizontal support. If USD/JPY moves lower, it will test support at the downward sloping trendline and could prove a false breakout. If the DXY and USD/JPY recover and trade above recent highs at 104.39, the pair could test resistance at 104.75.

With Powell’s dovish comments out of the way, the markets will turn its attention to Biden’s economic stimulus tonight. Longer-term, DXY has been moving lower. However, be mindful that the stimulus release tonight could end up being a “sell the rumor, buy the fact” in the long run. Watch for more volatility to come!

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“sell the rumor, buy the fact!! i lean to this , the oldest trick that always work!! lmaosmiley.gif





 
early birds
post Posted: Jan 14 2021, 08:53 AM
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DXY

On Monday, we discussed the possibility the US Dollar Index heading up towards 91.50/92.00 as the RSI turned lower and price appeared to be biding its time before the next move higher. On a 240-minute timeframe, price pulled back towards 90.00, filling the weekend gap and creating a flag formation. Price may be ready to break out. The target for a flag pattern is the length of the flagpole added to the breakout point. In this case the target is near 91.35. If price breaks out of the flag, it must first get through horizontal resistance near 91.00 and 91.25. If the DXY fails to move higher out of the flag pattern, support is at todays lows of 89.93 before last week’s lows at 89.20

EUR/USD

In the same article we looked at the possibility of EUR/USD heading lower to 1.2053, a 100% retracement of the ascending wedge. As with the DXY, price paused as the RSI hit its lower bound and bounced. EUR/USD traded sideways and now appears to have formed an AB=CD pattern, which targets 1.2020, near daily horizontal support dating back to September 1st, 2020. First support is at yesterday’s lows near 1.2137 before the full ascending wedge retracement at 1.2052. If price moves above 1.2220, the price pattern is invalidated and could head up to previous highs near 1.2345.


NZD/USD

NZD/USD has been trading similarly to EUR/USD. Price rose to a high of 0.7315 on January 6th, before breaking lower out of an ascending wedge. The kiwi halted at the 50% Fibonacci retracement level of the move from the lows of December 12th, 2020 to the January 6th highs, near 0.7150. Just as with EUR/USD, NZD/USD appears to be in the process of forming an AB=CD pattern, which targets 0.7075. Price must first break below the lows of January 11th at 0.7264 and the 61.8% Fibonacci retracement level from the previously mentioned timeframe. If NZD/USD reaches the AB=CD target, the target for the ascending wedge is next, near 0.7007. If price moves above 0.7237, the price pattern is invalidated and could head up towards previous highs near 0.7315.

Although this has been a quiet week for the markets news wise, tomorrows unveiling of Biden’s stimulus package and Fed Chairman Powell’s conversation could bring volatility to the US Dollar pairs!

================
DYOR




 


early birds
post Posted: Jan 12 2021, 08:27 AM
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There hasn’t been that much news to trade off today, yet the US dollar continues to trade higher.

There hasn’t been that much news to trade off today, yet the US dollar continues to trade higher. Republicans in the House of Representatives blocked a House resolution which would have called on Vice President Mike Pence to invoke the 25th amendment and remove President Trump from office. However, the markets are already looking past the 9 days Trump has left in the White House. Therefore, what is driving the US Dollar higher, and can it continue?

DXY

The US Dollar Index gapped open higher after the weekend and moved into resistance near the 90.50/60 area. The gap fill is an important first support area, which incidentally is near the psychological 90.00 area. If price can hold above there, the DXY can run to 91.50, and possibly even 92.00 Note the RSI hit 70 and turned lower. The index may just be biding its time while waiting for the RSI to move further into neutral territory.

EUR/USD

EUR/USD is moving opposite the DXY. The pair broke lower below an ascending channel on Friday and continues to move lower. The target for the breakdown of an ascending wedge is a full 100% retracement. EUR/USD has already retraced below the 61.8% Fibonacci level from the wedge lows to highs and is stalling just below it. The RSI hit the 30 level and bounced. The latest bar on the 240-minute timeframe is a bullish engulfing candlestick, so a bounce would not be out of the question. If EUR/USD could remain below 1.2200, the RSI will have time to unwind and the pair could move lower. 1.2125 is the next of support before retracing the entire wedge down to 1.2058, where buyers would be looking to step in. Above 1.2200, resistance is at 1.2213 and 1.2283. Watch for sellers in front of Wednesday’s highs of 1.2350.

