[September 14 Analysis Report] A hot short-term setup with a downtrend tailwind!?
Close attention on the euro-dollar continuing to fall
Hello, this is Leo.
This time,focusing on the euro-dollar as the main axis, I will look at this week’s market.
About the current euro-dollar, my view is quite simple.
all in a short direction
From the Dow Theory perspective, since the higher timeframes and short-term timeframe align downward,
seems to be the simplest approach.
Euro-dollar is short on all timeframes
First, the euro-dollar.
4-hour: Downward direction
1-hour: Downward direction
This is how I view it.
In other words, the direction on higher and lower timeframes is aligned.
In such markets,
instead of aiming for a bottom and buying,
it's easier to think in terms of selling on rallies.
From Dow Theory, as long as the trend continues with lower highs and lower lows,
What matters now for euro-dollar is the "pullback pattern"
However,
After a continued decline, a temporary rally will occur.
Therefore,
whether it fails to surpass the previous high again
.
For example, if on the 1-hour chart there is a rally but it cannot exceed a key pullback high, and then the price makes new lows,
in such a pattern it becomes much clearer to consider shorts.
Conversely, if the 1-hour chart clearly breaks above the pullback high and trends upward, I would temporarily hold off on shorts.
Enter on a pullback
Euro-dollar also pays attention to important support
Currently, euro-dollar, while looking downward, comes near important support zones where caution is warranted.
Just because it reaches support doesn't mean you should buy immediately.
What matters is,
・Will it continue to set new lows
・Will it break the pullback high
・Will selling pressure be sustained
.
If the support is clearly broken and the 1-hour timeframe continues to fall, it becomes easier to aim lower.
Dollar-Yen: Will the weekly pullback activate?
And this time, what’s also important for euro-dollar isUSD/JPY.
Dollar-Yen has fallen sharply, but in the long term,
pullback
may be approaching.
From here on,
continue to break the weekly pullback and fall further.
a buy emerges from the weekly pullback and USD/JPY turns up.
We will watch which of these occurs.
If there is buying in USD/JPY, there is bearish news for euro-dollar
This is quite important.
If USD/JPY rebounds from the weekly pullback,
USD buying / JPY selling
will occur.
In other words, dollars tend to strengthen.
Then euro-dollar, being EUR/USD, will tend to fall more as the dollar is bought.
＋
Dollar-buy reaction from weekly pullback in USD/JPY
overlap can lead toincreased downward momentum for euro-dollar.
But dollar-Yen reversal is not confirmed yet
Of course, reaching the weekly pullback target doesn't mean you immediately buy USD/JPY.
What I watch is,
.
Near the weekly horizontal line or rising line, if the 1-hour chart shifts from down to up,
then it might indicate that the weekly pullback is starting to function.
.
Conversely, even if the weekly target is reached, if the 1-hour chart continues to make new lows, buying is still difficult.
This week, FOMC is the biggest focus
And this week is important not only technically but also in terms of fundamentals.
The main focus is,
.
If the market’s outlook shifts that the interest rate path or policy will be different, the dollar can move significantly.
If the market is more hawkish than expected,
↓
EUR/USD decline
tends to strengthen.
Indicators are about following price action more than chasing results
During major events, it is risky to decide direction based only on numbers.
For example, if the market has already priced in the news, good numbers might still see the dollar sold.
The reverse is true as well.
not simply sell because the indicator was weak.
Instead,
look at which way the actual chart moves after the indicator
as a guiding principle.
BOJ actions also matter for USD/JPY
Additionally, for USD/JPY, the BOJ’s monetary policy is quite important.
If yen buying intensifies, USD/JPY could break below the weekly pullback.
Conversely, if yen buying eases and there is dollar buying entering at the weekly pullback,
＋
euro-dollar further decline
there is a possibility for this flow.
This week, rather than viewing USD/JPY and euro-dollar separately,it might be clearer to view them as overall dollar strength.
Two scenarios I’m considering for this week’s euro-dollar
Downside direction on daily, 4-hour, and 1-hour continues. If USD/JPY also rebounds from the weekly pullback and dollar buying intensifies, EUR/USD could fall further.
If FOMC or BOJ triggers stronger dollar selling and yen buying, and EUR/USD on the 1-hour chart breaks the pullback high and turns up, the current short scenario would be temporarily terminated.
This week's viewpoint
All timeframes: short direction. Generally aim to sell on rallies.
In the long term nearing the weekly pullback target. If it rebounds, it could lead to dollar buying. However, this requires confirmation of a 1-hour upside reversal.
Because central bank events can greatly shift the dollar’s direction, focus on the 1-hour and 4-hour responses after the indicators.
This week,
“whether the weekly pullback activates”
is a major theme I expect.
In particular, if USD/JPY rebounds from the weekly pullback, dollar buying strengthens,
and euro-dollar that is already in a short state
may accelerate lower.
However,
with important events ahead this week,
・whether the weekly pullback in USD/JPY truly functions
・whether the 1-hour trend is changing
I will respond while checking these aspects.
＋
confirm weekly pullback in USD/JPY
This week, I will focus on these two as the main framework for market observation.
“Leo FX college”
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