Trade view /
08 September 2016 at 7:27 GMT
USD Index – Very mixed analysis still for the index. The daily chart is holding within the bullish channel formation. However, this still has scope to be a mere corrective formation before the next selloff. A clear break of the lower trend support at 94.51 is needed to confirm that view.
Source: Saxo Bank
The intraday chart highlights this area (94.60-94.52) as a potential right shoulder of a bullish reverse Head and Shoulders pattern. With the European Central Bank meeting today, we could easily see a spike down to this support and reject or break. With EURBP outlook still bullish, but dip buying possible, I think we could see a typical ECB day (a move in one direction, probably down, then a swift move back in the other direction).
I will not be trading euro-based majors or crosses. Instead, I am looking to USDCAD this morning and are starting to build a long.
Weekly – In a corrective but bullish channel formation. We rejected losses yesterday at the trend of higher lows (1.2820). A full AB=CD formation could take the pair toward the 50% pullback level of 1.3573 (from 1.4689-1.2459). This is our prime target area. However, we really need to see a continued move to the upside today as a weekly close below 1.2820 would break the channel and form an Evening Doji Star on the weekly chart (although this formation is stronger at the top of a trend it would highlight rejection of gains)
Daily – Doesn’t really benefit any outlook with a small inside bar posted (indecision).
Six-hour chart – Highlights an expanding wedge formation that has an eventual bias to break to the upside. We formed a bullish Outside Bar on the six-hour chart close to previous support. This candle formation often indicates the start on a new bullish trend. There are no Fibonacci levels of note. Trend resistance from the wedge is at 1.3130. Previous swing high is at 1.2963
One-hour chart– We have a potential bullish reverse Head and Shoulders pattern. We have stalled at the 50% pullback level of 1.2866 (where I have taken my first long). A break of 1.2900 and the measured move target will be 1.2990. As long as we hold above 1.2850 (trend line support and possible right shoulder) then our bias remains bullish. Stop placed at 1.2835
Management and risk description
Entry: long one unit at 1.2874. Will buy another unit on a break of 1.2900
Stop: initially 1.2835. On a break of 1.2900 then a trailing stop of 40 pips
Target: intraday 1.2990. Medium term 1.3480 (2-3 weeks)
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more