USD/CHF

When traders don’t have access to the DXY, they often trade USD/CHF as a segregate. Notice the correlation coefficient at the bottom of the chart below is currently +.91. A correlation of +1.00 indicates a perfect positive correlation between the 2 assets. USD/CHF traded right up to resistance today at 0.8920. Price is pausing while the RSI pulls back from near 70.00. A move above in price would target horizontal resistance 0.8980 and then .9020. If the US Dollar moves lower, it could move to support near Friday’s lows at 0.8824.

For many US Dollar pairs, the trend in the medium term (240-minute timeframe) is higher. Pullbacks may be opportunities for the RSI to unwind further before resuming higher. Bulls will be looking to buy dips towards the gap in DXY. They may also be looking to sell Euros and Swiss if DXY does pullback!
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it's just one of many TA studies, DYOR as always!!

 
early birds
post Posted: Jan 11 2021, 11:36 AM
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In Reply To: early birds's post @ Jan 10 2021, 08:29 AM

as AUD/USD goes down
i kinda think 0.78ish might be the short term top
i
m biased as i hold shorts on the pair !!



 
early birds
post Posted: Jan 10 2021, 08:29 AM
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US Dollar
The USD continues to test the 88-89 level, which is best viewed on this long term, monthly chart. If it's going to bounce, it should happen soon.

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what if it not bounce instead hit through the long term support?? so, stoploss should be in place , my one would be at 87.50 [ give bit of room for fake swings]. for my longs.

start to go short side of AUD/USD. just for hedge at moment!!



 
early birds
post Posted: Jan 7 2021, 07:45 AM
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Dems Win Georgia Senate elections; What that means US Dollar and CNH

The result of the Georgia Senate elections could result in 2 very different moves for the US Dollar over the next year

DXY

With the news of the unofficial Democrat winners, one would expect the S&P 500 raging higher today and the DXY would be lower. However, BOTH stocks and the US Dollar are higher. The DXY was lower overnight, so this appears to be a potential short squeeze as the market has been heading lower over the last few months. On a short-term 60-minute timeframe, the DXY has been in a descending wedge since Friday. Today, the index broke out of the top of the wedge and is near its target and horizontal resistance at 89.86. Sellers will be looking to take advantage of this pop to add to their position. The next resistance level is 90.00. Short-term support is at the downward sloping trendline of the wedge near 89.45.

On a longer-term daily timeframe, DXY could be ready for a move higher. Price is currently trading within a support zone dating back to early 2018. It is at the 161.8% Fibonacci extension from the lows of September 1st to the highs of September 25th. In addition, DXY is near the apex of a descending wedge and the RSI is diverging with price. This confluence of supports suggests there could be a possible bounce on a longer-term daily timeframe. Longer-term resistance is near 92.00.
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USD/CNH

USD/CNH also suggests that the US Dollar may be ready for a move higher. The pair has been trading in an orderly downward sloping channel since late May 2020 after breaking below the double top neckline during the week of August 31st. The pair reached the double top target (red lines) this week, but has halted at horizontal support from May 2018, the 78.6% Fibonacci retracement from the lows of March 2018 to the double top highs and the bottom trendline of the downward sloping channel. The RSI is also extremely oversold, near 21.23. This confluence of support near 6.44 suggests there could be a possible bounce on a longer-term weekly timeframe. First resistance is at the top trendline of the channel near 6.51, however if USD/CNH breaks above, there is room to move much higher.
The result of the Georgia Senate elections could result in 2 very different moves for the US Dollar over the next year. In the short-term, even with today’s bounce earlier, it’s possible that the stimulus will be too great and push the US Dollar lower. However, with the proposed tax hikes and the look at the longer-term charts, it appears that the US Dollar may be heading higher!
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just one of many studies....... DYOR as always!! tongue.gif


 
 


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