US Dollar positioning is turning increasingly bullish against the spectrum of major forex currencies. We have already initiated exposure against the Euro, the British Pound and the Australian Dollar, with trades selling the Canadian and New Zealand dollars against the greenback pending just around the corner.
[B]EUR/USD[/B]
[B]Strategy: Short at 1.3936, Targeting 1.2922[/B]
[B]Weekly Profit / Loss: [/B][B]- 8 pips[/B]
We sold EURUSD at 1.3936 after the pair confirmed a Dark Cloud bearish reversal pattern with a break through the bottom of a rising channel, initially targeting the previous swing bottom below 1.30. Prices are now setting up a Head-and-Shoulders top with a neckline in the 1.3725-1.3804 region. We also notice a short-term falling channel guiding the down move. We will remain short, looking for prices to take out the neckline in the days head. As before, a stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]GBP/USD[/B]
[B]Strategy: Short at 1.6274, Targeting 1.4990[/B]
[B]Weekly Profit / Loss: [/B][B]-74 pips[/B]
Last week we wrote that the British Pound was showing signs of a double top below 1.6670 but held off on entry as prices tested resistance-turned-support at the upper boundary of a previously broken rising channel. This proved wise, as prices recovered to re-test the swing high once again. Earlier this week, we sold the pair at 1.6274 as prices put in a clear Three Inside Down bearish reversal pattern. GBPUSD is little changed since then and will remain short, initially targeting 1.4990. A stop-loss will be activated on a daily close above the 06/03 wick high at 1.6667.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY[/B]
[B]Strategy: Flat[/B]
Last week we opted to remain flat USDJPY even the pair had broken out of a falling channel on concerns that a reversal in risky assets would boost the safety-linked Japanese unit. This proved wise, with the Yen outperforming the spectrum of major currencies as stock markets turned lower. Turning now to the long-term picture, we see the monthly chart showing a clear falling channel that has continued price since June 2007. Prices bounced from the bottom of this formation early this year and now appear to be turning lower at support-turned-resistance in the 99.56-101.50 area. We do not see a clear selling opportunity at the moment however, and will remain on the sidelines for the time being.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD[/B]
[B]Strategy: Pending Long[/B]
Last week, we noted that USDCAD looked to be finding a bottom having put in a Bullish Engulfing at 1.0789 at the bottom of a falling channel established from in mid-April. Indeed, the pair broke higher above the channel boundary and is now stalling ahead of support-turned-resistance at 1.1453. Back to back star candlesticks hint that a correction lower is likely before the rally begins in earnest, with a possible bottom at the broken channel’s top (now at 1.0349). We will remain flat for now and look for buying opportunities on a pullback.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD[/B]
[B]Strategy: Short at 0.7896, Targeting 0.6949[/B]
[B]Weekly Profit / Loss: [/B][B]-46 pips[/B]
We sold AUDUSD at 0.7896 as prices broke support of a rising channel after showing a Bearish Engulfing reversal pattern. Since then, prices have corrected higher and now look to be setting up a double top, with the bearish bias bolstered by negative divergence o the RSI oscillator. We will remain short, continuing to target a decline to the previous swing bottom at 0.6949. A stop-loss will be activated on a daily close above the 06/03 wick high at 0.8269.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]NZD/USD[/B]
[B]Strategy: Pending Short[/B]
On balance, NZDUSD positioning is little changed from last week: Prices remain confined in a rising channel and are now testing its lower boundary. A daily close below this juncture (now at 0.6260) will expose a selling opportunity to target the previous swing low at 0.4913.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
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