Category Archives: USD Index

The Trading Room – 13th February, 2017

Today’s Trading Room looks at USDJPY, USD Index, NZDUSD, EURUSD and US Oil (by popular demand).

To learn what the Trading Room is about see last Trading Room analysis here.

USDJPY

TECHNICAL ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

For the long term, assume the trend remains up until proven otherwise. The long term 200 day moving average still has a positive slope, and the short and mid term averages are still above it.

For the mid term, price has seen a relatively deep pullback. The question will be: Is this over and will the upwards trend resume?

Price is at support just above 111 (horizontal support and resistance lines are drawn after looking back 3 years). Resistance is just above 114 and next about 116.

There is some bullish divergence with RSI, but RSI did not reach oversold for this pullback.

The risk here is that the pullback may move lower and RSI may develop double divergence with price before price turns up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

ELLIOTT WAVE ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

This wave count has excellent alternation and Fibonacci ratios. There are also some close Fibonacci durations for waves.

If intermediate wave (4) moves lower, it should find strong support at the lower edge of the best fit channel. Double zigzags are reasonably common structures. Triple zigzags (labelled W-X-Y-X-Z) are very rare. If intermediate (4) is correctly labelled as a double zigzag, then the probability that it is over here is very high.

VOLUME ANALYSIS

USDJPY Chart Daily 2017
Click chart to enlarge.

Volume increased during the middle portion of the pullback, and now at the last low volume declined as price fell; the market fell of its own weight. This points to a tired trend. Price certainly could move lower here, but the probability of a low in place has slightly increased.

On Balance Volume is at support. If it breaks below the yellow line, that would be a bearish signal.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price has moved upwards since last analysis of this market.

The long term trend should be assumed to remain upwards until proven otherwise. This downwards movement should be assumed to be a pullback within a larger upwards trend.

Looking back at price behaviour in the last upwards wave from the left of this chart: price starts out slowly with choppy movement, generally trending, and it is not until the middle of the movement that Bollinger Bands widen and ATR shows a good increase. Then the trend quickly became extreme, yet price continued upwards while ADX steadily declined from about 45. So trends for this market can remain very extreme for long periods of time.

The current situation looks similar to that back in September 2016: ATR is declining as price moves up, Bollinger Bands are contracting, ADX is low and below both directional lines, and RSI is neutral. In the current day, Stochastics is also returning from oversold and exhibits single bullish divergence at last lows.

It is looking like USD index may be in the very early stages of the next wave upwards.

Unfortunately, neither BarChart nor Stockcharts provide volume data for the USD Index, so no volume analysis can be done.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

The structure of intermediate wave (3) and of primary wave 5 is incomplete. Price has found support and bounced up off the best fit channel. The short term yellow resistance line is breached. It is looking increasingly likely that USD index is beginning the next wave up.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Since last analysis of this pair, which was very bearish, price has fallen and closed below the short term Fibonacci 13 day moving average. The long, red daily candlesticks look bearish, and the longer upper wicks on the first two are bearish.

RSI is now neutral and Stochastics is returning from overbought. There is room for this wave down to continue.

ADX was extreme. It has a long way down to go before it would again indicate a trend.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

The green support line has been fully breached.

The structure here is seen as a leading expanding diagonal. The fifth wave of minute wave v must be longer than minute wave iii to meet the rule regarding wave lengths for expanding diagonals. This gives the minimum target calculation.

A trend line is drawn about On Balance Volume, which has been tested at least three times before and is long held. It is now breached and OBV is coming up for a back test of resistance. If this line holds, it would be strengthened and more confidence would be had that price has turned.

The three red daily candlesticks in last week saw increasing volume. This supports downwards movement and adds confidence in a trend change here.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Support and resistance lines are added this week. Look for support next at 1.055.

This pair is not as clearly bearish as NZDUSD, but it does look like they may be turning downwards together. Look out for Bollinger Bands to widen as volatility returns to this market.

