Trade view /
05 September 2016 at 7:28 GMT
USD Index – The Nonfarm payroll release did little in the way in giving a clearer picture for the immediate outlook for the USD Index. Although the long-term bias remains mildly bullish, we expect intraday trading to remain mixed and volatile.
Looking at the intraday chart (four-hours), we have a completed a bullish five-wave count. This should dictate that the market would now look to buy dips. However, we could see a correction to levels below Friday's dip (95.18) before the correction lower is complete. With this in mind, fading USD longs is the trading technique we would use today.
EURGBP is looking overdue for a profit-taking correction higher and I am now looking to fade dips down to 0.8356. I do not want to see a daily close below this support. European PMI data (The Purchasing Managers Index) is on tap today, so we could see some intraday spikes.
Monthly – The longer timeframe keeps the cross positive after breaking through the corrective channel formation to the upside. However, after posting a Doji Top in August there is ample scope for a correction lower to retest the breakout level at 0.8075.
Weekly – After completing a bullish five-wave pattern (Elliott-Wave theory), we posted an Evening Star formation from the high. This would suggest that a medium-term top is in place. However, we have bespoke support at 0.8356 and 0.8320 so it is unwise to sell from current levels.
Daily – Dip buying from current level (or close by) would likely form a Head-and-Shoulders pattern this week. The prime target area for a corrective right shoulder is 0.8613-0.8724.
Intraday (four hours) – The four-hour chart highlights the first leg of the corrective selloff complete close to the 261.8% extension level of 0.8373 (from 0.8724-0.8590). As long as we see a daily close above 0.8356, the immediate bias remains bullish.
Management and risk description
long at 0.8396.
daily close below 0.8356.
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more