Updated: Nov 4, 2020
There is so much going on these days that we have a hard time knowing where to start. We have highlighted various instruments in previous posts today. Given the quick nature of the market at this time, we may need to publish more individualized analysis versus newsletters. The nature of the current environment is favoring fast trades and setups can turn from short to long (or vice versa) very quickly. As such, expect more one-off posts until things clear up.
This pair, USD/CAD, is sitting at a very long term support spot. This instrument is highly reliant on the price of oil, with oil stalling around the $40 level its no surprise this is stuck. We believe the DXY will strengthen in the near future and as such we expect oil to weaken, dollar to strengthen and this pair to go up to the next resistance at 1.3400. Wait for a proper short-term setup in the 1hr or 4hr timeframe before initiating a long position.
Brexit, Brexit, Brexit. That is basically the main driver to this pair at the moment. So much indecision and uncertainty, which is very much reflected in the chart. We expect it to continue between our two moving averages between 1.2825 and 1.3000 for two weeks until we get clarity on Brexit.
The dollar index had gone into sideways action for the better part of the last week. Since the stimulus package has been called off, but Donald Trump has indicated a willingness to pass legislation for stimulus on a "case-by-case" basis these two actions may nullify each other in the short-term. Therefore, we expect the U.S. Dollar to trade in conjunction with Risk. When risk assets move up, the dollar should go negative, and when risk assets move down, the dollar should go positive. again we expect this to mostly range-bound between 93.40 and 95.00 level until after the U.S. Election.
The AUD/JPY is one of our favorite pairs. We issued an open trade alert last week and closed it out for over 41 pips in profit. We typically use this pair against our short-term risk oscillator. So given that our short-term oscillator is currently in overbought terrirtory. We will be looking to fade this pair.
This pair, EUR/USD, is currently bumping up against a descending trendline. However, the RSI is starting to break over 50, which could signal a bullish move is on the cusp. However, keep in mind our U.S. Dollar comments above and we find it hard to believe that if the DXY increases to 95.00 that this would currently be a good buy. We are avoiding this pair at this time as we expect mostly sideways action for the foreseeable future.
Thanks for reading, Happy Trading.