Chart Comparative Analysis: USD Tech FLAG Before & After the Fact

DXY As of Aug 10, 2016

Fig. A Before the Fact

Fundamental / Market Driven Support
With the upcoming Thanksgiving holiday, market expectations would be limited to a few reports on US Durable Goods, FOMC minutes (Wed) and UK GDP on (Fri). Although, the market has already established a greater probability of a rate hike, this may have been priced-in from the re-pricing  done from the recent rally, where the USD Index have extended its run above the 101.00 levels. The market driven by bullish USD sentiment aims the 102.20 levels but the shorten activity may try to attempt a run due to the vulnerable thin market conditions that may also derive its fuel from the up coming data.

On the tech angle of the #USD -DXY; after establishing a defined Flag pattern after the consolidation period which we have anticipated to form since August 10, 2016 ( fig. A) to be precise have finally bear fruit with a completed formation and justified with its recent move above 101.00 that penetrated the projected resistance line as of Nov. 11, 2016 (Fig. B).  It's the ability to go beyond charting analysis by being able to anticipate a probable formation/s in the making or even before its completion simply based on market / price behavior.

DXY As of Nov. 21, 2016

Fig B After the Fact

The prices traded through the 98.00 handle trend line resistance level well supported by market driven sentiments and volumes from the positive reports including Chairperson Janet Yellen testimony. Which became the catalyst and the fuel for the USD to go beyond expectations. Any price above the 101.00 is an extension of such velocity.

However, the upcoming Thanksgiving holiday will also provide a thin and vulnerable market and certain price swings should not be discounted especially Wednesday and Friday's report

Meanwhile, across the currency markets, the closing prices among the major pairs have provided the calm condition and a recent price relief seen in the early Asian market's opening levels.  

TSOT - Thrid (3rd) Sequence #AUDNZD

#AUDNZD extension. at 1.0704 low nearest to the Trend-line support drawn from the lowest 1.0027 last 3.30 is significant. While today's price level at 1.0793 as of 5.17 is considered to be the 1st Pullback signal for the day. On the tech angle, a higher bottom is part of the complex IHS expanded formation before reaching its time cycle fig. 2 from previous chart. Currently, we are just waiting on USD direction from the upcoming CPI due during the week & the FOMC in June.

While the market is building its "Momentum & Volume" it would validate initial price reversal heading towards a recovery. Do not discount daily session price swings in both direction, while investors waits on the up coming event risk for the following trading weeks.ahead Follow sequence of twitter trade signals from 4.26.16 to have a better footing on the continuing analysis

https://twitter.com/MegaTrade101/status/732447741448728576 

Case Study: Effective Sequence of Trade maintaining the course

CCy Insight & Price Behavior: USDJPY

UPDATE 11.22: USDJPY Steadily supported with fundamentals with US economic data while GBPJPY cross rate supports both majors contrary to the USD daily price swings. Corrective moves have materized specially with Cable holding steady as it continues to move higher. An effective "Sequence of Trade - maintaining the course"

UPDATE 11.15: USDJPY finally breaks benchmark of 100 way above trendline resistance and tight trading range! And this is more related to Yellen's perception and ecominc outlook for the Fed's taper schedule of providing more to help the US economic recovery.  Please take note of the original date above 11.12.13 of this analysis, while it is still quite effective inspite of the stream of market data for the week.

As of 11.12 : Observing market action from the sideline has its benefits of being able to clearly see through the market's price volatility and investors market sentiments. The main market drivers can only be summarized into two segments, namely ECB Mario Draghi's rate cut decision and the much better than expected Non-Farm Payrolls report.

CCy Insight & Price Behavior: USDJPY
CCy Insight : GBPJPY Cross rate

CCy Insight: GBP JPY & Cross Rate

The market's ability to change directions can only be dictated by market participnts themselves. And this ie equally true with the Euro's backing the fundamental comments made by ECB Mario Draghi and currently has gained back its lost ground half-way through its previous decline.

While coming from its HI/LO range between @1.3800 / @1.3300; the current price level @1.3488 to this writing is seeking fresh incentives from market data particluarly on both sides of the continent, while waiting for the unemployment data to push market volatitlity. Meanwhile, the EURUSD gradual climb is indeed a welcome relief. Although, it is still pacing price action compared with the rally on Cable. GBPUSD is @1.6125 after coming from an anticipated correction and again is back on track even above the 1.6080 interim resistance of last week's trading.

Market conditions between these two major pairs have slowed with daily price consolidation is seen over the market place.

CCy Insight: GBP JPY / Cross Rate

Insight: Cross-Trade Strategies

Market Price Action: GBPJPY GBPUSD USDX
On the fundamental side of the market, the focus is on the FOMC minutes which we still expect to be in line with its previous policy stance that have sustained a releif recovery for the US Dollar. Although, a mix report transpired last week, uncertainty over how investors react have dictated price action in the market.

