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FX Indices: pause or reversal?

September 26, 2020

It was a good week for the US$ and the index will close with a large bullish weekly candle and back above the recently broken 10-yr support trend line. The question now being: is this a pause or reversal of the recent bearish move? There are a few clues traders can look for when monitoring this latest shift. Next week brings end of month and NFP to throw into the mix of news. I have left this post unlocked for this week so, if you find this article of any use, please consider subscribing.

 

DXY

DXY monthly: the monthly candle will close on Wednesday but is currently printing a bullish engulfing candle. This coming after four bearish monthly candles:

 

DXY weekly: these bullish-reversal descending wedges rarely fail!!

 

DXY daily: price action is now stuck in the resistance of the daily Cloud so watch for any new breakout: up or down:

 

DXY daily + fibs: any bullish breakout would bring the 61.8% fib, circa 99, into focus:

 

DXY 4hr: some extra trend lines to monitor at the start of the week:

 

EURX

EURX monthly: the monthly candle will close on Wednesday but is currently printing a bearish engulfing candle. This coming after five bullish monthly candles. The question here being: is this just a test of the recently broken multi-year trend line? Such events do often occur before eventual continuation so keep an open mind:

 

EURX weekly: so much for that look of a Bull Flag but a test of this multi-year trend line was always on the cards:

 

EURX daily:watch for any potential support from the bottom of the daily Cloud and multi-year trend line:

 

EURX daily + fibs: any break of this support would bring the 61.8% fib, circa 112, into focus:

 

EURX 4hr: there is a bit of a bullish-reversal descending wedge on this 4hr chart so keep an open mind and watch trend lines for any new breakout:

 

 

FX Index Alignment: the FX Indices are not aligned at the moment.

  • EURX: is below the 4hr Cloud but in the daily Cloud so currently not aligned and prone for potential choppy EUR$ price action.
  • USDX: is above the 4hr Cloud but in the daily Cloud so currently not aligned and prone for potential choppy USD$ price action.

 

 

Calendar: the main risk-event this week is NFP: