Consumer Confidence Jumps Up; The Dollar Stays Put

Even with a high Consumer Confidence Index, the Dollar didn’t really make a push against the majors. Tomorrow should be an interesting day with GDP and the Chicago PMI report coming out. This could possibly set the tone for the rest of the week so be prepared!

Chart Analysis:

EUR/USD

The Euro has formed a bearish hidden divergence on the 4hr chart. Stochastics has made higher highs while the price has made lower highs. In addition, 4hr. stochastics are trending down after just leaving overbought territory. However, the daily stochastics are trending up which is giving me conflicting indications. Technically speaking, the pair is still stuck within the 2900-3000 range so I’m not real confident on the future direction of the Euro. I think it will take a break out from this range to get a better feel for the future direction.

GBP/USD

The Cable is looking very ugly right now on the 4hr chart. All 3 of my moving averages are starting to group together which makes trying to find a direction extremely difficult. Right now the price is right in between its 50 EMA and 200 SMA. If the pair breaks above the 50 EMA then there is a good chance it will move to 9700. On the other hand, if the pair breaks below the 200 SMA there is a good chance the pair will hit 9550. 4 hr. stochastics are trending down and daily stochastics is just now entering oversold category which leads me to believe that the pair may fall (possibly to 9550) and then bounce back up. I’m going to hold off for now until I can find a better trade idea.

USD/CHF

It looks like we’re getting a regular bearish divergence on the Swissy. On the daily chart, the price has made higher highs while stochastics has made lower lows. This is an indication that the pair is headed down. But wait! If you look back at my EUR/USD analysis, I also noticed a bearish divergence. These pairs have a very high negative correlation which means that if one pair goes up, then the other pair usually goes down. So what I’m finding now is that I am seeing signs for both pairs to drop?!! That means that one of these pairs will not follow through with their bearish divergence. I just don’t know which one it will be. As a gut feeling, I think it will be the Swissy that actually falls. I can’t explain it, but something about that 2500 level and the fact that it took 11 days for the pair to break it leaves me to believe that the breakout might have been a fakeout. If the pair breaks back down below 2500, look for the pair to drop hard!

USD/JPY

The Yen is bouncing in between 121.50 and 122.00. 4hr. stochastics are trending down which leads me to believe that the pair will continue its downward movement towards its 50 EMA. Daily stochastics is still hovering around overbought territory but has crossed down. We’ve seen this pair rally hard over the past 2 months so I’m expecting to see a nice retracement just as soon as their is an economic catalyst to support the movement. I’m still holding back for now.