Gauging the U.S. Dollar and Dow's Next Move
Forex traders know that currency is the closest to "stock of a country". Since the U.S. Dollar is part of every major pair there must be a way to gauge what the U.S. economy will do.
"Major" pairs are EUR/USD; USD/JPY; and GBP/USD. Some traders consider the USD/CHF as being part of the major pairs. Even when venturing into commodity currencies the U.S. Dollar is a factor as with the USD/CAD and AUD/USD.
The EUR/USD and USD/JPY pairs have a unique place amongst the majors as the EUR/USD (also known as the "fiber") moves opposite to the U.S. Dollar Index. The USD/JPY typically moves with the Dow Jones. These two pairs can shed light on the U.S. economy and that can reveal trading opportunities in the U.S. Dollar correlated pairs.
The 60 minute EUR/USD has formed a Continuation Channel Down chart pattern as the markdown cycle has taken the prices to the 1.4200 level. Prices are testing this major psychological level. Thus far buyers are supporting the 1.4206 level as prices climb slowly. This means that the U.S. Dollar will be slightly down as the EUR/USD is slightly up.
Due to the Dollar moving slightly downward there is a good chance that the Dow Jones could move slightly upward. The setup here with the low Initial Trend (X) is to keep an eye on the downtrend resistance line (Y) as prices find selling pressure closing in on 1.4250. A break out would ideally break through the downtrend line and also the 1.4250 level.
Since the Initial Trend is weak this could work against the trend follow short. As long as prices are below the "50" pip mark a swing short can be taken off the downtrend line (Y). A break higher up on the EUR/USD chart could mean that the U.S. Dollar has broken lower.
The 60 minute USD/JPY has formed a Continuation Falling Wedge Chart pattern. This is a trending pattern that suggests the Yen's strength over the Dollar. When the U.S. Dollar is weak the Dow is usually up. Since both currencies are relatively flat here during the early hours of the New York session traders will have to wait and see what the psychology will bring. More fear means a stronger Dollar and a possible reversal on the USD/JPY. Risk aversion in equities would mean more downside. It would also mean a trend follow off on the downtrend resistance line (R) and the 93.00 level (S). Another low Initial Trend reading (T) means there is very little opinion here in the market at this time.
For further information on this and other chart patterns visit www.autochartist.com.
"Major" pairs are EUR/USD; USD/JPY; and GBP/USD. Some traders consider the USD/CHF as being part of the major pairs. Even when venturing into commodity currencies the U.S. Dollar is a factor as with the USD/CAD and AUD/USD.
The EUR/USD and USD/JPY pairs have a unique place amongst the majors as the EUR/USD (also known as the "fiber") moves opposite to the U.S. Dollar Index. The USD/JPY typically moves with the Dow Jones. These two pairs can shed light on the U.S. economy and that can reveal trading opportunities in the U.S. Dollar correlated pairs.
The 60 minute EUR/USD has formed a Continuation Channel Down chart pattern as the markdown cycle has taken the prices to the 1.4200 level. Prices are testing this major psychological level. Thus far buyers are supporting the 1.4206 level as prices climb slowly. This means that the U.S. Dollar will be slightly down as the EUR/USD is slightly up.
Due to the Dollar moving slightly downward there is a good chance that the Dow Jones could move slightly upward. The setup here with the low Initial Trend (X) is to keep an eye on the downtrend resistance line (Y) as prices find selling pressure closing in on 1.4250. A break out would ideally break through the downtrend line and also the 1.4250 level.
Since the Initial Trend is weak this could work against the trend follow short. As long as prices are below the "50" pip mark a swing short can be taken off the downtrend line (Y). A break higher up on the EUR/USD chart could mean that the U.S. Dollar has broken lower.
The 60 minute USD/JPY has formed a Continuation Falling Wedge Chart pattern. This is a trending pattern that suggests the Yen's strength over the Dollar. When the U.S. Dollar is weak the Dow is usually up. Since both currencies are relatively flat here during the early hours of the New York session traders will have to wait and see what the psychology will bring. More fear means a stronger Dollar and a possible reversal on the USD/JPY. Risk aversion in equities would mean more downside. It would also mean a trend follow off on the downtrend resistance line (R) and the 93.00 level (S). Another low Initial Trend reading (T) means there is very little opinion here in the market at this time.
For further information on this and other chart patterns visit www.autochartist.com.
- 2 September |
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