Mean reversion readings for the EURUSD, AUDUSD, NZDUSD, and USDCHF warn of breakouts in the coming days. Momentum favors a break towards USD weakness.
About the DFX Trend Index
The DFX Trend Index ranges from -100 to +100 and is updated everyday at 5 pm eastern US time. On the charts, bars are painted blue if the index is above 50 (uptrend) and red if the index is below -50 (downtrend). Readings between -25 and +25 result in a green bar to indicate that price has reversed to the mean. The spreadsheet shows the index values for the last 15 days.
50 to 100: uptrend / potential for a top increases the closer the index is to 100
25 to 50: in a range / bullish potential
-25 to 25: price has reversed to the mean
-50 to -25: in a range / bearish potential
-100 to -50: downtrend / potential for a bottom increases the closer the index is to -100
EURO / US DOLLAR
The trend index is at -9, which indicates mean reversion. Mean reversion warns of a breakout. In this case, the break will likely be higher.
BRITISH POUND / US DOLLAR
The trend index is at -68, which indicates downtrend / potential for a bottom. Structurally, a flat could be unfolding from 1.35. As such, a low may already be in place.
AUSTRALIAN DOLLAR / US DOLLAR
The trend index is at -7, which indicates mean reversion. Mean reversion warns of a breakout. In this case, the break will likely be higher.
NEW ZEALAND DOLLAR / US DOLLAR
The trend index is at -21, which indicates mean reversion. Mean reversion warns of a breakout. In this case, the break will likely be higher.
US DOLLAR / JAPANESE YEN
The trend index is at 93, which indicates uptrend / potential for a top. The USDJPY is topping. Price could spike through 99.68 prior to forming a more meaningful top.
US DOLLAR / CANADIAN DOLLAR
The trend index is at , which indicates uptrend. Stay long as the pair has exceeded the October high. Risk should be at 1.2712 now. If the stop is triggered, then watch for potential trendline support at 1.26.
US DOLLAR / SWISS FRANC
The trend index is at -9, which indicates mean reversion. Mean reversion warns of a breakout. In this case, the break will likely be lower.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
Please send comments about this report to jsaettele@dailyfx.com
