The AlphaMind Blog: Possible Red-Letter Day on AUDUSD and DXY and USDJPY

Just yesterday I highlighted the possibility of AUDUSD making a Bullish Flag breakout. - Today it did break out the top of this pattern, it also made a new high for this move, but it also may have had a spectacular failure in doing so, as highlighted by poor volume on the breakout and heavy volume on the failure. - Today's price action has also produced a bearish 'Shooting Star' candle. - On its own, not that significant, but given the breakout failure and the high volume, this may turn out to be a significant day for the AUDUSD in relation to the next few weeks. The first and second chart below highlight these points.

Below the AUD charts I have some other charts of interest. The first is today's USD Index, which has not yet closed, but it looks nailed on for a significant 'Bullish Engulfing Day', this is often a strong reversal candle signal. I would also like to point out this 'may' also be forming a 'Bullish Falling Wedge' pattern on the USD Index; if this were to complete, then the odds would be strong for a move back to the highs of the USD Index in coming weeks, and quite possibly higher. With the major constituent for the USD Index being the relationship to the EURO and European currencies, this could be significant for the EURUSD.

The fourth chart shows how today's strong up-move in USDJPY has produced a strong monthly candle. This suggests that today's move is based on USD strength at this stage rather than a risk-off flight. I touched on the possibility of a significant move for USDJPY a couple of weeks ago, that post can be seen here . Today's close near the high of the month is supportive of further upside in coming months and in the big picture seems very bullish. Finally below this chart is some analysis courtesy of Barclays FX research, which also shows some interesting analysis on the USDJPY.

AUDUSD CME FX FUTURES CHARTS