The dollar index pairs are trying hard to get back into long mode on the 4 hour charts and are just about breaking the dollar bulls down. However, the global dollar drivers, equities and commodities, are already all in long mode, and right now registering oversold Usd reads. It will now take an increase in volume to get through the next resistance area, and that may just allow the dollar a chance to regain some lost ground ahead of the main cash markets opening.
The opening and closing of the three global commercial markets will be critical in trading forex through August, and probably will be far more important to gauge order flows than at any other time of year. The European markets are on their extended summer holiday breaks, and as such order flows are going to be sporadic, although possibly not thin. Automated trade has its place right now; we will respect that fact and we will be looking to bank near-term targets as our August goal on signals sent out.
The forex valuations have been stuck in a range since the beginning of June, and most major pairs have not been able to generate the energy to easily move higher against the Usd without swaths of pull-back orders muting the trend building process.
However, the daily chart reads are starting to show signs that the dollar is heading lower, maybe not in one go, and certainly not without a fight, but the momentum indicators and simple moving average reads are showing that short-Usd plays may be getting favored.
Volume is the key to sustainable breaks, and volume flows increase, like waves flowing in and out on a beach, as each global commercial region opens and closes for business.
Overbought Usd drivers, mixed dollar index major pair near-term trend reads, all add up to a swing point that tried to break long Usd recently, that now is failing, and setting up what could be a huge move against the Usd. To complete, we will be looking for 1005 on the S&P to hold, and oil to push towards 72.50.
If that happens, the dollar index may be on its way to 75.00; something that equates to 300-400 pips each on the major pairs. It can happen if volume comes in, if not, it will be a hard fought, wheel spinning battle to gain fair value on the dollar each day.
