Equity Markets to Dictate Forex Direction

EUR USD took out a swing top at 1.4290 but failed to follow-through to the upside in an attempt to test the June top at 1.4337.

EUR USD took out a swing top at 1.4290 but failed to follow-through to the upside in an attempt to test the June top at 1.4337. The subsequent sell-off started before the equities opened and accelerated to the downside once the stock market topped out and sold off.
Based on the prolonged move down in terms of both price and time, the USD CAD is ripe for a closing price reversal bottom on the daily chart. Watch for a higher close, close above 50% of the range and a close above the open to trigger the start of a retracement rally.
Firm overnight equity markets helped boost the AUD USD before the opening, but the inability of the indices go through last week’s highs with conviction encouraged selling in the Australian Dollar in front of the June top at .8264.
The inside move on the NZD USD chart is indicating a possible change in trend to the downside but the inability to break equity index prices appears to be holding this currency pair up. While Thursday’s lower close has the appearance of a reversal to the downside, it didn’t meet all of the criteria to form a true reversal top. Nonetheless, selling pressure is likely to accelerate to the downside if Friday’s low at .6511 is violated.
The July 23rd closing price reversal top at 1.6585 in the GDP USD was confirmed late last week with a follow-through break on Friday. Even though this market has not continued the developing break today, this chart is now beginning to show the possibility of a secondary lower top which could mean the start of a sizeable correction to at least 1.6284 over the short-run.
The U.S. Dollar remains strong against the Japanese Yen. Better than expected economic news and the inability to break the equity markets today with any conviction is still putting upside pressure on the USD JPY. A closing price reversal top today in the stock market is likely to trigger a profit-taking break in the USD JPY tomorrow.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More