Stochastics is returning from overbought after exhibiting divergence there. If it reaches oversold while price reaches support, then this market will be carefully analysed for any weakness in downwards movement.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume remains bearish. A back test of resistance for both yellow trend lines has happened and OBV has turned down from both giving bearish signals.

The best fit channel has been breached. A one day throw back occurred right after the breach, but price may still curve up and around for a longer back test of resistance. That is the risk here to short positions.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

US Oil

TECHNICAL ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

US Oil entered a consolidation back in December 2016. Since then price has been fluctuating with typically choppy movement from resistance to support and back again. Resistance is about 54.15 to 54.35 and support is about 52.15 to as low as 50.70. During this long consolidation, it is now two upwards days that have strongest volume suggesting an upwards breakout is more likely than downwards.

On Balance Volume has last week given a strong bullish signal.

Prepare for an upwards breakout. This may happen this week.

A classic analysis target would expect price to travel at least the distance of the widest part of the consolidation after a breakout. That would expect a movement of about 4.53.

ELLIOTT WAVE ANALYSIS

USOil Chart Daily 2017
Click chart to enlarge.

The Elliott wave analysis is overall very bearish for US Oil. This is an alternate wave count that is published here because it aligns with the classic technical analysis today.

This wave count expects essentially that any upwards breakout may be false and short lived.

Trading advice for members only: [Content protected for Elliott Wave Gold members only. To subscribe click here.]

DISCLAIMER

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Accept that this analysis may be wrong. It is impossible for any analyst to predict with certainty what a market will do next.

This analysis is published @ 06:27 p.m. EST on 12th February, 2017.

The Trading Room – 8th February, 2017

Introduction:

The Trading Room is a new idea that I want to test and develop over the next few months.

I find myself spending a lot of time writing and publishing analysis of Gold and the S&P500 (over at Elliott Wave Stock Market) when those markets are quiet and range bound and offer no good trading opportunities. This focus on inactive markets takes focus away from markets that are trending and do offer good trading opportunities.

What if the focus was on finding good trading opportunities over a range of markets rather than daily analysis of specific markets? What if the Trading Room can be the platform for publishing these good trading opportunities?

Therefore, this Trading Room approach will look over a range of markets to identify any possible trading set ups which may unfold now or over the next few days, and the focus will be on trading set ups and not on teaching and learning Elliott wave.

Analysis will be brief and to the point.

As always, it is essential that anyone using this analysis for trading advice manages risk carefully. Follow my two Golden Rules:

1. Always use a stop.

2. Never invest more than 1-5% of equity on any one trade.

Trading is about probabilities, not certainties. Failure to follow my two Golden Rules of trading indicates failure to manage risk.

Today’s Trading Room focuses on NZDUSD, EURUSD, USD, and GDX:

EURUSD

TECHNICAL ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

So far upwards movement should be assumed to be a counter trend movement, until proven otherwise. The prior wave down put ADX into extreme and upwards movement from the 3rd of January has brought ADX back down from extreme. There is again room for a trend to develop.

Single divergence with Stochastics on its own is not enough to indicate a high in place. A breach of a support line should be seen before entering short.

Stockcharts do not offer volume data for currencies, so this is analysed below with BarChart data.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

EURUSD Chart Daily 2017
Click chart to enlarge.

The best fit channel is slightly adjusted to be more conservative than the last published chart for EURUSD. If price can print a full daily candlestick below the lower edge of the yellow channel, that would offer further confidence in a trend change. When that trend line is breached, then it should offer resistance.

Stops may be set a little above the trend line offering a low risk high reward opportunity. Do not set stops too close to the line; allow the market room to move. Sometimes trend lines are overshot and this trend line is not perfect.

On Balance Volume has confidently breached a horizontal support line which offers strong technical significance. A retest of resistance at that line shows it holds. This is a strong bearish signal.

NZDUSD

TECHNICAL ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

Classic technical analysis of this pair is very bearish. The long upper wick on this last daily candlestick is bearish. This trend is extreme; it will end sooner rather than later.

