Currency market: FX next week and USD/BRL

Brian Twomey Brian's Investment

EUR/USD target this week at 0.9782 traded to 0.9750. EUR/USD must break 0.9773 to target 0.9782. Friday's close just below 0.9773 targets next week's range from 0.9773 - 0.9928. Big break for higher is located at 1.0082 to target easily 1.0159. EUR/USD 1.0082 derives from a significant 78 pip drop from 1.0160 at week's beginning.

Massive overbought USD/CHF joins overbought counterparts, USD/CAD and USD/JPY. USD/CHF targets next week 0.9780 then 0.9756. USD/CHF runs about 100 pip difference from last week's 0.9685. USD/CHF must break 0.9828 to target 0.9780 then 0.9756.

DXY at 114.75 highs this week rose from 112.54 to travel another 121 pips and to drive currency and all market prices. DXY next week ranges from 115.30 to low 112.00's and no changes to ranges from past months.

DXY at 200 ish pip ranges offers USD and non-USD currencies 200 to 250 pip weeks. EUR/USD for example traded 218 pips this week, USD/CAD 269 and USD/JPY at 172.

The overall trade strategy remains long EUR/USD and non-USD and short USD to USD/JPY, USD/CHF and USD/CAD. Strategies were imposed and viable as best approach due to massive overbought DXY and trading to exorbitant levels.

Weekly trades normally contain multiple shorts and longs but DXY at 114 offers to wide to divergence to short EUR/USD and Non-USD. The only trade and direction for EUR, GBP, AUD and NZD is up and much higher. Upon normalization, multiple longs and shorts begin again.

GBP/USD, GBP/CHF and GBP/JPY contain a long way to travel to target 1.1089, 1.0830 and 158.00's. GBP and cross pairs are best profit trades next week and beats EUR/USD.

GBP/NZD for higher targets above 1.9166, trades below and remains deeply divergent to massive overbought EUR/NZD. GBP/NZD and 1.9166 decides as EUR/NZD trades miles above vital 1.6602. Divergence could last another few weeks easily. Best trade is EUR/NZD as short strategy.

GBP/AUD trades oversold to overbought EUR/AUD. EUR/AUD traded 280 pip higher this week to 1.5002 from 1.4723 or roughly 70 pips per day. EUR/AUD 1.4841 ends the divergence to GP/AUD as GBP/AUD trades below 1.7132.

AUD/USD and NZD/USD at deep oversold targets easily 0.6600's and NZD 0.5800's. AUD/CHF, NZD/CHF, EUR/CHF and GBP/CHF offers additional longs as complement trades and companion currencies to anchor pairs.

USD/JPY maintained 143.00's to 146.00's this week and offers shorter 200 pip ranges next week from 144.00's to 146.00's. USD/JPY trades and tracks perfectly to DXY.

GBP/JPY higher must break 160.00's and trades deeply oversold. Higher for AUD/JPY and NZD/JPY must break 93.56 and 83.99. EUR/JPY and CAD/JPY trade above 139.42 and 105.01.

Note the wide variance to EUR/NZD Vs GBP/NZD, JPY cross pairs, EUR/AUD Vs GBP/AUD. DXY is the problem to cause market abnormalities due to the wide divide from overbought USD and oversold NON USD.

Currency cross pairs rectify to trade consistent when DXY trades lower and compresses the wide USD division.

Best trades over next few weeks are the majors as EUR/USD, GBP, AUD, NZD and USD/CAD, USD/JPY.

Brazil elections and USD/BRL

Brazil's President Bolsonaro is up for reelection this Sunday against far-left globalist and former president Sa Silva. USD/BRL at 5.37 63 trades massive overbought as all EM currencies as USD/EM. USD/BRL targets 5.2682 easily and short rally trade strategy.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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