The FX market doesn’t seem to know what to do with the Greenback at the moment.
Against the Pound, we’re seeing Dollar weakness:
What do I mean? Well, after rejecting the upper trendline I’ve drawn in here (USD strength), price rushed back up just to have another go at breaking out. Not to mention that the overall, multi-month consolidation we’re seeing here suggests a bigger move higher (i.e., more USD weakness in store)
Similarly, here is the Aussie daily chart:
Price has already managed a close above the capping trendline, opening the way for more upside; more USD weakness.
Contrast this with the Swissy:
We’re seeing price making higher highs and higher lows on the daily timeframe. We could even argue that an inverted head and shoulders pattern has printed. This suggests Dollar strength.
You could be forgiven for thinking that we’re seeing USD weakness against the so-called “commodity currencies”, but once again, we see a contrasting picture with the Loonie:
The USD blasted above resistance…only to collapse back down, and now threaten its supporting trendline.
What do we do with this “conflicting” information? Trade it. Why can’t the dollar be weak against some, and strong against others?
GBPUSD: I like the long breakout. I will short the Dollar if/when the breakout and retest comes.
AUDUSD: Breakout has happened. Let’s get the retest and go long AUD, short USD.
USDCHF: Go long for Dollar strength? Sure, why not. We need the neckline to break first
USDCAD: Short, aiming for USD weakness. Let’s have the trendline break and retest.
Now, two other markets that present opportunity.
I think EURGBP is in a lovely spot for a bounce. What we need to see now is a big, bullish candle on the daily timeframe off this spot.
The GBPNZD appears to have run out of buyers. Price has been tightening up for some time now and appears to be about to break to the downside. I think the smart way to play this is to wait for the confirmed break, wait for a retest, and sell on continued weakness, perhaps on the 4-hour timeframe.
OK, one more Dollar pair, because I think this one is really interesting: The Yen.
This Yen weekly chart shows the very clear break of support at 107.50 to 108.00 (it’s the same zone for me).
But since then, price has done nothing. Is it pausing before moving lower, or instead is it building a solid foundation for a leg higher.
I think USDJPY is going to spike up and catch a whole lot of traders off guard, getting them into long positions. And then she’s going to fall, and take out the recent lows. Let’s see.