ELLIOTT WAVE ANALYSIS + VOLUME ANALYSIS

NZDUSD Chart Daily 2017
Click chart to enlarge.

On Balance Volume has no trend line. Any trend line drawn would have too steep a slope to have reasonable technical significance.

If an expanding diagonal is unfolding, then minute iv must be either over now or very close indeed. There is almost no room left for it to move.

I have been analysing NZDUSD (because I’m a Kiwi) for years using Elliott wave and I will note that NZDUSD rarely offers good looking Elliott wave structures. Therefore, I place more weight in classic analysis of this pair than Elliott wave analysis. The Elliott wave analysis is supplementary.

I will wait for the green support line to be fully breached before going short here.

USD INDEX

TECHNICAL ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

There is not enough bullish indication here to go long yet. Upwards movement on this chart is a clear trend and downwards movement is choppy and overlapping, so downwards movement looks more like a counter trend movement. If that conclusion is correct, then USD should break out upwards.

The larger trend at the monthly chart level remains up and the 200 day moving average still has a positive slope.

ELLIOTT WAVE ANALYSIS

USD Chart Daily 2017
Click chart to enlarge.

Neither Stockcharts nor BarChart have volume data.

The short term yellow resistance line has been breached. However, the long upper wicks on the last two daily candlesticks gives some cause for concern.

Price may be bouncing up from the lower edge of the best fit channel. With another upwards day moving further away from the trend line, a long position may be entered. A stop may be set just below the last low.

GDX

TECHNICAL ANALYSIS

GDX Chart Daily 2017
Click chart to enlarge.

Next resistance is at 26.0.

This chart is provided today mostly for members of Elliott Wave Gold and not because I see a trading set up here, because I don’t. (That doesn’t mean one does not exist, only that I don’t see it today).

Going long here risks entering at the end of the trend. ADX is nearing extreme and price has closed above the upper edge of Bollinger Bands now for the last four sessions.

Going short here is trying to pick a top. Before going short at least two of the following should be seen: a bearish candlestick pattern, a break of support by On Balance Volume, divergence with price from RSI while overbought, price to move below the short term 13 day moving average.

This analysis is published @ 02:59 a.m. EST.

USD Index Elliott Wave and Technical Analysis – 12th December, 2015

I have only one bullish Elliott wave count for the USD Index.

New updates to this analysis are in bold.

US Dollar Elliott Wave Chart Weekly 2015
Click chart to enlarge.

The US Dollar has been in a bull market since July 2011. So far there is no confirmation of a trend change. The bull market should be assumed to remain intact until proven otherwise.

Ratios within intermediate wave (1) are: minor wave 3 is 24.98 longer than 2.618 the length of minor wave 1, and minor wave 5 has no Fibonacci ratio to either of minor waves 3 or 1.

Within minor wave 3, there are no Fibonacci ratios between minute waves i, iii and v.

Ratios within minute wave iii are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 8.46 short of 0.382 the length of minuette wave (iii).

Within intermediate wave (3), minor wave 3 is 87.36 longer than 4.236 the length of minor wave 1.

Minor wave 3, within intermediate wave (3), shows strongest upwards momentum. MACD supports the Elliott wave count.

Within intermediate wave (3), minor wave 2 was a very deep 0.98 zigzag. Minor wave 4 is a shallow flat correction. There is perfect alternation between these two corrections which increases the probability of this wave count.

Draw a channel about intermediate wave (3) using Elliott’s first technique: draw the first trend line from the highs labelled minor waves 1 to 3, then place a parallel copy on the low labelled minor wave 2. So far this contains all of intermediate wave (3). The lower edge of this channel is proving useful in showing where downwards movement is finding support.

The US Dollar was in a sideways consolidation since mid March. During this sideways movement it is an upwards week which has strongest volume. This indicates that when the consolidation is complete an upwards breakout is more likely than downwards. So far, at this stage, it looks like price has now broken out of this consolidation upwards as expected.

A final support line is shown in cyan.

