Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
SPX Losing Gains - 17th Aug 18
What Gold Is Not - 17th Aug 18
Dollargeddon - Gold Price to Soar Above $6,000 - 16th Aug 18
Stock Market Higher Again, Correction Over? - 16th Aug 18
Up Your Forex Trading Game - 16th Aug 18
Large Caps Underperformance vs. Small Caps is Bullish for Stocks - 16th Aug 18
“The Big Grab” - Failing Pension and Retirement System - 16th Aug 18
How US Indo-Pacific Vision Forgot Asian Development - 16th Aug 18
Impulse Moves in the Currencies - 15th Aug 19
Best Merlin UK Theme Park Summer Holiday 2018 - Thorpe, Alton Towers, LegoLand or Chessington? - 15th Aug 18
The Essence of Writing an Essay that Must be Understood - 15th Aug 19
Is Solar Energy Rising From The Ashes Again? - 15th Aug 18
A Bullish Bond Argument That Hides in Plain Sight - 15th Aug 18
Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - 15th Aug 19
A Depressed Economy And A Silver Boom - 15th Aug 19
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18
Yield Curve Inversion and the Stock Market - Video - 11th Aug 18
Land Rover Discovery Sport 1st Dealer Oil Change Service - What to Expect - 11th Aug 18
How to Setup Webinars and Use Them to Overcome the Barriers in E-Learning - 11th Aug 18
Big US Stocks’ Q2’18 Fundamentals - 11th Aug 18
Dow Stock Market Trend Forecast 2018 - 10th Aug 18
SPX Testing Its First Support Level - 10th Aug 18
Dreaming of a "Comfortable Retirement" on a Public Pension? - 10th Aug 18
The Forrest Gump of All Future Democrat Election Losses - 10th Aug 18
More Uncertainty as Stocks Got Closer to January Record High - 10th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

Focus on the Greenback, Will USD Fall Below Euro 1.6?

Currencies / Forex Trading Jul 13, 2018 - 02:09 PM GMT

By: Nadia_Simmons

Currencies

Although last week’s decline took the USD Index under the late June’s lows, currency bulls didn’t break down with this deterioration and responded to their rivals fairly in previous days. Thanks to their determination, the greenback has wiped out most of the recent decline, which in combination with several other positive factors about which we wrote in today's Forex Trading Alert suggests that ...

Before, we analyze the current situation in our currency pairs, let’s examine the short-term picture of the USD Index.


Focus on the Greenback

Looking at the daily chart, we see that although the USD Index moved lower last week, the size of that correction was quite small compared to the upward move that we could observe in the previous months.

As you see, the greenback didn’t even reach the blue support line based on the previous lows, not to mention a decrease to June’s low or the 38.2% Fibonacci retracement based on the entire February-June increases.

Such price action shows that currency bulls are stronger than it seemed at the beginning of the week. Therefore, we think that further improvement in the coming days is very likely – especially when we factor in the buy signals generated by the CCI and the Stochastic Oscillator.

So, how high could the index go in the coming week?

In our opinion, if the greenback extends gains from current levels, the initial upside target will be around 95.30, where the June peak is. Nevertheless, taking into account the above-mentioned show of the bulls’ strength, it seems that the index will test the blue doted resistance line based on the previous highs (around 95.50) or even the upper border of a potential blue rising trend channel (around 96.30) in the following days.

How such price action could affect our opened positions? Let’s examine the current situation in the Forex market.

 

Will EUR/USD Drop Below 1.6000?

Looking at the daily chart, we see that several unsuccessful attempts to go above the upper border of the brown rising trend channel encouraged currency bears to act, triggering a move to the downside in the previous days.

Earlier today, EUR/USD moved lower once again (making our short positions even more profitable), which in combination with the sell signals generated by the indicators at the beginning of the week suggests further deterioration and a drop to (at least) the previously-broken upper line of the brown triangle.

If this support is broken, currency bears will likely test the lower border of the brown rising trend channel(currently around 1.1570) in the following day(s).

USD/JPY – Breakout and Its Consequences

Looking at the weekly chart, we see that this week’s breakout above the major resistance (the orange declining line based on the August 2015, December 2015 and January 2017 peaks) and its positive impact on the price are still in effect, supporting the buyers and higher values of USD/JPY.

How high could the exchange rate climb?

In our opinion, we could see even a test of the orange resistance zone seen on the above chart in the following week(s). At this point it is also worth noting that the pro-growth scenario is reinforced not only by the current situation in the USD Index, but also by the short-term picture of the exchange rate. What do we mean by that?

Let’s take a closer look at the daily chart below.

From this perspective, we see that USD/JPY broke above the upper border of the brown rising trend channel and the pink resistance zone (created by the 76.4% and the 78.6% Fibonacci retracements), opening the way to higher levels.

Finishing today’s commentary on this currency pair it also worth noting that although daily indicators climbed to their overbought areas, we think that as long as there are no sell signals another attempt to move higher is likely.

Nevertheless, if we see any reliable sign of currency bulls’ weakness, we’ll consider taking existing profits off the table. Meanwhile, let’s support the bulls with all our strength.

AUD/USD – Which Way Next?

Yesterday, AUD/USD rebounded, erasing some of the earlier losses. Nevertheless, earlier today, currency bears came back to the market, triggering a move to the south and making our short positions more profitable.

Taking this fact into account and the sell signals generated by the CCI and the Stochastic Oscillator (which continue to support the sellers), we think that lower values of the exchange rate are just around the corner.

If this is the case and the pair extends losses from here, we’ll likely see not only a test of the lower border of the blue declining trend channel, but also a decrease to last month’s lows in the following days. We will keep our readers informed should anything change, or should we see a confirmation/invalidation of the above.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Oil Trading Alerts as well as Gold & Silver Trading Alerts. Sign up now.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski
Founder, Editor-in-chief

Sunshine Profits: Gold & Silver, Forex, Bitcoin, Crude Oil & Stocks
Stay updated: sign up for our free mailing list today

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules