2017 Currencies Review

Just read an article on ZeroHedge reviewing performance of stocks, currencies and other assets for 2017:

The Dollar was a bloodbath this year – the biggest loss for the greenback since 2003…

Well, if that’s a bloodbath (see the chart below, USD top right – click to enlarge), I am quite Bullish on USD for 2018 (even though it is likely going lower before it goes higher)!

NZD depreciated much more, even though it bounced in December. JPY did not have a very strong year either.

EUR is a clear winner for now, but being extremely overbought and reaching a major resistance on Monthly, I am Bearish in the long term.

GBP had a nice bounce from all time low, but in light of the prior Bearish trend I do not think this will last.

AUD, NZD and CHF are more or less unchanged, while CAD is somewhat Bullish.

AUD has been flat, trying to push higher against the stronger Bearish cycle lasting 3 years from 2013 to 2016. I would expect a breakout towards the yellow resistance and a likely rejection from there. Could start a major Bearish cycle in 2018.

NZD is the weakest currency in 2017, and it doesn’t look like the descent is done. However, I note the prior Bullish wave in 2015-2016 against which the current drop is trading, and the Bullish trendline it is approaching.

JPY, while registering a negative year, is trading against a very strong Bullish wave. And momentum of this current Bearish cycle is slowing down. Expecting a bounce towards 2016 highs.

CHF is still pretty much unchanged after January 15th 2015 SNB fiasco. And yet, the price is sitting on a very long term Bullish trendline – no other currency is showing such consistent Bullish trend, lasting since 2000. Expecting a bounce and retest of the highs, but a temporary break towards lower support cannot be discounted.

Finally, CAD is slowly pushing against multiple resistance levels. Bullish momentum remains more likely, but I think it will have a hard time turning into a strong, multi-year Bullish cycle. Additionally, I do not think that Oil prices will reach much higher from where they are right now, unless a major war breaks out in middle east (which certainly cannot be ruled out).

27th of December 2017

This is a very interesting rejection that could lead to CAD reversal. And of course, as AUD, NZD and CAD have been leading the recent Bullish surge, it could in turn cause correction in these other currencies…

…speaking of which, AUD certainly looks a little bit overextended… However, judging by the Weekly chart, I would not bet on this Bullish trend reversing. A correction, on the other hand, seems very likely.

In addition to the above, I am waiting for GBP to continue its Bullish trend and it seems that AUD is the main currency preventing that from happening. Finally, current price on GBP and AUD indexes seems very fitting.

I would not be eager to Buy GA just yet, but there are other GBP pairs to work with.

26th of December 2017

Quoting Scotiabank:

AUD positioning is a little more perplexing; the modest net long in the market that has persisted since mid-year has turned into a large and relatively significant net short. Week on week, this is the largest positioning shift against the AUD since the carry trade rout of 2007. There is little obvious fundamental news to have driven such a turn in sentiment over the past week, in our opinion.

This drop in Net position is certainly interesting, especially in light of recent strong Bullish action on AUD.

Looking at all major AUD pairs the Bullish cycle is very clear against all other currencies, but also interesting is the fact that price is trading near important resistance areas right now on many pairs:

Given the size of this positioning shift, it does not seem likely to be caused only by profit taking before Christmas. What do these large traders know that we don’t? AUD pairs certainly deserve some serious attention in the coming week.

Here price is approaching a long term value zone on Daily. As it climbs higher I am looking for any signs of weakness that would signal a Sell trade.

Price has been trying to break below this level on multiple occasions, each time reaching a little bit lower. Comparing momentum between Bullish and Bearish swings, Bears have been stronger throughout the whole range for the past 3-4 months. Current Bullish swing is slowly climbing towards the higher range boundary. This is definitely a Selling opportunity.

Complex Bearish correction in a Bullish trend. Looking for price rejection, ideally as it breaks the nearest support on H4.

Price is breaking above long term range with some strength. I am still skeptical about long term Bullish continuation, but only because price seems to be too expensive to be a buyer. Watching for possible rejection.

Even though trendline has been broken, another test remains just ahead to confirm change of trend. Given signs of weakness as price approaches this level, rejection and a Selling opportunity is the main scenario.

11th of December 2017

Price has been rejected from the lows, but if it shows weakness trying to break through the current price congestion, this is a good Short opportunity.

After strong rejection from the lows last week, and weaker Bearish correction, my bet is that Price is going to test the Daily highs again.

It is a struggling Bearish trend on Weekly, but a Bearish trend nevertheless. Since Bulls are failing to show any signs of strength as we are trading at the low for the year, Bears are favorite to continue lower.

Price trading in a rather slow complex Bullish correction after breaking Weekly support. It can reach as high as the yellow resistance level without changing Bearish scenario.

Complex Bearish correction against Bullish trend on Weekly and Daily. Expecting rejection around these levels and retesting the high. We are approaching an important psychological price of Brexit breakout last year. Overall Bullish momentum on Weekly is still quite slow, but persistent.

4th of December 2017

Only waiting for a weak pullback, preferably between 2 yellow levels on H4…

Very tricky rejection, but Bearish trend remains intact. There is a good chance of spending some time between the two yellow SR levels. Rejection from the resistance will signal a Sell entry.

My trade from 3 weeks ago just got closed in BE. Still considering possibility of re-entry.


1st of December 2017

That happened faster than expected. Let’s see how the price acts at this lower support and if any weaker pullback is offered to establish a short entry.

That short idea did not work out very well and the trend is now officially reversed. Still trading in a bigger range on Weekly, but there is enough distance to the upper boundary to look for Buys on a weak pullback (which was already available on the approach to the upper yellow resistance on H4).

While Daily Bearish wave is accelerating, rejected from the TL, it is still trading against a bigger Weekly Bullish move, and now approaching the first real challenge. I would not expect the price to go through this area easily.

Price turned quite sharply, and momentum shows decreasing Bearish strength, increasing Bullish. Note that the whole Bearish wave on Daily is moving against a much bigger Bullish move.

I can imagine that many Bears are panicking right about now, seeing their profits being undone with alarming speed. A weaker correction will give them some temporal relief, and it is exactly when I would be looking to bet against them.

This is an interesting spike. Bearish move got violently rejected, but it is clearly a news spike, so I would not give it too much weight. More interesting is the fact that most of the Bullish candle was undone right away, and price settled somewhere around the middle for now.

More price action is needed to make a decision. I never like to base my trades on news related spikes.

Looking at all CAD and CHF pairs separately, the picture is even more interesting. The spike was bullish for both currencies, CHF coming just a bit later than CAD.

The real question is which currency will be able to sustain this Bullish momentum? That will decide whether CH is a Buy or a Sell.

Today NJ looks much better, and failure to break this level is a clear Buy signal. Momentum on Daily is not very favorable for Bulls. However, I would not want to put any trades on right before the Market close…

…Let’s see if that’s little congestion area on the left offers any decent resistance.

…it did, but somehow I managed to miss the trade!