Markets To Watch #2

Last week I mentioned to keep a close eye on the Euro, the US Dollar, and the Swiss Franc for possible corrections.  All three markets made slightly newer highs or lows, but my analysis remains intact.  I still expect reversals in all three.  The biggest question to me is how big will they be?

Let's briefly look at each market.

Euro:

The COT report on the Euro shows large traders holding record long positions, commercials holding record short positions, and the small traders holding record long positions for the 2nd consecutive week.  A bearish engulfing candle also formed on Friday and a possible double top is forming as well.  This pattern is confirmed with a close below 1.17065.  Below this double top neckline is the first area of support between 1.16765 and 1.1659.  This is a cluster of symmetrical Fib retracements since March.  Any move below these levels would suggest a bigger move.  The next expected retracement zone would be between 1.1610 and 1.1440.  This area contains the 34 EMA wave, which often serves as support in bullish trends.  It also contains a bigger symmetrical Fib retracement, the 50 DMA, and the double top target of 1.1484.  Any move lower than this zone would signal a change in the bullish trend.

Swiss Franc:

A possible double top is forming.  This pattern is confirmed with a close below 1.0829.  The first area of support happens before this patterns neckline between 1.0908 and 1.0884.  This is a cluster of symmetrical Fib retracements since March.  Any move below these levels would suggest a bigger move.  The next expected retracement zone would be between 1.0814 and 1.0656.  This area contains the 34 EMA wave, which often serves as support in bullish trends.  It also has the 50 DMA and the monthly S1.  Any move lower than this zone would signal a change in the bullish trend.  It is worth pointing out that the double top target would be below this 2nd zone @ 1.0602.

US Dollar Index:

A bullish high close doji pattern formed last Thursday and Friday.  A possible double bottom pattern is also forming.  This pattern is confirmed with a close above 93.98.  Above this double top neckline is the first area of resistance between 94.22 and 94.595.  This is a cluster of symmetrical Fib retracements since March.  Any move above these levels would suggest a bigger move.  The next expected resistance zone would be between 94.715 and 95.885.  This area contains the 34 EMA wave, which often serves as resistance in bearish trends.  It also contains a bigger symmetrical Fib retracement, the 50 DMA, and the double bottom target of 95.45.  Any move higher than this zone would signal a change in the bearish trend.

 

 

 

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