Forex Trading Insights: Key Levels for US Dollar Weakness 10-16-23

Outline

Introduction

  • Overview of tough start for US dollar this week
  • Candles showing downtrend, paused under minor support level

Key Support/Resistance Levels

  • 50 period moving average on 4 hour chart aligns with 200 period moving average on 1 hour chart
  • If 200 period MA breaks on 1 hour, critical for day traders
  • Support at top of October open week, 100.610
  • 100 period moving average below that around 100.617

US Dollar Index (DXY)

  • Bounced from moving averages but rejected, now retesting
  • Watching 100 period MA around 100.617 as key support
  • If October open fails, next support 106 area

EUR/USD (EU)

  • Reclaimed 20 and 50 period moving averages, showing strength
  • Needs to close above major quarter area
  • Closed above indicates bullishness ahead of next session

USD/JPY (UJ)

  • Lost weekly open, now at midpoint area
  • Acts as both resistance and support last week
  • Starting week weaker but awaiting economic reports

Upcoming Event Risk

  • New Zealand, Australia, US retail sales reports
  • Canadian CPI numbers tomorrow
  • Locked in and ready to trade around news events

Conclusion

  • Recap of dollar weakness but key levels outlined
  • If levels break, could indicate further downside
  • Upside potential if levels hold as support
  • Ready to trade the volatility around high impact news

Transcript

So today was a really tough start for the dollar. As we can see here, every single candle from this week’s start,excluding the first, has been in a downtrend.

So all of those candles up to this point have been red. Right now the dollar is in market is still open for today. So the dollar is kind of paused right here underneath this minor quarter area.

100 and 625, very key area. One of the things we talked about today being this 50 period moving average area for the four hour. We talked about it earlier that if that area doesn’t hold shared over in discord.

And the reason why that area is so important is because, I mean, just math, but the math of it is that 50 period moving average on the four hour chart is going to be the same and the equivalent of the 200 period moving average on the 1 hour chart. So we come pull this up and we’re going to see that this is the 200 pair moving average. And so with this being a 200 pair moving average, one of the things that I was calling out earlier is that if this area breaks,this is going to be a key area that is breaking for day traders.

So people who often day trade inside of the forex market, they don’t all the time go down to these smaller timeframes in the same way that you’ll see for the stock market, because of the fact that you have so many different sessions. Whereas the stock market, you only have one session and once that session is done and that session is complete, then everybody is done as well. With the forex market, you have these multiple sessions.

So with that people use the hourly chart for their day trading. And so what you end up having is you end up having this area right here that goes alongside again moving average, 23 moving average, moving immediately sideways. And so with that you have the  3 moving average as well as that minor quarter area kind of coinciding with one another perfectly.

And when it was immediately broken here, then that’s when it came back up to try to retest try to push up to see, hey, can we reclaim this 200 area? It was not able to reclaim that 200 area, which is why it then continued down to I Believe that is last week’s Open. We can go back out to the four hour chart to see I believe it’s either last week’s Open or the week before. So it’s the week before.

So it’s the top of October’s opening week here. That price has found support at, if that cannot hold, it does have last week’s Open right below it at 100 and 610. Alongside this 100 and 610, you also have this 100 pair moving average.

And then even above, even below that you have the 106 as well. So this should all come together to form a nicegood bit of support for the dollar index here. But again, if the dollar does break down, the first area that we’re going to be on watch for will be this 100 period moving average area.

If this top of October, if that does not hold. Because again, psychologically, that’s saying anybody that bought at the top of October, those individuals that buy at the top of the month, any of those individuals that bought at the top of October, those individuals are now down on that trade idea if they bought at the top of the month. And so this is going to be a very key critical area to watch.

That 100 and 617 four, so 106, 174. And then we also have for the UC idea again, this one is coming back down. This box that it was in for the majority of last week is now acting as support.

So if we were just to take this over and extend it over really quickly, you can see it’s just acting as support. So that same box that it was inside of before it decided to break out, that same box is not acting as support. If that box is lost and so that support is then lost as far as that it has over here with that box, then we can see it fall back inside of that box and then seek to have to reestablish itself.

Because the price action, if it breaks down that low, it would have to reestablish itself. And so we also see from theguid again, nice bounces here has been able to now successfully reclaim because last week we were looking at how it bounced up and then it got rejected immediately as soon as it made it up to a moving average. But this weeknot only accepting and reclaiming that 20 period moving average, but also reclaiming that 50 period moving average as well.

Again, 200 area, which is a very strong area. So 20 period moving average on the four hour chart. So that’s a very key, very critical area for it to regain.

So in it regaining, we can definitely see some strength in this chart. This is up for the week. We also see very similar strength over here for the EU idea.

Again, up for the week above, this major quarter area again reclaimed both this 20 pivot moving average and this 50p moving average. We’ll see if this can close above, if it can close above, that is going to be strength going into thisnext session. And that’s what we’re seeing here.

And then for the UJ idea again, it’s something we talked about earlier as far as when the idea was coming backdown towards weekly open, it has lost this weekly open and it’s now down here at this midpoint area, which was avery key, very critical area even last week. As far as kind of getting rejected there, dropping back down, coming backup, failing to retest that same area. Coming back down and then popping back up and then kind of failing first and then coming through and then breaking through but then coming back down and then kind of being stuck at this same area.

So we have price with support being around this same area. So right now the dollar is starting off with a weaker week but again we will see how these reports come out. We do have not only the New Zealand as well as Australia reports coming out we also have in the early a.m

At 830 we do have retail sales numbers coming out so we will be watching that one together. And then also we have CPI numbers coming out for the Canadian dollar tomorrow as well.

So we’ll be locked in and ready to go for that.

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