Factor Alert, September 7, 2017 — Update on U.S. Dollar (and other forex pairs)
Beginning of the end or mid-point of the trend
The forex markets have provided excitement this past week — and a review of action prior to this weekend’s Factor Update is appropriate.
USD/JPY — The present decline appears to be challenging the lower boundary of a 5-month trading range (symmetrical triangle is my best labeling). A close below 108.13 would complete this pattern and establish a possible target of 103.52. Factor is flat, but I have an interest in the short side of this forex pair.
EUR/USD — I have discussed at length in Factor correspondence the possibility of capitulation on the part of the massive Commercial short position. This appears to be happening just as it did from Mar 2007 through Apr 2008 (chart now shown). The initial weekly chart target of 1.2485 is coming into view. Factor is long EUR/USD.
USD/CAD — the second major leg of the bear trend in this pair (bull trend in CAD futures) is well entrenched with a target of 1.1730 (.8436 in futures). Factor is short USD/CAD as of this past week per comments in the Sep 3 Update.
AUD/USD — the 16-month rectangle has been resolved by this week’s advance. Factor is flat but I have an interest to buy a correction with a target of .8388.
USD/TRY — the 3.3652 target is now within striking distance unless a sudden reversal in the USD occurs. Factor is short.
CAD/CHF — this pair has nicked the important resistance at .7806 — but not convincingly (at least not yet). Factor is long this pair. I did not add to this position this week — yielding instead to a net short USD/CAD position.
The short side of the USD is getting to be a crowded trade. While I want to ride this trend to the degree possible, some wild swings could occur at any moment. I will add to these comments in this week’s Factor Update, as appropriate.
plb
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