For the first time since January 12th, the EURUSD trend index is not negative. More importantly, this is the first time since December 5th that the index has flipped from negative to positive.
[B]About the DFX Trend Index
[/B]
The DFX Trend Index ranges from -100 to +100 and is updated everyday at 5 pm eastern US time. On the charts, bars are painted blue if the index is above 50 (uptrend) and red if the index is below -50 (downtrend). Readings between -25 and +25 result in a green bar to indicate that price has reversed to the mean. The spreadsheet shows the index values for the last 15 days.
50 to 100: uptrend / potential for a top increases the closer the index is to 100
25 to 50: in a range / bullish potential
-25 to 25: price has reversed to the mean
-50 to -25: in a range / bearish potential
-100 to -50: downtrend / potential for a bottom increases the closer the index is to -100
[B]
EURO / US DOLLAR[/B]
The trend index is at 0, which indicates mean reversion. This is the first time since 1/12 that the index is not negative and the first time since 12/5/08 that the index has turned from negative (which preceded the advance to 1.47).
[B]
BRITISH POUND / US DOLLAR[/B]
The trend index is at -60, which indicates downtrend / potential for a bottom. Structurally, a flat could be unfolding from 1.35. As such, a low may already be in place.
[B]
AUSTRALIAN DOLLAR / US DOLLAR[/B]
The trend index is at -5, which indicates mean reversion. Mean reversion warns of a breakout. In this case, the AUDUSD has broken above trendline and structural resistance, so the upside is favored.
[B]
NEW ZEALAND DOLLAR / US DOLLAR[/B]
The trend index is at -11, which indicates mean reversion. The interpretation is the same for the NZDUSd as for the AUDUSD.
[B]
US DOLLAR / JAPANESE YEN[/B]
The trend index is at 94, which indicates uptrend / potential for a top. The USDJPY is topping but it is unclear if a new high will be made prior to additional weakness. Staying below 98.51 keeps the topping scenario valid.
[B]
US DOLLAR / CANADIAN DOLLAR[/B]
The trend index is at 62, which indicates uptrend. Risk should be at 1.2712. If the stop is triggered, then watch for potential trendline support at 1.26.
[B]
US DOLLAR / SWISS FRANC[/B]
The trend index is at 40, which is neutral. Today’s surge (over 400 pips) made a mess of structure. It is worth noting though that such spikes tend to mark the end of a move more often than the beginning of a move.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
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