Welcome to our newest feature; DecaPip. The concept is simple: our professional market technician, with an exceptional system, showcases his own daily Support and Resistance levels across a broad spectrum of FX currency pairs. The most effective way to use the levels are:
- If indicated levels hold, look for the price to reverse.
- If levels are broken, look for the price to continue past to new highs or lows.
Today in my DecaPip Daily column I will be looking closely at the US Dollar as a heavy down break occurred in Wednesday’s trading and also looking for clues to see how genuine this move may actually be.
The US Dollar has been consolidating and stuck in range bound trading and finally we saw a hard fall through it’s support area and now traders will be looking at the market closely for two consecutive daily closes under the previous break out support.
We also have a raft of European and United States data coming out during the day and traders will be watching retails sales and jobless claims from the USA extremely closely and possibly taking positions later today after these releases.
The chart below really highlights the break to the downside under support after the long consolidation period and the large red reversal candle.
The question here is how do we trade this break out and as i always like to say to other foreign exchange traders, what would a smart trader be doing as regards to taking a position ?
My very simple answer is that we may very likely see price come back to test the broken support area again to see how genuine the move actually was and as such if we get another rejection on the pullback it is time to start to sell the US Dollar.
Traders may also look to test the lower support level highlighted in the below chart as it will test it’s holding strength and many will be looking for lower lows and lower highs if we do get a break through which may trigger another heavy fall.
If we do close or trade comfortably above the break area from yesterday some caution is required and it may well be time to consider waiting for the NYC close.
Some USD currency pairs have some very critical resistance levels we can also watch out for clues if these break areas become tested later in trading.
EURUSD – 1.1210
GBPUSD – 1.5666
AUSUSD – 0.7460
USDJPY – 124.90
Got any questions about our new DecaPip feature? Contact Nathan at Nathan@littlefishfx.com
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