- A look at the weekly technicals on DXY, USD/JPY, AUD/NZD & TNX
- Review the Foundations of Technical Analysis mini-series
- Join Michael for Live Weekly Strategy Webinar s on Mondays at 12:30GMT
In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Here are the key levels that matter on the weekly charts heading into the holiday weekend.
DXY Weekly Price Chart
Notes: Last month we highlighted a key support zone in the Dollar Index , " at 88.26/71 where the 2010 swing high converges on the 50% retracement of the 2011 advance. Note that basic downslope support also converges on this region and further highlights the near-term risk to the broader downtrend. " Indeed price has continued to trade above this threshold for the past three weeks with the index once again testing this support on Friday.
Bottom Line: The focus remains on a below this level with the broader outlook still weighted to the downside while below the 2017 low-week close at 91.33 . A break targets the 2011 trendline support which converges on the 2014 September swing high at ~ 86.75 (an area of interest for possible exhaustion / long-entries).
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USD/JPY Weekly Price Chart
Notes: USD/JPY broke below confluence support at 107.84 this week with prices now probing the 61.8% retracement of the 2016 advance at 106.38 . Note that a sliding parallel of the dominant slope (red) caught the lows today and may offer a reprieve near-term.
Bottom line: From a trading standpoint, this support zone could interrupt things a bit but look to fade strength sub- 107.84 with a break lower targeting confluence support at 103.04/40 where the 100% extension and the 78.6% retracement converge on broader slope support (critical).
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USD/JPY IG Client Positioning
- A summary of IG Client Sentiment shows traders are net-long USD/JPY- the ratio stands at +2.58 (72.1% of traders are long) - b earish reading
- Retail has remained net- long since Dec 29 th ; price has moved 6.3% lower since then
- Long positions are 4.1% higher than yesterday and 20.6% higher from last week
- Short positions are 6.5% lower than yesterday and 8.9% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USDJPY-bearish contrarian trading bias from a sentiment standpoint.
See how shifts in USD/JPY retail positioning are impacting trend- Click here to learn more about sentiment!
AUD/NZD Weekly Price Chart
Notes: Our focus last week was on a key support confluence in AUD/NZD at, " 1.0791-1.0830 where the 50% retracement & 61.8% extension converge on the 52-week moving average and slope support. " A break below this level has us targeting, " the 61.8% retracement at 1.0722 and the 100% extension at 1.0626 . "
Bottom line: The decline is now probing below initial support and a weekly close below this level would keep price on course for a drop into the lower 50-line of the newly identified descending pitchfork formation. Interim resistance now with the 200-week moving average ~1.0770s with bearish invalidation now lowered to 1.0844 .
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TNX Weekly Price Chart
Notes: Yields on the 10-year have rallied to four-year highs with rates probing into a critical area of resistance this week around 2.90 where the 1994 channel resistance converges on the 50-line of the ascending pitchfork formation extending off the 2015 low.
Bottom line: The implications of a breach here are Big with a rally / close above the 2013 high / high-week close at 3.00/04 needed to validate the breakout of the multi-decade downtrend. That said, the immediate advance remains vulnerable while below this threshold with interim support eyed at the January uncovered gap at 2.66 backed by the 2016 high / slope support at 2.62 (bullish invalidation) . A breach higher targets the upper parallel which converges on the 100% extension at ~ 3.32 .
Previous Weekly Technical Perspectives
- Weekly Technical Perspective on AUD/USD, USD/CAD, AUD/NZD and Bitcoin
- Weekly Technical Perspective on DXY, USD/JPY and NZD/USD
- Weekly Technical Perspective on GBP/USD, USD/CAD, USD/CHF
- Written by Michael Boutros, Technical Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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