Side Note: For the record, I’m starting to agree with Warren Buffett’s thoughts on technical analysis, at least in the Currencies sector. Buffett has said on the subject, “I realized that technical analysis didn’t work when I turned the chart upside down and didn’t get a different answer.” My initial look at the latest monthly charts for the various currencies (as well as previous edition’s) and I see few clear technical pictures.
The US dollar index ($DXY): The $DXY looks to be in a major (long-term) sideways trend between the July 2023 low of 99.58 and October 2023 high of 107.35. However, the $DXY posted a new 12-month low (Donchian Channel) during August 2024 at 100.51. Theoretical Positions: Traders might’ve established new short positions in early August when the $DXY posted a new 4-month low below 103.65.
The euro (^EURUSD): The euro also looks to be in a major sideways trend between the high of 1.12754 (July 2023) and low of 1.04487 (October 2023). The euro posted a new 12-month high of 1.12016 during August. Theoretical Positions: Short positions would’ve been covered on stops above the previous 4-month high of 1.09481 and new longs positions established at the same price.
The euro/Canadian dollar (^EURCAD) completed a bearish spike reversal during August, posting a new 41-month high of 1.52273 before closing at 1.48893, down 0.00412 for the month. Theoretical Positions: Positions have been chopped up the last number of months. However, traders might’ve sold the EURCAD near the August close based on the completion of the bearish spike reversal.
The Canadian dollar (^CADUSD) completed a bullish key reversal during August confirming a move to a major (long-term) uptrend. Theoretical Positions: Traders might’ve taken another shot at going long the CADUSD near the August close of 0.74108, though there is a great deal of risk down to sell stops below the August low of 0.71708.
The Brazilian real (^BRLUSD) confirmed a major uptrend as it completed a bullish key reversal during August. Theoretical Positions: Traders might have covered previous short positions and established long positions near the August close of 0.17828. If so, sell stops would be placed below the August low of 0.17172.
