Are you familiar with the technical term of confluence? It's when completely different technical tools like moving averages, Fibonacci Levels, or pivots lay right on top of each other. This signifies a critical level could be sitting at a specific price area.
There is a strong confluence on $AUDUSD near 0.9200. The chart below shows that these levels combine; prior price action support, the 200-dma, and 2 critical Fibonacci relationships. If the USD continues to strengthen and AUDUSD continues to drop, the 0.9200 level will be a critical level to watch to see if buyers step in or the correction deepens.
This morning, EURUSD punched below the infamous 1.3503 spike low of early June and printed an intraday low just 13 pips above the 2014 low. However, we're about to close on the highs, which is an ominous price action signal.
If you’re not comfortable with price-action analysis, register for our free online price action course here.
If you're in this trade or aren't sure about entering, here are a few levels worth watching.
A close above 1.3575 could warn of a bounce higher is in the works and it's best to put aside a short bias for now. However, a close back below the 2014 low of 1.3476 could bring the Nov. '13 low of 1.3295 into focus.
Of course, a break above 0.8845 could target the 0.8975/0.9000 level which is a historical chart juncture from nearly 35 years ago.
I've yet to find something that can help you see where the next probable move in the market could land like the Elliott Wave Approach. Looking to the USDOLLAR index provided by FXCM / Dow Jones, Keep an eye for the following levels:
Bullish Break: 10,480
Very Bearish Break: 10,375
Believe or not, the bears have turned to bulls. At least according to the DailyFX Speculative Sentiment Index. If you're not familiar with the SSI, it is a prime contrarian indicator in the FX market.
Here is the description from the DailyFX site:
The SSI is a powerful tool unique to FXCM. It shows you FXCM's trading book: what our clients are trading. At a glance, you can see where traders are in the market. Are there large numbers of buyers or sellers? Are they exiting or entering? FXCM's SSI is updated twice every day, and the information is current - unlike the COT report.
As a contrarian indicator, when a majority of traders are short, you can look for buying entries. Since July 2013, this has been the case, whereas EURUSD contained many sellers and few buyers. Unfortunately for them, this was happening as EURUSD was moving from 1.2750 up to 1.3992 in early May '14.
However, a major shift has developed. Specifically, EURUSD SSI readings have flipped from net-negative since 07/13-05/14 to net positive toward the end of this month. Should the Bulls gather steam, a clear contrarian signal would be put in to have us looking for further declines.
The data out of the US is finally starting to impress. This is a story that Wall-Street and FX traders around the world have been waiting for. Based on a recent turn-around in $USDCAD, the best as well as the 2014 highs, could be yet to come.
The USDollar continues to underwhelm in 2014 and if Risk-On sentiment continues (it's starting to feel like SPX500 will never drop 10% +) AUDUSD could find itself pushing higher yet again.
A few key technical levels come into picture. 0.9450 is the corrective high that a trendline is drawn off of and a close above that level could see the correction as over. A more aggressive entry would be to enter off the trendline break, which sits near 0.9405.
Counts are based on Elliott Wave Theory
To learn more, click here: http://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2013/10/18/Basic_Tenets_of_Elliott_Wave.html
Recently, Canada bank debt outlook was downgraded and a potential soverign debt dowgrade could be in the works as the following headlines came across news wires:
Day of reckoning nears for Ontario as growing deficit raises risk of fresh credit downgrade
Moody’s lowers outlook on Canada’s biggest banks
An important election took place which gave victory to the Liberal party in Ontario, which will look to boost the economy through a massive spending for infrastructure and education all the while the nations budget is in the red.
Keep an eye on the 1.0820 level on USDCAD because if it holds, there could be opportunity on the horizon for USDCAD longs. If that level breaks due to USD weakness, then GBPCAD could become increasingly attractive.
We will never know until we know but there is evidence that could favor that a top may have been put in for EURUSD this month.
First, the long-term charts show a very ominous pattern for EUR bulls. A Bearish Key Month is at work. A Bearish Key Month, or week or day, happens when you post a higher high but close BELOW the low of the prior time period. This shows a key reversal of sentiment and a close today below 1.3671 would confirm a bearish key month, which developed off a 5-year trend line.
- FXCMTrading Instructor
Identify the Risks
High Risk Investment
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
DailyFX Market Opinions
Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Accuracy of Information
The content on this website is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. Dailyfx has taken reasonable measures to ensure the accuracy of the information on the website, however, does not guarantee its accuracy, and will not accept liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the website, for any delay in or failure of the transmission or the receipt of any instruction or notifications sent through this website.
This site is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to in this website are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of visitors to this website to ascertain the terms of and comply with any local law or regulation to which they are subject.
Third Party Links
Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. DailyFX neither endorses nor guarantees offerings of the third party providers, nor is DailyFX responsible for the security, content or availability of third-party sites, their partners, or advertisers.
- Texas State University System2005
Learn Forex: The USDMXN has an Ichimoku Set-Up & Carry Trade Edge | ...
Many traders understandably only look at the major currencies, but the lesser known USDMXN has a compelling story and Ichimoku set-up to con
Learn Forex: Automated Trading May Be The Solution You Seek | DailyFX
While Auto trading isn’t for everyone, it can be a great fit for the trader who has a hard time taking all the incoming information
Learn Forex: Learn To Read Candles For Valid Breakouts | DailyFX
Breakouts happen when emotions are running high in the market. Here are a few clear ways to see if the breakout may not follow through.
Learn Forex: Prevent Counter Trend Trading With Ichimoku | DailyFX
GBPUSD has spent much of the month above the Ichimoku Cloud signaling a Bullish Market for the pair. If price action tips its hat at
Learn Forex: 3 Tips For Trendline Trading | DailyFX
Trendlines are a staple for technical Forex traders that can be used on any currency pair and on any time frame. Follow these 3 easy