Trade view /
02 September 2016 at 7:14 GMT
USD Index – After a mild morning rally, dollar buying was soon reversed with worse than expected US economic figures. As we noted after Fed chair Janet Yellen’s last press release at Jackson Hole, US data releases will be closely watched (and reacted on) with the next rate move being heavily data dependent. Today’s nonfarm payrolls could be a real roller-coaster.
Technically, the USD is in ‘no man’s land’ with conflicting views. We have a bullish channel that is countered by the fact that the inside waves are made of three waves. This normally dictates that the whole move up should be corrective. A bullish Outside Day after Yellen’s speech (at the channel base) is countered by a bearish Outside Day (at the Ichimoku Cloud top).
Source: Saxo Bank
We really can’t see a setup that screams out a bias (on the USD majors) and even USDJPY has conflicting views.
USDJPY Weekly – Moving Higher in an AB=CD formation towards 108.20. We do have bespoke resistance at 103.92
USDJPY four-hour chart – 5 waves complete so scope for a possible correction lower. We have a channel base at 102.34. This is an important level.
USDJPY 30-minute chart – Possible bearish Head and Shoulders pattern as long as the rally is rejected close to 103.65. This is the 61.8% pullback level and the projected right shoulder. A break of the neckline at 103.15 would take the pair down to 102.25, close to the aforementioned channel base. With this in mind, the selloff could/should be short-lived so would be an intraday play only.
Management and risk description
Medium Term Call
Entry: Buy a break of 104.00
Time horizon: 2-3 weeks
Entry: Sell a break of 103.15
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more