Trade view /
09 September 2016 at 7:23 GMT
USD Index – The selloff was strongly rejected yesterday with a bullish outside bar posted on the four-hour chart close to our aforementioned support (or right shoulder). We really need to see a break of the neckline at 96.15 to confirm the medium- to long-term bullish bias for this pattern.
Source: Saxo Bank
However, looking at chart two we can note that 94.51 is a Fibonacci confluence area (78.6% pullback and a 161.8% extension). Although this is not a ‘perfect’ symmetrical pattern, it does offer us an immediate upside bias. We are now USD bulls.
Shifting to a USD bull stance
Taken a long trade in USDCHF and short in EURUSD this morning. Here is an explanation for USDCHF. EURUSD is virtually the mirror image:
Weekly – Trading with a bearish channel formation. However, the lack of a strong trend makes the assessment of this pattern as being corrective. Furthermore, we are seeing higher weekly lows, possibly forming a bullish ascending triangle pattern. We have trend-line resistance at 0.9878 then the formidable psychological Big Figure at 1.0000 (parity).
Daily – The strong recovery of losses resulted in USDCHF posting a bullish Outside Day yesterday, a pattern that often indicates the end of a bearish run and the start of a new upward bias. This was close to previous support from the beginning of August at 0.9632.
Bullish Outside Day
Four-hour chart – Highlights dip buying close to the 61.8% pullback level (of 0.9669). This was a previous congestion area. The end result was the pair closing back inside the trend-line support (and possible right shoulder) at 0.9700. Resistance is seen at 0.9895.
Management and risk description
long at 0.9718.
hard stop at 0.9645 or daily close below 0.9700.
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more