Is the Dollar decline a correction or reversal?

FX markets started the new year with a
bang.
Euro-based currencies were rallying against the USD from early this
morning, well before FOMC minutes were released. Remains to be seen if this USD
decline is merely a correction from recent trend OR a change in overall market
bias to come.

Session Review:

GBPUSD (+$10 per pip)

British Pound gave a buy signal this morning
near 7255 we called in the live room, which soon worked its way to 7455 for a
+200pip rise or +$2,000 per FX contract. Gotta love these currency markets…
when they make their moves, there is no comparison.

Swiss Franc also offered a viable short trade
signal near 3100 identified in the room, but I held out for 3115 or slightly
higher instead. Poor decision on my part… traded down to 2890 at the time of
this writing. Did hear about that one from some members who played this pair
more aggressively than I!

EURJPY (+$9 per pip)

EuroYen also offered a long trade signal early
this morning near 139.10 which did rise modestly to 139.78 “bid”, turned back
down for a second long entry signal again. Offered +50 pips twice, nothing to
pass up but this pair is usually muted in price action compared to major USD
cross pairs.

GBPUSD (+$10 per pip)

British Pound has clustered resistance layers
up near 7600 and then again near 7900+ for some very solid “lines in the sand”.
We could see 7600 traded to within days, possibly hours from now. That should
bring in a fresh round of selling if/when GBP tests this level of clustered
resistance again.

EURJPY (+$9 per pip)

EuroYen has hit initial resistance squarely, where price action paused for now.
A continuation to 140.50 would be high-odds sell signal at layers of resistance
right there. If that level failed to hold, 141.20 offers last line in the sand
for sellers to target above.

Admin Note:

While the FX universe has several major pairs and numerous secondary symbols to
trade, I personally confine 90% of my trading inside two: the GBPUSD and EURJPY.
These symbols are loosely correlated, as opposed to trading GBP and EUR or CHF
which is essentially the same trade.

GBPUSD tends to make the widest swings = trend
moves compared to all others. The USDJPY pair is too sideways buzzy-fuzzy for my
taste, while the EURJPY is just right.

For the most part we’ll profile GBPUSD and
EURJPY symbols in this forum, with occasional guest spots for other currency
pairs. When FX markets are sideways, all pairs are muted. When FX markets are
directional, most pairs offer high-odds trade setups for success.

{Price levels noted by arrows in charts above
are compiled from a number of market measurements. Over the course of time we
will see these varying levels magnetize = repel price action consistently}

Summation

Currency markets should continue to increase already strong
volatility as the early part of this year proceeds. FOMC minutes hint of an end
to rate hikes in sight will shake the FX tapes much like the start of this
process did back in early 2004. FX traders merely need to avoid sideways
whipsaw-chop and focus on the directional swings to come. Simple as that… but
never easy ;>)



Trade To Win


Austin P


www.CoiledMarkets.com

(Weekend Outlook trend-view section
open access)

Austin Passamonte is a full-time
professional trader who specializes in E-mini stock index futures, equity
options and commodity markets.

Mr. Passamonte’s trading approach uses proprietary chart patterns found on an
intraday basis. Austin trades privately in the Finger Lakes region of New York.