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

Minor wave 4 was a flat correction. Minute wave b is a 105% correction of minute wave a, so this is a regular flat. Minute wave c is longer than normal for a C wave within a regular flat. There is no Fibonacci ratio between minute waves a and c.

The sideways consolidation turned out to be a leading contracting diagonal for minute wave i. This was followed by a relatively deep 0.52 flat correction for minute wave ii.

At 12,601 minute wave iii would reach 1.618 the length of minute wave i.

At 13,421 minor wave 5 would reach equality in length with minor wave 3.

This wave count expects a long extension for minor wave 5.

Within minute wave iii, the first wave for minuette wave (i) may now be complete, but it has a slightly truncated fifth wave. This slightly reduces the probability of this wave count and indicates caution. Risk management as always is the key to successful trading. This small truncation indicates traders should be careful to manage risk, if using this analysis for trading decisions.

So far minuette wave (ii) may be a complete quick shallow zigzag, at 0.48 the depth of minuette wave (i). If minuette wave (ii) continues any further, it should find strong support at the lower blue trend line copied over from the weekly chart.

The green base channel is drawn about minuette waves (i) and (ii). If minuette wave (ii) moves lower, redraw this channel. Draw the first trend line from the start of minuette wave (i) to the end of minuette wave (ii), then place a parallel copy on the higher price extreme within minuette wave (i) at the end of subminuette wave iii.

If price breaks above the upper edge of this base channel, then a third wave up would be confirmed. Along the way up, downwards corrections should find support at the lower edge of this channel.

TECHNICAL ANALYSIS

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

At the weekly chart level, the strongest volume during the sideways range from early March to October 2015, was an upwards week. This indicated price should break out upwards. New highs in November are the result.

On 5th November price made a new high on an increase in volume. This was an upwards breakout, supported by volume.

It is consistently upwards days which show strongest volume since that breakout. This supports the trend. The rise in price is supported by volume and is not suspicious.

Short term, at the low of 10th December, there is slight divergence with price and RSI. On 10th December price made a new low below the prior short term swing low of 3rd December while RSI did not make a corresponding low. This indicates weakness in downwards movement and is very often accompanied by a trend change. In the short term, some upwards movement should be expected from here. This supports the Elliott wave count which labels this downwards correction as a complete second wave zigzag.

ADX is rising and above 15, the red -DX line is above the green +DX line, so a downwards trend is indicated by ADX. ATR disagrees: it is flat indicating no clear trend at this stage. With these two lagging indicators not in agreement with each other and not with the Elliott wave count, caution is advised. The picture here is unclear and may be resolved if price now moves higher for a few days as RSI indicates it will.

The series of blue and pink trend lines are my own technique which I strongly favour when trading. Along the way up, price may find support and resistance at these series of lines; these may assist to time entry points. The first of each series of trend lines is drawn from the price points labelled and parallel copies are placed higher up at various swing lows and highs.

On Balance Volume is bullish while it remains above the trend line.

Overall, the bullishness of volume, OBV and RSI should be favoured over the lagging indicator of ADX at this time. This indicates overall upwards movement from the USD. There will be corrections along the way up, and the third wave expected to begin does not necessarily have to start out quickly (although it may).

USD Index Elliott Wave and Technical Analysis – 15th November, 2015

I have only one bullish Elliott wave count for the USD Index.

New updates to this analysis are in bold.

US Dollar Elliott Wave Chart Weekly 2015
Click chart to enlarge.

The US Dollar has been in a bull market since July 2011. So far there is no confirmation of a trend change. The bull market should be assumed to remain intact until proven otherwise.

Ratios within intermediate wave (1) are: minor wave 3 is 24.98 longer than 2.618 the length of minor wave 1, and minor wave 5 has no Fibonacci ratio to either of minor waves 3 or 1.

Within minor wave 3, there are no Fibonacci ratios between minute waves i, iii and v.

Ratios within minute wave iii are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 8.46 short of 0.382 the length of minuette wave (iii).

Within intermediate wave (3), minor wave 3 is 87.36 longer than 4.236 the length of minor wave 1.

