Trader's Outlook
Dollar bulls are weeping, why did the dollar retreat, the answer is simple because it did not go further. Most traders are so caught in their own side of a trade they fail to see the other side, this trader is always on the both sides of the market, which is why discretionary trading will always be more successful than system or "black box" trading. For this reason I believe the price is an ultimate indicator, not all other indicators, most indicators are used to predict the past and smooth out the price action, quiet useless to make a determination for the future. This trader just follows the price as the current price level is always a proxy for a future direction, because if it happened it's already too late.
EUR/USD - Euro bulls remained on a warpath as the pair headed above the 1.2100 figure with single currency longs testing the greenback defenses around1.2122, a level marked by the October 17 high, which is further reinforce by the 50-day SMA at 1.2160. A further move to the upside will most likely see the euro test the dollar defenses around 1.2253, a 23.6 Fib of the 1.3477-1.1869 USD rally, with subsequent reversal seeing the greenback bulls reestablish their dominance and pushing the pair back down toward the psychologically important 1.2000 handle. Indicators are diverging with momentum indicator above the zero line and negative MACD sloping upward toward the zero line, while neutral oscillators give either side enough room to maneuver.
USD/JPY - Japanese Yen longs took a brief trip above the 116.00 handle, but managed to hold their ground and pushed the greenback longs back toward the 115.00 level. A successful move below the psychologically important 115.00 handle will most likely see the pair head lower and test the greenback defenses around 114.67, a level established by the 20-day SMA, with a further move to the downside will most likely see the pair head toward the 113.75, a level marked by the October 17 daily low. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, with ADX above 25 at 25.77 signaling an existence of a trend not a direction of one, while neutral oscillators give either side enough room to manuver.
GBP/USD - British pound bulls continued to push deeper into the greenback territory thus breaking above the dollar defenses around 1.7820, a level marked by the August 31 daily high. A further move to the upside will most likely see the pound longs taking on the psychologically important 1.8000 handle, and with a break above taking on the dollar defenses seen around 1.8017, a 38.2 Fib of the 1.9219-1.7284 USD rally. A sustained momentum will most likely see the cable bulls run out steam around 1.8149, a level marked by the September 22 daily high. Indicators are diverging with momentum indicator above the zero line, while the negative MACD is sloping upward toward the zero line, while overbought Stochastic gives the dollar bulls a chance to retaliate.
USD/CHF - Swiss Franc longs continued to assault the greenback positions with the price action siding with Swissie bulls as the pair tumbled toward the dollar defenses around 1.2703, a level established by the 23.6 Fib of the 1.1492-1.3085 USD rally. A further move to the downside will most likely see the pair head lower and test the greenback defenses around 1.2535, a level marked by the September 14, daily high, which currently acts as a gateway toward the psychologically important 1.2500 figure. A break below the psychologically important 1.2500 handle will most likely see the pair lose momentum around 1.2471, a level marked by the 38.2 Fib of the 1.1492-1.3085 USD rally. Indicators are diverging with momentum indicator below the zero line, while the positive MACD is sloping downward toward the zero line, while neutral oscillators give either side enough room to maneuver.
USD/CAD - Canadian dollar bulls made another sharp move with greenback longs managing to launch a counter aatack around the 1.1650 level. A reversal from these levels will most likely see the pair head back up toward the 1.1857, a level marked by the 23.6 Fib of the 1.2730-1.1592 CAD rally, with a further move to the upside seeing the pair head toward the 1.2027, a level established by the 38.2 Fib of the 1.2730-1.1592 CAD rally, thus seeing the Loonie bulls give up the control to the psychologically important 1.2000 handle. Indicators are favoring the Canadian dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators giving either side enough room to maneuver.
AUD/USD - Australian dollar managed to gather enough momentum to punch through the US dollar defenses and push the pair toward the greenback defenses around .7604, a 38.2 Fib of the .7991-.7374 USD rally, thus breaking above the 50-day SMA at .7587. A further move to the upside will most likely see the Aussie bulls head higher and test the greenback defenses around .7678, a level established by the 50.0 Fib of the.7991-.7374 USD rally. A subsequent reversal will most likely see the US dollar longs reassert their dominance over the price action and push the pair back down toward the psychologically important .7500 handle. Indicators are favoring the US dollar bulls with both momentum indicator and MACD below the zero line, while neutral oscillator give either side enough room to maneuver.
NZD/USD - New Zealand dollar bulls decided that the possession of the psychologically important .7000 handle is not enough and pushed the pair higher toward the greenback defenses around .7122, a September 9 daily high. A further move to the upside will most likely see the pair test the US dollar defenses around .7167, a level marked by the 61.8 Fib of the .7468-.6681 USD rally, at which point the US dollar longs will most likely launch a massive counterattack which will see the greenback bulls push the Kiwi back toward the psychologically important Indicators are supportive of the New Zealand dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic gives the US dollar longs a chance to retaliate.
Sam Shenker is a Technical Currency Analyst for FXCM.