Side Note: For the record, I’m in agreement 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.” The latest round of monthly charts for the various currencies (as well as previous edition’s) continue to show few clear technical patterns.
The US dollar index ($DXY): The $DXY still 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 September 2024 at 100.16. Theoretical Positions: Investors have likely moved to the sidelines given the lack of clear trends. Hedgers might be nervous heading into early November with risk in both directions.
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). Theoretical Positions: As with the US dollar index, both investors and hedgers are likely concerned about the risk in both directions yet unclear on the best way to cover that risk.
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: Traders might’ve sold the EURCAD near the August close of 1.49071 based on the completion of the bearish spike reversal. Buy stops would be above the August high of 1.52273.
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. These stops would’ve been triggered early on Friday, November 1 taking traders to the sidelines again.
