RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

After a successful multi-week rally the U.S. Dollar Index experienced a strong rejection from the 100.00 level which could indicate the beginning of a technical retracement this coming week. As considered in previous posts, both the U.S. Dollar Index and euro charts showed potential trade setups which are still valid for the near future.

In addition to those, this week the charts have suggested two instruments that historically have something in common and are usually indicative of a movement to safe-haven assets. These being gold and the Japanese yen.

Concerns over climate change ahead of the next G20 summit, the looming U.S. elections, trade negotiations and the impact on production (and tourism) of the coronavirus continue to add strain to the new year’s uncertainty. In previous years during similar periods gold and the Japanese yen have been known to attract increased attention.

Japanese Yen, Daily, Bearish

The monthly chart is unclear in terms of overall direction while the weekly and daily charts show a downtrend of lower-highs and lower lows.

The moving averages are also bearish in terms of order, angle and separation.

The daily chart has two potential levels of future resistance: one at 0.00913 and the other at 0.0090 which also overlap with the area between the moving averages. The momentum indicator also supports a bearish sentiment.

If price retraces from its current location then a Fibonacci measurement overlays a 61.8% and 50% level to those same levels respectively.  Ideally, price would retrace back up into these areas and produce a bearish candle testing resistance at either level.

An entry below the low of this candlestick could be an economic entry into the trend if it resumes its downward momentum while a stop-loss above the 0.00913 level could add additional technical protection.

Gold, Daily, Bullish

The Monthly, Weekly and Daily timeframes display higher highs and higher lows with a generally smooth flow of price action.

The momentum indicator is neutral or flat not adding any additional (technical) indication of sentiment.

Price recently broke up through 1,600 and could retrace in the near future to test the 1,600 level for support. Other possible levels of historical significance are at 1,575 and 1,540 respectively.

Should price maintain its bullish sentiment it could do a test at either 1,600 or 1,575 which is also close to the moving averages, this can often represent an area of equilibrium between buyers and sellers.

Should price action produce a bullish candlestick at either of these levels an entry on the break of the high of this candle may be an elegant entry into the next phase of the uptrend if it resumes.

The price action swing-lows below the 1575 level could offer technical locations for stop-losses.

Risk management will be key so a stop-loss is imperative in order to protect capital exposure against unforeseen outcomes.

RJOF Editorial Team