A look at Dollar Index DXY, EURUSD, AUDUSD, NZDUSD, GBPUSD, WTI and XAUUSD. A common theme – a turning point could be showing up soon seeing how these pairs might be at support.
These are some of the charts I showed to participants at my lunch time on Wednesday. Unfortunately I am only able to manage time to post today. As a reminder I do not have a CMS license so I am not qualified to make recommendations.
Chart #1 – Dollar Index 12M chart from 1970 – present
This first chart is a 12M chart which means each candle is shows OHLC price action of 12 months. This data is available from Tradingview.com when you have subscription.
As a background, DXY is down since 3 quarters i.e. Q1 – Q3 this year. The index is doing a retracement/consolidation this quarter. There is a new 52-week low so I see the start of a down trend. If not this quarter, then the seed of a new low is already planted for 2018. However that purple zone around 92.00 is critical. If the index doesn’t break this level, then there would be no new low. This level is a resistance-turn-support going back to 2004.
Dollar Index 12M chart from 1972 – present
Chart #2 – EURUSD weekly chart 2015 – 10 October 2017
This is a chart I used two sessions ago. The critical feature to look at is the former horizontal resistance at around 1.145. This is a prominent level between 2015 – 2016. While this is not the highest (for example EURUSD spiked to as high as 1.17 in Q3 2015), this is the recurring zone that price managed to close by the end of the week on many occasions.
EURUSD weekly chart 2015 – 10 October 2017
Last quarter’s rally pushed EURUSD above 1.145 decisively to a high of around 1.21 and forming a head and shoulders feature. But on the line chart you can see that space between 1.145 and the neckline of the head and shoulders chart pattern is actually devoid of price features. I am treating this as a forex gap to be covered eventually – meaning that EURUSD bears will be looking at 1.145 has a target. It makes a lot of sense from the psychological point of view because EURUSD bulls would want to commit to an entry level only at a strong level and 1.145 certainly looks stronger than any level above.
Chart #3 – EURUSD daily chart June 2017 – 07 November 2017
This chart was captured 3 days ago. You can see clearly the head and shoulders which was broken and you can see the 1.145 level printed clearly below.
The critical feature in this chart is the two black arrows which have the same length. This is a highly recurring phenomenon that demonstrates how prices tend to move by the same magnitude. Most interesting confluence between the prominent 1.145 level observed earlier in Chart #2 confluence with the projection indicated by the current black arrow. In other words, both methods observe a high probability of a turning point based on 1.145.
EURUSD daily chart from June to 07 November 2017
Based on overnight observation however, there seems to be support from 1.155 – 1.16 region. This level is last year’s 52-week high.
Chart #4 – AUDUSD weekly chart Sep 2015 to 07 Nov 2017
Support from rising channel. This is where two flows collide: traders following short term momentum falling from Q3 peak to present meet bulls trying to find best value and support to go long 1-year trend.
AUDUSD weekly chart Sep 2015 to 07 Nov 2017
Chart #5 – NZDUSD weekly chart late 2014 to 07 Nov 2017
Prominent support 1.5 year low.
NZDUSD weekly chart late 2014 to 07 Nov 2017
Chart #6 – GBPUSD weekly chart mid-2016 to 07 Nov 2017
There are two features in this chart. First feature, see the way price moves by the same magnitude. Note the two pairs of red arrows which have the same length. Second feature, see support show up in the price action very clearly with a pow-pow, test, re-test sequence.
GBPUSD weekly chart mid-2016 to 07 Nov 2017
Chart #7 – WTI weekly chart 2008 to 08 Nov 2017
WTI printed a new 52-week high so I am looking forward to further gains if not by end of 2017 then at least Q1 2018. It is important to establish if this 52-week high is a ‘real’ one or a fake break. I tend to think that this is a real break of the 54 level due to duration. Fake breaks usually ‘regret’ very quickly by falling back below.
If this is a real break, where is target? I am looking at WTI target around 60. This is 2015 high. My method -look for significant tops, move back the time frame like peeling an opinion level by level. (Is that even a right analogy? Sounds right to me.)
Some analysts numbers already came up like for example $70 per barrel. A look at the chart, it goes back to 2010. I think there is no point to be looking to far. Take one step at a time, before price goes to 70, it must overcome 60 first so focus on $60 per barrel as the immediate target.
WTI weekly chart 2008 to 08 November 2017
Chart #8 – XAUUSD weekly chart July 2016 to 07 Nov 2017
As a learning reinforcement, this chart of XAUUSD demonstrates the idea of looking for support or resistance by recognising levels that are being tested by the market. See what I wrote earlier about GBPUSD under Chart #6.
XAUUSD weekly chart July 2016 to 07 November 2017
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
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"I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."