Dollar Volatility to Dominate Market Sentiment Today
Will the Rising Trend Line Hold on EUR/JPY?
Will you look at that? The hourly time frame reveals that the euro has been kicking the yen’s butt since last week. EUR/JPY has been making higher lows that, in fact, if you connect them, you will see a rising trend line on the currency pair.
Truth is, price is currently testing the said rising trend line. It may do you well to pay close attention to it as the area where EUR/JPY is trading now is also the 38.2% Fibonacci retracement level of the low just above 136.30 to the swing high at 137.17 where the pair topped out on August 13.
Also note that EUR/JPY is also testing support on the 100 SMA while the 200 SMA is just a hairsbreadth away from where price is at now and may as well get tested too.
Now, don’t get too excited about jumping in on a long euro trade. Notice that the 137.00 psychological handle has been a resilient resistance. In the past, EUR/JPY has gotten rejected quite a few times from the level.
Reversal candlesticks could once again hint another rejection from the psychological handle. Who knows, it may even lead to a break of the trend line.
NZD/USD: Support-Turned-Resistance on 100 SMA?
The Kiwi has been having a very rough two months on the charts. Since establishing yearly highs above the .8800 handle, NZD/USD has been on a down trend. The change in the RBNZ’s rhetoric can be cited as the catalyst for this massive drop in the Kiwi. In fact, the currency has fallen below the 100 SMA and 200 SMA.
In the past, the 100 SMA has served as a resilient support level for the currency pair. However, now that price is trading below it, the indicator may reverse its role and become an area of resistance instead. Keep an eye out for the .8500 handle as candlesticks around the area could give us clues where NZD/USD is headed next.
Reversal candles in the form of dojis may mean that there are not enough buyers in the market to push price higher and could signal a drop in NZD/USD back down to its previous low around .8100. On the other hand, a bullish close above it may mean that we could see a comeback from the Kiwi. If this happens, a run up to .8800 won’t be all that surprising from NZD/USD. It will take a big catalyst for that to happen though, make sure you read up on fundamentals.
Head and Shoulders on USD/CHF?
As it turned out, it was not a double top that we saw on USD/CHF a few days ago. The currency pair once again found support on the .9050 minor psychological handle and re-tested resistance just below .9100. The currency pair has made another high, almost with the same height as the highs that we saw for late July.
Now, it looks like we’re looking at a head and shoulders on USD/CHF! For those of you who do not know, this chart pattern considered to be a bearish signal by most traders.
Stochastic seems to suggest that we would soon see the pair trade lower. Lines have just converged and are pointed downwards. But don’t get ahead of yourself. A convincing close below the neckline support at .9050 will be needed in order for us to confirm if this chart pattern is indeed a head and shoulders or not. The formation of a bearish marubozu around the area could mean that USD/CHF may soon drop down to .8875 where it previously bottomed out.
On the other hand, if dojis materialize around the level, we could see the dollar take another shot at the .9100 psychological handle. It may even rally past that if there are enough bullish momentum!