We have hit some bespoke resistance overnight at 94.25 so the preferred trade today is to buy into dips. The intraday chart highlights a bullish five-wave pattern (Elliott Wave) highlighting that we should now see a correction lower in a choppy, three-wave pattern.
Prime support (and a possible right shoulder of a bullish reverse head and shoulders pattern) is between 93.90 and 93.73 (93.73 being prime, lining up with the previous swing low and the 61.8% Fibonacci pullback level).
Summary: Buying USD dips
USD index daily, buyers from 61.8%:
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Source: Saxo Bank
US index one hour (DXc1), bullish five-wave pattern:
EURUSD looks primed for the next move lower.
The monthly chart highlights a bearish outside candle that offers a downward bias. It should also be noted that 1.1440 has capped buying on eight occasions in the seventeen months.
Monthly (1.1440 caps buying):
The daily chart highlights an expanding wedge formation that has an eventual bias to break to the downside (one of the hardest patterns to trade as high volatility is normally seen inside). We posted a bearish Outside Day from the top of the Ichimoku cloud yesterday.
Daily chart (bearish Outside Day):
The intraday chart highlights an Evening Doji star from close to the 261.8% extension level of 1.1419 (from 1.1096-1.1219). This coincided with a wedge breakout. We have hit some bespoke support at 1.1290 overnight so selling at the open would be unwise. Marabuzo support from the 03/06 is seen at 1.1255.
Four-hour chart (selling into rallies):
Market Profile highlights yesterday’s Point of Control at 1.1338. With our bespoke resistance at 1.1335, this is regarded as a prime area to get short.
Stop can be placed above yesterday's mid-point (1.1360) and, with the target level being the June 3 Marabuzo at 1.1255; this offers a solid risk/reward trade today.
Entry: selling at 1.1335.
Time horizon: today to trigger, two or three sessions for target.
— Edited by Michael McKenna
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Non-independent investment research disclaimer applies. Read more