Higher yields, and a corrective phase for the Dow Jones have likewise proven to be the balancing act that investors and traders have to weigh. With no real catalyst except for the FOMC report other than the general expectations of retail forex analyst for a USD recovery; we remain neutral-to-bearish for the USD unless proven otherwise. A combination of cross-trading majors and crosses remains well positioned after certain trade settlements have been made.

MegaTrade101.com - Insight: Cross-Trade Strategies

Market Insight: USD rallies higher

With some mix reports from the market, the USD continues its rally setting a new high @84.72 basis point in the American session. This prompted Cable to push even further on top of the widening trade deficit in UK that led the earlier decline for the Pound during the European session. While the limited soft correction for the Euro has held it prices from the recent Cash aid for Greece came through before giving up its recent session gains with a high @1.2897 and working now @1.2768; as the USD continues to move higher touching an 84.72 high, currently @84.67 as of this writing. Daily corrective pullbacks is expected and as long as the USDx remains above the 83.90 levels, it would hold true to its bull sentiments. Although, a decline lower than the figure of 83.05 basis point may prove to be pushing some serious pressure for a near-term corrective phase. Click to continue.

The Aftermath of Forex Volatility

When heavier than expected news reports prevails before and after trading sessions expect increase volatility & price action. This occurred when Moody's rating agency have downgraded the UK one notch lower after Friday's trading hours that led the opening price in Asia to hit @1.5085 low and stayed within these price levels.

However, the opening price gaps occurred across the board, especially with the Japanese Yen reacted on the stance of the ADB Kuroda and that Prime Minister Shinzo Abe will appoint someone who shares his dovish position with regards to monetary stimulus is expected. While the Asian market opened @94.20 from the previous closing price of 93.40 then drove the prices to as low as 90.85 and currently working @91.93.

Other than the recent Italian elections, all eyes would focus on Fed Chairman Ben Bernanke as he would be making his congressional testimony for two days which would again make the market vulnerable to sensitive comments posing price swings in both directions. 

But as we have mentioned in our previous market analysis dated the 22 of February; a major correction was indeed expected in the first two days of this trading week. Whereas, the corrective strength of the JPY

Market Perspective: EURJPY & USDx

The major trend for the EURJPY cross rate is still intact as the bigger technical perspective on the chart is bullish. The rapid acceleration of the USDJPY behind the fundamentals of the Japanese Yen and strength of the EURO have fueled the the EURJPY cross strength.

Monetary easing from Japan and renewed policy makers in Europe have been the reinforcing factors supporting this trend. That is unless some newer policy changes would take effect or announced to reverse price action in the market. And the FOMC minutes have outweighed these two remaining reasons until a fresh incentive would either reinforced the resurging strength of the US Dollar or otherwise investors confidence on the US economy deteriorates. Knowing these reasons and analyzing market behavior in line with price action would provide a better glimpse as to which currency pairs would best suite market conditions that can deliver a reasonable potential for a trade.
Click here to continue...

USD reacts to FOMC..

other currency review & analysis!

Increased volatility surged as the FOMC statements outweighed mixed reports from the economic sectors. As most traders were made aware that the Federal Reserve would slowdown or even stop purchasing bonds sooner than expected. This statement was the main catalyst as investors uncertainty prevailed in the market place prompting a slide in the US stock market. And the USD to rally which has influenced the Gold prices to mark a decline touching the all important support price @1555.07 levels. 

With that said, the USDx topped the 81.10 basis point and have shown a good deal of sustainable strength at these levels which we have anticipated would occur between the Wednesday through Thursday trading sessions. Momentum build-up emerged alongside with the volumes to push the US Dollar higher have made many market participants cover short USD positions. Daily trading sessions pullbacks are again expected until a considerable follow-through towards the end of this week's trading takes place. USD strength have shown it true colors! And now choosing the best currency pair to pursue the USD directional movement would be determined by way of tracking open interest and trader volumes during position adjustment.

Please continue...

Market Behavior ...

vs. Price Action
The ability to weigh trading analysis between economic reports and technical perspective has drawn a significant mark on price behavior in between the 3 major trading sessions. The upcoming reports on the European Consumer Price index would come earlier than the FOMC minutes that would provide a signal directly effecting the USD direction. Although, as the mid-week reports follows when the US Consumer Price Index would be compared with the German GDP report which would weigh more with the direction of the EURUSD.

