Sarah Benneter
New member
- Joined
- Sep 30, 2026
- Messages
- 1
The currency markets are finally giving us some high-conviction structural shifts to chew on this week. With the U.S. midterm elections on the horizon, we are seeing the typical pre-event positioning where the Dollar Index (DXY) begins to lose its grip on recent highs. This slight slip in the greenback is creating some incredible technical setups across the majors and crosses, particularly in the Yen and the Euro-Cad.
Looking at USDJPY, we are seeing a significant technical retracement that has now spanned three consecutive trading sessions. The pair dipped to 157.32 on Friday, and from a purely technical standpoint, the price action is screaming "regime change." While the Bank of Japan held its key interest rate steady at 1.25%, the real alpha for technical analysts wasn't in the rate decision itself but in the forward-looking inflation signal. The BoJ finally acknowledging that core inflation has hit the 2% target acts as a fundamental catalyst that validates the bearish divergence we’ve seen on the daily charts.
This morning, while I was reviewing my 4-hour candle structures, I noticed a very specific pattern that reminded me of a setup I traded back in 2018. Back then, I got caught on the wrong side of a carry trade because I ignored the sub-text of a central bank's inflation projections. I tried to buy a "cheap" dip without realizing the structural trend had flipped. Today, I’m much more cautious. I ran a quick backtest on my proprietary momentum filter, and the results suggest that the 157.30 level isn't just a random number—it’s a confluence of previous structural resistance now acting as a pivot. If we see a daily close below this mark, the door opens for a much deeper correction toward the 155.00 handle.
Switching gears to the crosses, EURCAD is presenting one of the cleanest reversal setups I’ve seen all quarter. We have a clear rejection of the 1.5600 support level, which, if you zoom out on your charts, was a significant multi-month low back in March. This area successfully halted the Wave (5) exhaustion move we’ve been tracking. What makes this particularly compelling is the confluence of the lower daily Bollinger Band and a long-term support trendline. When you see price action reverse from the bottom of a volatility envelope right at a historical horizontal support, the risk-to-reward ratio for a long position becomes mathematically superior.
The technical objective for EURCAD now sits at the 1.5750 resistance level. We are seeing a classic mean reversion play here. The downward momentum that dominated the pair for several weeks has clearly dissipated, replaced by a rounding bottom on the lower timeframes. For those of you who trade Elliott Wave, this looks like the beginning of a corrective ABC structure or perhaps the start of a new impulsive cycle to the upside. The Euro is gaining strength as the USD softens, and the Canadian Dollar is struggling to find its footing amidst shifting commodity sentiment, which provides the perfect fundamental tailwind for this technical setup.
In the broader context of the G10 space, the Euro is showing surprising resilience. As the Dollar slips ahead of the midterms, we are seeing capital rotate into EUR and JPY. The Yen, in particular, is finally benefiting from the narrowing yield spreads. If the 2% inflation target in Japan remains a reality, the "higher for longer" narrative for the JPY might actually start to hold weight, which would fundamentally break the back of the USDJPY bull run we’ve endured for so long.
I’m currently watching the 1-hour charts for a minor pullback to enter a tighter position on EURCAD. My stop-loss is tucked just below that 1.5600 psychological floor. I’ve learned the hard way that trying to "DCA" into a losing trade when a major support level breaks is a recipe for a blown account, so I’m keeping the risk management tight. The confluence of the Bollinger Bands and the trendline gives me enough confidence to take the trade, but the market always has the final say.
Are you guys seeing the same exhaustion on the DXY, or do you think this midterm slip is just a temporary liquidity grab before another leg higher?
Looking at USDJPY, we are seeing a significant technical retracement that has now spanned three consecutive trading sessions. The pair dipped to 157.32 on Friday, and from a purely technical standpoint, the price action is screaming "regime change." While the Bank of Japan held its key interest rate steady at 1.25%, the real alpha for technical analysts wasn't in the rate decision itself but in the forward-looking inflation signal. The BoJ finally acknowledging that core inflation has hit the 2% target acts as a fundamental catalyst that validates the bearish divergence we’ve seen on the daily charts.
This morning, while I was reviewing my 4-hour candle structures, I noticed a very specific pattern that reminded me of a setup I traded back in 2018. Back then, I got caught on the wrong side of a carry trade because I ignored the sub-text of a central bank's inflation projections. I tried to buy a "cheap" dip without realizing the structural trend had flipped. Today, I’m much more cautious. I ran a quick backtest on my proprietary momentum filter, and the results suggest that the 157.30 level isn't just a random number—it’s a confluence of previous structural resistance now acting as a pivot. If we see a daily close below this mark, the door opens for a much deeper correction toward the 155.00 handle.
Switching gears to the crosses, EURCAD is presenting one of the cleanest reversal setups I’ve seen all quarter. We have a clear rejection of the 1.5600 support level, which, if you zoom out on your charts, was a significant multi-month low back in March. This area successfully halted the Wave (5) exhaustion move we’ve been tracking. What makes this particularly compelling is the confluence of the lower daily Bollinger Band and a long-term support trendline. When you see price action reverse from the bottom of a volatility envelope right at a historical horizontal support, the risk-to-reward ratio for a long position becomes mathematically superior.
The technical objective for EURCAD now sits at the 1.5750 resistance level. We are seeing a classic mean reversion play here. The downward momentum that dominated the pair for several weeks has clearly dissipated, replaced by a rounding bottom on the lower timeframes. For those of you who trade Elliott Wave, this looks like the beginning of a corrective ABC structure or perhaps the start of a new impulsive cycle to the upside. The Euro is gaining strength as the USD softens, and the Canadian Dollar is struggling to find its footing amidst shifting commodity sentiment, which provides the perfect fundamental tailwind for this technical setup.
In the broader context of the G10 space, the Euro is showing surprising resilience. As the Dollar slips ahead of the midterms, we are seeing capital rotate into EUR and JPY. The Yen, in particular, is finally benefiting from the narrowing yield spreads. If the 2% inflation target in Japan remains a reality, the "higher for longer" narrative for the JPY might actually start to hold weight, which would fundamentally break the back of the USDJPY bull run we’ve endured for so long.
I’m currently watching the 1-hour charts for a minor pullback to enter a tighter position on EURCAD. My stop-loss is tucked just below that 1.5600 psychological floor. I’ve learned the hard way that trying to "DCA" into a losing trade when a major support level breaks is a recipe for a blown account, so I’m keeping the risk management tight. The confluence of the Bollinger Bands and the trendline gives me enough confidence to take the trade, but the market always has the final say.
Are you guys seeing the same exhaustion on the DXY, or do you think this midterm slip is just a temporary liquidity grab before another leg higher?