SB Trade Desk: FX Range Expansion Underway

Less than a month ago, I warned that FX volatility was extremely low and that extremely low readings give way to periods of range expansion (trends).  By sending this, I hope I’m not angering the market gods.  They frown upon these types of marketing emails but I’ve got to get the word out somehow, right?  I believe that a period of FX range expansion is underway.  The USD (DXY chart below) is on the trendline that held earlier this month.  Revisiting a trendline so quickly (any barrier for that matter) warns of breakage and range expansion.  My own experiences also suggest that developed market FX is pivoting towards a period of range expansion.  It’s been a grind for 10 months but action the past few weeks are different.  There is a distinguishable ebb and flow to recent trade; a result of more impulsive behavior and impulsive behavior suggests range expansion and better trading opportunities (analysis examples from the last week are displayed below).  Changes in market conditions happen slowly…and then suddenly.  If you’ve been waiting for the FX market to ‘wake up’, I believe that the alarm clock is about to go off.

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DXY Daily 6/20

EURUSD 4 Hour 6/16

EURUSD needs to find support in the 1.1180s if it’s headed higher.  1.1186 is the 61.8% retrace of the rally from the 2017 low.  The lower parallel is about 1.1190 on Monday and the line off of the 4/17 and 5/13 highs is about 1.1180 on Monday.  This line was precise support on 6/6.

DXY Daily 6/17

DXY blew out the first 2 levels on Friday and is nearing the final level for proposed resistance and a lower high at 97.71.  The 61.8% retrace of the decline from May is just below at 97.64 and the upper parallel is a few ticks above at 97.77.  Bottom line, we know where resistance needs to show (97.64/77 or so) in order to keep the bearish ‘idea’ (currently flat however) valid.

GBPUSD Daily 6/18

GBPUSD put in a small range key reversal today after tagging the parallel that extends off of the 5/23 low.  The show at support along with an 8 hour volume reversal (on futures…see below) suggests the possibility of a low.  I’ll need more information before attempting an entry however.  If we get a small 5 waves up, then I’ll be on alert for a long entry.

British Pound Futures 8 Hour 6/18

AUDUSD Daily 6/18

AUDUSD put in a J-Spike today after taking out the May lows.  Low was also on a parallel that has been a pivot since April 2018.  Non-confirmation occurred with NZDUSD as well since NZDUSD never dropped beneath its May low.  This is a bullish setup for commodity FX (AUD and NZD in particular).

NZDUSD 4 Hour 6/18

The NZDUSD move above .6514 is enough for me to take a shot on the long side.  As mentioned, there is non-conformation with AUDUSD, which traded to a new low.  NZDUSD also completed a Demark buy countdown on Friday and there is divergence with daily RSI at the low (not shown).  A near term level to know on the upside is .6560.  Trading wise, I’m content to take a position given the amount of evidence and let the market do what it will do.