More to digest going against the USD – Confluence Detector

Gonçalo Moreira, CMT Independent Analyst

Most major currency pairs are in the same predicament: there is much more to digest going against the USD than in its favor. Note the movement would neutralise part of last week's U.S. equity losses for the international investor.

The EUR/USD could pivot to the upside into an eventual new up leg only after taking out a consequential resistance-cluster lodged between 1.1525 and 1.1540, and shortly thereafter breaking the pivot point's R1, in order to trigger an upside projections to 1.1760. On the downside though, isolated technical barriers are looking more like targets than solid levels of support. Pivot point's S1 around 1.1450, the weekly pivot S1 around 1.1425, and a few more you can check on the Technical Confluences Indicator do not look as if they could contain any serious drop.

A slowly rising tide does not float all boats equally, so USD breakouts could have started with the CAD, AUD and GBP around the weekend, while JPY and CHF are still nipping at the USD's ankles in terms of performance.

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.

Learn more about Technical Confluence

Author

Gonçalo Moreira, CMT

Independent Analyst

As a trader in the foreign exchange market since 2005, Gonçalo Moreira honed his analytic and strategic skills through the Chartered Market Technician (CMT) designation. 

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