Strategic trade
Trade view / 19 September 2016 at 7:00 GMT

Analysing this week's USD Index and FX majors

Analyst / PIA First
United Kingdom
Background

USD Index – Trading at the start of last week was mixed until USD buyers returned on Friday. The daily chart highlights the index in a bullish channel formation with complex wave structures inside. We look for the focus over the medium term to be towards 99.76, the AB=CD formation target and close to the psychological Big Figure of 100.00. This channel top is seen at 98.60. This is an important factor that will become clear on the four-hour chart. 

 
USD indxe D
Source: Saxo Bank 

The four-hour chart - Highlights a bullish reverse Head and Shoulders pattern. We have stalled at the neckline (96.10) on Friday so there is scope for a mild correction at Monday's open. Dips or breaks should be bought. 

USD Index 4
 Source: Saxo Bank 

The measured move target for this breakout is seen at 98.47, very close to the channel top. A formidable barrier is going to be 97.61. This is the 161.8% extension level from 94.05-96.25 and the previous swing high (25/07).

USD Index 42
Source: Saxo Bank  

EURUSD weekly – For the last three weeks, levels above 1.1250 have attracted sellers with following through bearish momentum resulting in net losses last week for the major currency pair. Nothing to highlight a change of trend and the next formidable downside barrier is 1.0760-20, Fibonacci confluence area. The long-term bias remains bearish with an eventual triangle breakout. 

EURUSD W
Source: Saxo Bank  

The six-hour chart highlights a bearish Head and Shoulders breakout on Friday at 1.1174. The measured move target for the formation is at 1.0900. With bespoke resistance at 1.1180, this would be a great short entry on Monday. 

EURUSd 6
Source: Saxo Bank  

GBPUSD daily – After posting a Doji day on Thursday, strong selling pressure was seen on the last day of the week with a drop of over 250 pips from high to low. We are set to break out of the consolidating triangle formation to the downside. In the bigger picture, this whole move from the beginning of July is seen as a 4th wave complex consolidating triangle patter. The medium-term bias is bearish. 

GBPUSD d
 Source: Saxo Bank 

Four-hour chart – With a 161.8% extension level located close to the triangle base (at 1.2921), there is a chance of a small bounce to sell into. We have a previous swing low at 1.3022 and bespoke resistance at 1.3030, so we expect any ‘bounces’ to be mild. 

GBPUSD 4
Source: Saxo Bank  

EURGBP daily – The long term view for EURGBP is still bullish but we expect a move to the downside until the end of the year. Prime medium support is at 0.8075. The daily chart and we are looking for a bearish Head and Shoulders to form. We have stalled at the 61.8% pullback level of 0.8574 (from 0.8723-0.8332) on Friday. Prime resistance is seen at 0.8613 (previous swing high).
  
EURGBP D
Source: Saxo Bank 

Six-hour chart – Highlights a bearish five wave count to the downside and an AB=CD formation now complete (0.8577). With DeMark also posting an exhaustion 13 count on the six-hour chart, we start to look for topping formations. 

EURGBP 6
Source: Saxo Bank  

USDCHF weekly – A rather more confusing USD pair to analyse. This time frame highlights little net change last week and a prolonged period of consolidation (32 week). We could say that the higher lows are forming a bullish ascending triangle pattern (preferred) but the lower highs could also form a consolidating triangle pattern. 

USDCHF w
Source: Saxo Bank  

The daily chart gives no clearer clues with the RSI (Relative Strength Index) trading close to 50 (non-trending) 

Two-hour chart – The pair is in a bullish channel formation. The inside waves look corrective but there is no clear indication that the move higher is finished. I think there are much better pairs to play the USD bull trade.  

USDCHF 2
 Source: Saxo Bank 

USDJPY weekly – With a completed Elliott wave count (five bearish waves) we should now be in the corrective pattern higher. However, there is no clear indication that this is underway and I wouldn’t be surprised if we see a 5th wave extension. Last week posted mild net losses while registering an Inside Harami candle (indecision).
  
