DXY held this week at 103.63 and 103.53 by trading lows to 103.76 then the bounce to 104.60 highs. Target highs from last week was located at 104.80’s and 104.90. DXY is not only overbought but as written last week, the 105.21 highs forecasted for next week won’t trade. Any price in the upper 104.00’s to 105.00’s are short entries for USD to include USD/JPY, USD/CAD and USD/ EM.
Overall DXY is a horrible, non mover currency pair but its the only guiding light to accurately base market forecasts. Other methods exist but this requires work. As the BIS Triennial Surveys states every 3 years dating to early 1990’s, DXY is represented 85% in every transaction.
As DXY reaches its top, oversold EUR/USD approaches bottoms. EUR/USD big line is located at 1.0578 and a dropping line. As EUR drops, 1.0578 also falls. Overall bottoms are found at 1.0400’s. EUR/USD dropped 500 pips from 1.1100 highs. EUR/USD contains easy ability to trade to 1.0900’s. Overbought next week begins at high 1.0700’s.
In the DXY Vs EUR/USD relationship, as DXY builds average line supports below current prices then in EUR/USD materializes averages above current prices. Currently, 1.0700’s and 1.0800;s are lines to break for a higher EUR/USD to trade 1.0900’s. EUR/USD is finding itself in a range trap as it trades in relation to DXY at 117 pips this week to DXY at 87.
GBP/USD broke above 1.2046 this week and traded to 1.2159 as forecasted. GBP/USD big line for next at 1.2030 targets again middle 1.2100’s.
USD/JPY trap this week was the range from 133.99 to 134.66. USD/JPY broke 134.66 and traded 56 pips to 135.22. Last week’s 133.99 is today 134.54 as the impending break next week targets 132.00’s
GBP/JPY as the clear winning trade this week traded above the top at 162.07 to 163.74 highs. This trade was a free money short. On the way to the 159.00 target is the must break point at 161.73. Next week’s target at 160’s is easily achievable especially on USD/JPY’s break below 134.54.
EUR/JPY for weeks has been written as a problem currency. The dilemma is EUR/JPY is to high and must trade to easily 141.10 as first target then 137.00’s.
AUD/USD at 0.6855 targets the range from 0.6855 to 0.7008 or 153 pips. Buy drop strategy next week targets the 0.6855 break for a higher AUD.
GBP/AUD recommendation to long at 1.7300’s resulted in 18 long trades in the past 22 trade days. GBP/AUD traded its best day yesterday within the past month at 277 pips.
We’re short EUR/AUD and GBP/AUD next week and targets GBP/AUD break at 1.7549 to target 1.7400. After 1 month of trading, EUR/AUD and GBP/AUD reached uniformity as both now trade as one currency.
GBP/NZD trades overbought to oversold EUR/NZD. GBP/NZD is clearly the problem as has been the case over past months due to range issues. EUR/NZD is the better trade.
Day trades for today and factored yesterday align as best trades by the following currencies: USD/JPY, GBP/USD, GBP/JPY, EUR/AUD, GBP/AUD, EUR/NZD.
A normal list of 12 currency pairs to best trades align daily as USD/JPY, GBP/JPY, EUR/JPY as top 3 then GBP/USD, EUR/NZD, GBP/AUD, EUR/AUD. EUR/USD never makes the list nor NZD/USD,
AUD/USD, USD/CAD. DXY is offered as a guide rather than an actual trade.
Among 28 currency pairs, 14 currencies remain as viable trades. Interest rates and tiny interest rate trade ranges killed off USD/CHF, CHF cross pairs and CAD cross pairs. Eventually the mad scientists of market creation will destroy the 14 currencies to trade less than 50 pip daily ranges. Its viable as the 1960’s day trades was 10 pips at the daily highs.
Brian Twomey
BRIAN TWOMEY ON TRADING 