Minor wave 3, within intermediate wave (3), shows strongest upwards momentum. MACD supports the Elliott wave count.

Within intermediate wave (3), minor wave 2 was a very deep 0.98 zigzag. Minor wave 4 is now complete as a shallow flat correction.

Draw a channel about intermediate wave (3) using Elliott’s first technique: draw the first trend line from the highs labelled minor waves 1 to 3, then place a parallel copy on the low labelled minor wave 2. So far this contains all of intermediate wave (3). The lower edge of this channel is again proving useful in showing where downwards movement is finding support.

The US Dollar was in a sideways consolidation since mid March. During this sideways movement it is an upwards week which has strongest volume. This indicates that when the consolidation is complete an upwards breakout is more likely than downwards. So far, at this stage, it looks like price has now broken out of this consolidation upwards as expected.

A final support line is shown in bright aqua blue.

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

Minor wave 4 did not complete as a triangle, as last analysis expected, but was over sooner as a flat correction. Minute wave b is a 105% correction of minute wave a, so this is a regular flat. Minute wave c is longer than normal for a C wave within a regular flat. There is no Fibonacci ratio between minute waves a and c.

The sideways consolidation was not a fourth wave triangle, which was what I had expected. Instead, the sideways consolidation turned out to be a leading contracting diagonal for minute wave i. This was followed by a relatively deep 0.52 flat correction for minute wave ii.

At 13,062 minute wave iii would reach 2.618 the length of minute wave i.

This wave count expects a long extension for minor wave 5.

No second wave correction may move beyond the start of its first wave below 11,855 within minute wave iii. Minuette wave (ii) should find strong support again about the lower edge of the blue channel copied over here from the weekly chart.

USD Index Elliott Wave and Technical Analysis – 25th September, 2015

I have only one bullish Elliott wave count for the USD Index.

US Dollar Elliott Wave Chart Weekly 2015
Click chart to enlarge.

The US Dollar has been in a bull market since July 2011. So far there is no confirmation of a trend change.The bull market should be assumed to remain intact until proven otherwise.

Ratios within intermediate wave (1) are: minor wave 3 is 24.98 longer than 2.618 the length of minor wave 1, and minor wave 5 has no Fibonacci ratio to either of minor waves 3 or 1.

Within minor wave 3, there are no Fibonacci ratios between minute waves i, iii and v.

Ratios within minute wave iii are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 8.46 short of 0.382 the length of minuette wave (iii).

Within intermediate wave (3), minor wave 3 is 87.36 longer than 4.236 the length of minor wave 1.

Minor wave 3, within intermediate wave (3), shows strongest upwards momentum. MACD supports the Elliott wave count.

Within intermediate wave (3), minor wave 2 was a very deep 0.98 zigzag. Minor wave 4 may be unfolding as a very shallow triangle which would exhibit perfect alternation.

Draw a channel about intermediate wave (3) using Elliott’s first technique: draw the first trend line from the highs labelled minor waves 1 to 3, then place a parallel copy on the low labelled minor wave 2. So far this contains all of intermediate wave (3). Minor wave 4 may find support at the lower edge of this channel if it gets that far.

The US Dollar has been in a sideways consolidation since mid March. During this sideways movement it is an upwards week which has strongest volume. This indicates that when the consolidation is complete an upwards breakout is more likely than downwards.

A final support line is shown in bright aqua blue.

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

The daily chart shows the whole structure of minor wave 4 which may complete as a triangle, as expected, but it is also possible the triangle may be invalidated and the structure may morph into a combination.

Minute wave d may not move beyond the end of minute wave b above 12,096 for the triangle to remain valid. This invalidation point is not black and white because for a barrier triangle D may end slightly above B, as long as the B-D trend line remains essentially flat.

Minute wave e may not move beyond the end of minute wave c below 11,867. This point is black and white for the triangle. If it is breached, then minor wave 4 may be morphing into a combination.

I would not consider the possibility that minor wave 4 could be over at the low labelled minute wave a because it would not exhibit alternation with minor wave 2; they would both be zigzags.