USDJPY W
 Source: Saxo Bank 

Daily chart – Complex wave pattern seen while we are in this long-tern consolation mode. We have the trend of higher low at 100.00. With this being a Big Figure, it may take some breaking. 

USDJPY D
Source: Saxo Bank 

Four-hour chart – We can note a bullish five wave pattern. Although we have moved higher from the 61.8% pullback level of 101.36 (from 99.53-104.31), the rally has been anything but impulsive. In fact, we look to be forming an Expanding Wedge pattern that has an eventual bias to break lower. A full AB=CD formation would take the pair to 100.23, close to the aforementioned Big Figure. I think that this will be likely target this week. 

USDJPY 4
 Source: Saxo Bank 

USDCAD weekly – In a bullish channel formation. The next upside barrier is seen at 1.3310. This is the 38.2% pullback level and dense Ichimoku Cloud cover. 

USDCAD w
 Source: Saxo Bank 

Daily chart – A full AB=CD formation is 1.3490. Unlike most other USD majors, we have consolidated for the last three days close to the previous swing high of 1.3254 (27/07).

USDCAD D
Source: Saxo Bank  

Six-hour chart – Doji style candle posted at the high so, with the USD index stalling at its neckline, there is scope for mild selling at the start of the week. We have broken the bullish Reverse Head and Shoulders (in USDCAD) to the upside. Reverse trend line support is now seen at 1.3110. With bespoke support at 1.3130, this area is prime for a long entry at the start of the week. 

USDCAD 6
Source: Saxo Bank 

A full Head and Shoulder target level is seen at 1.3530, close to the daily channel top. 
USDCAD 62
Source: Saxo Bank  

AUDUSD weekly – After a strong move to the downside we have moved higher and consolidated from levels close to the 161.8% extension of 0.7165 (from 1.1083-0.8662). The correction stalled at the 38.2% pullback of 0.7849. This is common in 4th wave corrections (Elliott Wave theory).
  
AUDUSD w
 Source: Saxo Bank 

Daily chart – Highlights the pair consolidating for the last 108 days while forming a triangle pattern. The trend of higher lows is seen at 0.7428 and could be a formidable barrier at the start of the week so we could look to sell into "bounces". Our bespoke resistance is seen at 0.7540. 
On a break of 0.7428 we look to the next downside barrier at 0.7055 (AB=CD formation target) where we look to reassess the outlook. 

AUDUSD D
Source: Saxo Bank 

EURJPY monthly – Seen in a very large triangle pattern with trend line support at 96.59. The selloff has stalled at a Fibonacci confluence area (115.36-111.51) and indecisive Inside Months have been posted. 

EURJPY M
Source: Saxo Bank  

Weekly chart – Highlights the last 12 weeks being a mere 4th wave consolidation pattern. With EURUSD breaking lower, we should now be in line for the next move to the downside. 

EURJPY W
Source: Saxo Bank  

Daily chart – We have broken out of the consolidating triangle to the downside. The prime short entry is a retest of the breakout level at 114.18. From there on in, we would look to sell rallies. This is also another reason why we think the JPY bias may still be bullish (USDJPY bearish).
  
EURJPY D
Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 

Good luck this week. 

— Edited by Gayle Bryant

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Non-independent investment research disclaimer applies. Read more
19 September
AlexF AlexF
Hi Ian, how are you ? Have been in EURUSD entry 1.116 for a day trade just cross 1.1173 what would be you PT today in the pair ? tx
19 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Very well thank you. I am looking over the medium term. Next support at 1.1120
19 September
AlexF AlexF
Sorry I forgot to mention went long for a day trade in at 11.116 looking for a PT on the upside for the day to get out
19 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Our clients are short at 1.1180
19 September
AlexF AlexF
: )
19 September
AlexF AlexF
Ok thanks gives some reference
19 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
bespoke resistance at 1.1195
19 September
AlexF AlexF
Thanks I set it at 1.1199 but will move it now thanks
19 September
AlexF AlexF
Out

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