Monthly Analysis: Currencies

2022-06-04T08:01:46-05:00June 4th, 2022|Monthly|

The US dollar index ($DXY) completed a bearish spike reversal during June, indicating the major (long-term) trend has turned down. One of the characteristics of a spike reversal is it tends to be followed by a quick retracement, possibly so far as to test the previous high. In this case, that’s at 105.00. Once this occurs, it would establish a major double-top formation that would ultimately project a break to 97.60, or roughly the 50% retracement mark of the previous uptrend at 97.10. The secondary (intermediate-term) trend is also down while the minor (short-term) trend has turned up.

The euro (^EURUSD) completed a bullish spike reversal on its monthly chart during May, confirming a new major uptrend is in place. As with the $DXY, the euro could see a pullback to test the June low of 1.03498, a move that would be considered Wave 2 of the 5-wave uptrend pattern. The secondary trend on the weekly chart has already turned up, and could be ready for a Wave 2 selloff, while the minor trend on the daily chart looks to have turned down of late. This all fits together as a new minor trend would be considered a secondary Wave 2 with a downside target near 1.04433

I’m still not getting a great technical read on the┬áThe Canadian dollar (^CADUSD) monthly chart. Yes, the loonie extended its major downtrend to a new low of 0.7647 during May before closing higher for the month. Technically this looks to be another bullish spike reversal, though monthly stochastics remain well above the oversold level of 20%. The only clear signal I see is on the daily chart where the minor trend looks to have turned down Friday. if so, initial support is at the 4-day low of 0.7882.

The only thing I see on the monthly chart for the Brazilian real (^BRLUSD) is a series of major sideways trend, with the real slowly moving higher. The June 2020 high of 0.20739 was taken out during March 2022, followed by a bearish spike reversal during April and a bullish spike reversal during May. The next move could be triggered by a break of resistance at the April high of 0.21773 or the May low of 0.19223.

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