FXCM/DailyFX Signals and Analysis

US Dollar Breaks Key Support. Here are Levels We're Watching Next


The US Dollar has tumbled through significant support versus the Euro, Japanese Yen, and other majors. What levels are worth watching next?


EUR/USD
Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.
forex-trading-volume-at-price-and-us-dollar-levels_body_x0000_i1032.png

Data source: FXCM Real Directional Volume Indicator, Chart source: Prepared by David Rodriguez



The Euro surged beyond key resistance as it briefly broke to $1.17 versus the US Dollar, and the relative lack of further major resistance suggests risks remain for further advances. Support now starts at considerable volume-based congestion support near $1.14 and extends through $1.12. Resistance remains recent spike-highs at $1.17.
 
EUR/USD Posts Highest Volume Day in 2015 As Volatility Soars


On Friday, before the market shakedown, EUR/USD broke above the 200-day moving average for the first time since summer of 2014.

EURUSD-Sentiment-Vol-Dbl-Bottom-TYSSI_body_Picture_1.png.full.png



And it did so on high volume. This type of move favors follow-through.

EURUSD-Sentiment-Vol-Dbl-Bottom-TYSSI_body_Picture_4.png



From a pure sentiment perspective, where we look for aggregate retail positioning as a contrarian indicator, EURUSD has been flashing by signals from the 1.0808 bounce.

EURUSD-Sentiment-Vol-Dbl-Bottom-TYSSI_body_Picture_3.png



In the chart above, you can see the red bars showing retail open short positions largely outweigh retail open long positions, which favors further upside.
 
US Dollar Once Again in Control Versus British Pound


Our retail FX trader data shows that the majority of traders remain long the British Pound versus the US Dollar, and a contrarian view of crowd sentiment leaves us focused on further short-term weakness.


Weekly Summary of Forex Trader Sentiment and Changes in Positioning
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The US Dollar looks likely to resume its uptrend versus the British Pound. Here are the factors we’re watching.


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Last week we noted that traders had previously turned net-short for the first time since May, and that served as signal that the pair could be at a key turning point.


ssi_gbp-usd_body_Picture_5.png


That signal preceded a major break to the topside, but since then we’ve seen the pair break down and crowds have resumed buying.
 
COT-Smallest Short Position for Large Euro Traders in Over a Year

The COT Index is the difference between net speculative positioning and net commercial positioning measured.

A blue colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bullish) with speculators selling and commercials buying. A red colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bearish) with speculators buying and commercials selling.


Euro Daily Chart
Smallest-Short-Position-for-Large-Euro-Traders-in-Over-a-Year_body_eur.png


Non-commercials tend to be on the wrong side at the turn and commercials the correct side. Right now, large commercial traders have the smallest short position (meaning they are bullish the Euro) in over a year.

Use of the index is covered in more detail in Jamie Saettele's article on DailyFX.com.
 
FX Reversals: USD/CAD Declines on GDP Data

In today's Chart of the Day article, DailyFX trading instructor Walker England discusses the following:

  • USD/CAD moves lower on Canadian GDP Data
  • Today’s range measures 116 pips
  • R4 breakouts begin at 1.5477

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USD/JPY Battle Lines Drawn Ahead of NFPs- Short Scalps Favored Sub 120.80


Talking Points


USD/JPY Daily
Forex-USDJPY-Battle-Lines-Drawn-Ahead-of-NFPs--Short-Scalps-Favored-Sub-120.80_body_Picture_3.png.full.png


Technical Outlook
  • USD/PY approaches near-term resistance confluence 120.70/77
  • Key resistance & broader bearish invalidation at 121.83
  • Interim support objectives 119.88, 119.24 & 118.39
  • Pending RSI resistance trigger in play- breach would shift near-term focus higher
  • Event Risk Ahead: U.S. ISM Non-Manufacturing tomorrow and Non-Farm Payrolls (NFP) on Friday


USD/JPY 30min
Forex-USDJPY-Battle-Lines-Drawn-Ahead-of-NFPs--Short-Scalps-Favored-Sub-120.80_body_Picture_2.png.full.png
 
US Dollar in Position to Rally versus Euro, Yen. Here are Key Price Levels


The US Dollar remains in control versus the Euro and Japanese Yen. In his Weekly Volume at Price Report on DailyFX.com, quantitative strategist David Rodriguez discusses the key levels he is watching.


EUR/USD
Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.
forex-volume-at-price-update-us-dollar_body_x0000_i1031.png

Data source: FXCM Real Directional Volume Indicator


The Euro trades below key congestion levels at $1.12, and risks remain to the downside unless we see a significant move above the important price level. The psychologically significant $1.10 level remains the next logical target, while notable price and volume-based congestion near $1.09 offers subsequent support.

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USD/JPY
Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.
forex-volume-at-price-update-us-dollar_body_x0000_i1029.png

Data source: FXCM Real Directional Volume Indicator


The US Dollar continues to hold substantial volume-based support versus the Japanese Yen near the ¥119 mark, and trading above keeps focus on near-term technical resistance at the recent reaction high of ¥121.60. A break above sees little in the way of substantial resistance until considerable volume-based congestion near ¥123.50.
 
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