Currency Commotion

I hope you can forgive me if I’ll speak mostly in charts today as I’m feeling a bit under the weather. We’re seeing quite a few on-the-dime reversals on the currency side – especially with anything attached to ole’ bucky. But let’s start with the spoos and then move on to currencies:

After getting a HIGH probability trend day alert we quickly made our way toward our first target zone at 1356, which of course is the 100-day SMA. I do expect a bit of resistance here and since I took this snapshot we have already bounced back a little.

I did not share this chart on Monday but should have. My subs may recall that I was waiting for a resistance line breach on my RSI_EMA chart. Well, we got it and even if we drop back from here this line should now act as support.

Mr. VIX closed outside yesterday and apparently will do so again today. I caution anyone from jumping the gun here as we could easily see continuation here as the bears get squeezed just a bit more.

EUR/USD turned on a dime right at its 25-day SMA today and seems destined to push all the way back to 1.3. You all know why I am not too happy about that but obviously nobody cares about what some lowly expat in Spain wants 😉

It’s painting an inside candle today which I have very little interest in taking.

Here’s basically the same chart in inverse – the dollar index. It gives us a bit more context as it basically painted a last kiss goodbye at its prior Net-Lines Sell level. Not much below to act as support at this point. Another long inside day candle which obviously is untradeable as we couldn’t possibly entertain such a huge stop.

What’s also interesting is that the Dollar was moving with equities yesterday which left the door open to an inflection point breach followed by a response on the equities side. However, today bucky is getting killed and right at a point where it matters the most. Unfortunately this complicated matters a bit for us.

Just to round out the picture for you guys – USD/CHF. Another useless inside day candle – we can’t trade it but a breach of the downside will probably lead us to the target range near 0.925.

Okay, despite all the noise I was able to eek out three lousy setups – so let’s see them:

CAD/JPY – locked in a sideways churn from hell. Perhaps today’s inside day candle will be its ticket out. You know what to do.

Another inside day candle, this time on ZB (the 30-year treasury futures). We had one three sessions ago and since then haven’t really gone anywhere. If you are already long based on the prior one then a breach of the low probably is your ticket out. A breach of today’s high should be confirmation that the first ID candle was right and that we continue higher.

Crude – my favorite setup of the day. We have an inside day candle with triggers that correlate fairly close with Net-Lines – and in my not so humble opinion that probably increases the odds of whatever breach we’ll see here. Again, use regular ID trading rules here – if you are unsure what they are then please check the cheat sheet.

Cheers,