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USDCAD 1 hour CHART – RISK OFF
A risk off tone in equities is weighing on commodity currencies.
As can be seen on this chart, rising red AT lines are showing up momentum with support while above 1.3650.
However, there is a void of key levels on top until above 1.37, which means no obvious stop levels to go after, making the high of the day the closest resistance.
EURUSD 5-MINUTE CHART – THE AMAZING TRADER AND EPISODES
i could have posted a 15 and 30-minute chart to illustrate the same points, which are
1) How the Amazing Trader (blue) resistance line stopped the rally dead on. You may have drawn a similar line but it certainly is a lot easier for me when it is drawn dynamically.
2) Look at the up and down arrows. I view these as episodes: up as a correction, down in keeping with the current risk.
USDX 4 HOUR CHART – EURUSD PROXY DAY
A look across major currencies shows most trading close to unchanged vs. the dollar except EURUSD, which is down just 0.11% after bouncing off its intra-day low.
This suggests it has been a EUR more than a USD move today and this is reflected in a firmer USDX, where EURUSD represents 57.6% of the index.
XAUUSD 4 HOUR CHART – HELD BELOW RESISTANCE
I noted yesterday that 2370 was a key resistance level and the pause below it has seen the downside tested.
This has seen a minor trendline nicked but 2338 would need to be broken to put the 2325 low in play.
Otherwise, look fro 2350 to set the intra-day tone.
EURUSD 4-HOUR CHART – UNDERPERFORMER
EURUSD has been the underperformer so far today, losing both cs. the dollar and on its crosses (e.g. eurgbp, eurjpy)_
Attention has now shifted to the bottom of the current 1.0805-95 range, a reversal of what was seen at this time yesterday.
To keep it exposed. the break of 1.0839 needs to hold although 1.0850 will likely set its intra-day tone.
USDJPY DAILY CHART – What’s the Nervous Zone?
USDJPY extended its high through 157.19, leaving it as initial support although expect bids below the market.
Move-up should put MoF/BoJ on intervention alert but it would be like pissing in the wind if US bond yields remain firm.
With that said, 157.99 is the last line of defense ahead of the 160.16 high so a level that the BoJ would not like to be broken. This would make 157.50-00 a nervous zone if it should trade.
While the move in the US 10-year Treasury bond yield above 4.50% has seen the forex market react (with a bit of a delay), the key yield is one set around the start of May at 4.69%. This leaves room on the upside in terms of yield should 4.50% become the new floor.
In any case, this article shows you
Today was a good example of a market trying to trade the old episode (dollar down) when a new one has begun. (dollar up).
This is why I look at the forex market as trading in episodes rather than trends.
Why You Need to Focus on Trading Episodes and Not Trends
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