Ahead of the market mid-week price action has given the USDx a daily signal of a probable pause as against a breakaway gap against all odds. Nevertheless, this should not discounted on a daily pullback and a retest of the continued strength towards the end of the week's trading will take place. Either way, Wednesday through Thursday sessions would provide a clearer picture. A Tug of War again appears to be in place

Reinforcing Trend & Counter-trade Strategies

As the year draws closer; market sensitivity is clearly seen by the indecisiveness of price swings across the forex market where the USD weakness was relatively drawn from the Federal Reserve seen increasing the ante by as much as USD4T of new asset purchases. The USDx is working @80.09 basis point lower from the day's high marked at the 80.57, although seen as a corrective move from a more fundamentally oriented market as of today.

With the market quietly pausing during both the Asian-European sessions prior to the US market's more choppy price swings; we have seen that a more direct effect has taken place for Cable moving back higher from a registered low @1.6000 even then a recovery move took place in a slower pattern as the US market opened. Apparently, since the USD follow-through did not materialize, a trailing stop to cash-in our short-Cable on the way higher was initiated alongside a counter-trend /Trade strategy utilizing the GBPJPY as the primary currency of choice as indicated in the figure 1. Expect a daily follow-through from this reinforced Trend for the Cross Rates prior to Wednesday Fed policy report and the Fiscal Cliff.

On the tech-perspective: The GBPJPY 4hour chart formation simply showed a double bottom formation with a stronger support @131.65 and a spinning top prior to the session rally. Likewise the key price refernce for the other EURJPY cross is still at the 105.50/65 levels. That is why we have since then that both cross rates are within a "Reinforced Trend" But more importantly, disecting the time-frame within the 4hour segment would be a typical market timing developed alongside with timing the other correlated currency pairs before actual execution. In essence, its also helps when trading skills related to market timing must be part of due diligence before any trading decision can be made. Remember, nearing the end of the year's trading activity and last quarter for the year; a short-term three (3) days trading exposure would be more applicable at this time.
Clearly market participants have renewed their trades and shifted positions based primarily from the recent COT; where increased OI on both sides of the market took place with the Aussie$ taking the lead while European currency pairs were net short. However, this was prior to the expected announcement by the Fed regarding pumping up assets which drove the USDx lower while both Euro & Cable rallied to their present prices @1.2993 & @1.6108 respectively. Expect a relatively choppy price action across the board on both major pairs while the  AUDUSD and the AUDJPY remains resilient and trending higher will be dominant. Of course with some price adjustments nearing the end of the month's trading. Prices have achieve our first target at the 1.0510/15 levels as of this writing.

FX Market Perspective l

Sequential Trades leading to NFP & Unemployment Data:
On the Fundamental stand point: the doom and gloom reports on job cuts in the news wires prior to today's much anticipated NFP numbers of 146,000 jobs added and unemployment data at 7.7% (lowest since 2008) beating market expectations have finally put most naysayers to silence.

The overwhelming & unexpected data from both reports have benefited the USD and investors risk appetite. Of course, there will always be a contrary and counterpart opinion in all this pleasant reports. Which in fact, only boils down to the Fiscal Cliff and the Fed's policy on whether adding additional asset purchases would continue to boost the US economy. With the news now out of the way, the focus would be the FOMC meeting heading into next week with a better looking labor market report. Weighing market sentiments comes into play once again will head towards how the technicals would paint the charts at the closing of this week's trading.

However, expect some relative corrections...

Directional Trend 4th Qtr of 2012

The start of the 4th quarter of the year with relative good signs for US manufacturing providing the lift for the US Dollar. The surprising move has kept many analyst and traders in Wall Street to continue their raging arguments on the prospects for Quantitative Easing.

As many traders and hedge fund managers have tirelessly been going back & forth with the same issues the European debt crisis that evolves with Spain taking the recent limelight of the story. Confusing as it may seem to a lot of foreign currency traders and investors; the market conditions in trading have changed its financial landscape of market analysis and trading execution.
Since high frequency trade execution by institutional houses including interbank trading have provided a higher degree of trading difficulty in the market.

A classic example...

Technical Perspective: GBPUSD

GBPUSD: The weekly cross-hair after a daily - rounded top consolidation has provided the Sterling Pound's weakness. Currently working at the 1.6190 would continue its decline and daily pull-back near the 1.6100/10 levels (S1).

Bullish momentum have declined from its daily consolidation while the gradual decline has been more associated with the strength of the USD and its related favorable reports the past couple of days. For now the registered high @1.6308 would serve as its initial topping-out formation and price levels. As long as the USD remains in positive territory a gradual decline can be expected.

Although, the daily bar chart in this figure shows the pullback from its daily corrective high @1.6174 failing to maintain and closed lower for the first trading day of October. Extensions to watch for are the 1.6050 (S1) levels and 1.6185/95 (R1) on a corrective move whenever favorable reports would come out of the UK and EU zone for the weeks ahead.

Current prices are stable for now while traders are waiting for some important figures this week from the Bank of England, the US FOMC minutes and particularly the unemployment figures.