USD Analysis

Hello Forex Traders!

Yesterday the currency market loosened up a bit with a decent intra-day fall on the EURUSD – for example. Although the range remains relatively tight as the October 17 deadline for raising the debt ceiling in the U.S. approaches.

Is it quietness before the storm? Will volatility spike?

Keeping an eye on the news the next of days is advisable, but other than that I will keep focusing on technical analysis for actual trading decisions. 🙂  How about you? Are you risking less when the budget date arrives?

We will look at the US and the USD via the USDCHF and USD index in today’s article.

By the way, for those who want more information on the following, please click on the links:

1)      Double Trend Trap Trades October 15 

2)      EURUSD and AUDUSD analysis 

3)      Trader’s Tech part 96 

4)      EURGBP and GBPAUD updates 

5)      How to trade Gartley pattern

16- 10- 2013 USD W

The USD Index is currently in the middle of a wedge (black trend lines) and it is approaching horizontal support (green lines). There is also trend line (purple) that is providing support.

The main question on the 4 hour chart is whether the channel can be considered a bear flag or an uptrend? Keeping an eye on both sides of the channel is advisable. A break down might confirm that the upside was a correction. A break above the resistance (red) could confirm the upside continuation but be aware of the Fibonacci retracement levels. Let us take a look how that info translates with the USDCHF.

16- 10- 2013 usd 4

USDCHF

The USDCHF is nicely trending up on the hourly chart ever since the bounce off of the 0.900 price level and break out of the down trend (orange trend channel).

The uptrend channel (blue) is at a very neat angle and has neat touches on the tops and bottoms. Within the channel, price has moved up impulsively whereas the corrections were primarily sideways. This is a classical example of a trend channel.

In all 3 cases, the currency has also respected the 61.8% Fibonacci retracement level (purple circles), and in 2 cases the currency has broken out of those corrections (light green lines).

16- 10- 2013 uc 1

Will the USDCHF move up yet again to higher ground? There is 1 hour divergence between the tops but as long as the UC stays within those blue lines, there is a decent chance of continuation.

How does this short-term vision align with a longer-term chart?

The weekly chart is showing that the weekly pinbar which was created on the USDCHF 2 weeks ago at the weekly support levels (green) could be a classical reversal signal. How far could the bounce go? Well, the next major weekly resistance is the weekly top at 0.9450 and the weekly trend line at 0.9670. So there is space to the upside. Will the currency actually travel that far? That is something we can monitor by keeping an eye on – for example – the trend channel of the lower time frames.

16- 10- 2013 uc w

What is your opinion of the USD? Are you looking to trade it? Let us know in the comment section down below.

All shares of this article are greatly appreciated and wish you Good Trading in the 2nd half of this week!

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