The EURUSD, AUDUSD, and NZDUSD are threatening to break above resistance and confirm reversals. The recent USDJPY range may be a triangle that leads to a terminal thrust (top and reversal) above 99.68.
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 -42, which indicates range / bearish potential. The wave structure is at odds with classifying current conditions as an early downtrend. The pair tested but closed below a short term trendline. A close above this line would be bullish.
BRITISH POUND / US DOLLAR
The trend index is at -87, which indicates downtrend / potential for a bottom. Structurally, a flat could be unfolding from 1.35. As such, a low could form soon.
AUSTRALIAN DOLLAR / US DOLLAR
The trend index is at -60, which indicates downtrend / potential for a bottom. It is best to wait for a break from the compressed range before taking sides. Similar to the EURUSD, the AUDUSD is testing resistance; watch for a break higher.
NEW ZEALAND DOLLAR / US DOLLAR
The trend index is at -70, which indicates downtrend / potential for a bottom. The interpretation is the same for the NZDUSD as the AUDUSD.
US DOLLAR / JAPANESE YEN
The trend index is at 94, which indicates uptrend / potential for a top. One more high (above 99.68) is expected before a reversal.
US DOLLAR / CANADIAN DOLLAR
The trend index is at 79. 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 -6, which indicates mean reversion. Following strong uptrend readings in early February, the USDCHF reversed and recent readings have indicated mean reversion. Notice that there were not strong uptrend readings at the top of the recent range. This indicates a weak market (divergence).
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
