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September 13, 2018 - Institutional Market Observations

The markets have reacted to the Pound and Euro rate releases and we are starting to see some more weakness in the #dollar coming into play. #eurusd and #gbpusd charts look ready for a rally higher but weekly supply is holding them both back.

DOLLAR ~ The dollar had some nice momentum that has paused and chart dynamics suggest a move lower could be expected. With this in mind, taking dollar pairs long were therefore considered risky. As price dropped into the poorly formed weekly demand zone it became a strong possibility that the zone was not going to hold.


$USDCAD ~ on the #usdcad chart it's weekly demand was of higher than the dollars and so it's value was greater. Chart dynamics suggested it was likely to hold. It has been holding as the dollars has as well but there was a momentum shift that took place on the daily chart suggesting the institutions may have been planning to make a move higher but the momentum switch zone was not of high quality and it has since been broken. What is working against this is a monthly force is pushing downwards unlike the dollar.


$USDJPY ~ Now we have the #usdjpy and it's weekly demand was also not with the best formation but unlike the $usdcad it has a moderate force pushing upwards. I was watching for the institutions to switch momentum to the upside, which they did, leaving behind an invalid demand. they later validated the demand through momentum shifting on the four hour chart. Now price is moving upwards without the help of the dollar.


So why the move higher on the $usdjpy when the $usdcad, $usdchf and $dxy are all weak?

The answer lies in the market forces that are in play. The $usdcad and $usdchf both have higher time frame forces pushing down on price. Whether or not this is playing a role in the current dollar weakness is unknown but not having this downward force on the $usdjpy chart is surely helping price move higher as it does not have anything to contend with.

Where does that leave us with the $usdjpy? A much larger move higher has always been the expectation but with more potential weakness that can come in the dollar, longs would be against the current. Best we wait for a decisive move to take place on the dollar before opening any positions on the dollar pairs.

In the meantime, I'll be watching the $usdjpy behavior and learning for next time!

Magic Trader


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