Skip to main content
Track Trendline
35 / 53
Search the archiveLibrary
Library

2007issue C011-4

Linked cross breaks as dollar-pair filters

Majors and commodity-pairs all share a US dollar leg, so a directional call also implies a view on dollar strength or weakness. This archive case parks that call until a linked currency-cross loses a trendline or tests support-resistance.

  • Every listed major and commodity-pair shares a US dollar leg, so a directional call on those pairs also requires a view on dollar strength or weakness.
  • A currency-cross prices two non-dollar currencies against each other and can express relative strength without first deciding whether the dollar is firm or weak.
  • Breaks of support-resistance on a cross were treated as early turning-point cues for a linked dollar pair, with hourly bars as the shortest suggested horizon and longer frames described as more reliable.
  • After EUR/JPY lost a seven-day uptrend line on 4 October 2006, the case treated USD/JPY as likely to follow lower under temporary yen strength, and both pairs later neared marked support zones.
Entries in this reading3 entries
Current trackTrendline128 readingsIntermarket analysis136 readingsSupport and resistance170 readings

The dollar leg sits inside every listed pair

Every major and commodity pair listed shares a US dollar leg, so a directional call on those pairs also requires a view on dollar strength or weakness.

Majors are the most liquid dollar pairs: euro, Swiss franc, sterling, and yen versus the US dollar. Commodity-pairs are the dollar pairs tied to commodity-exporting economies: Canadian, Australian, and New Zealand dollars.

A currency-cross can hold the dollar question aside

A currency-cross prices two non-dollar currencies against each other, so it can express relative strength without first deciding whether the dollar is firm or weak.

The cross-rate is the implied price of that non-dollar pair obtained from the two dollar legs of the same triangle. EUR/JPY equals the product of EUR/USD and USD/JPY, so a heavy break of technical levels on the cross can feed back into either dollar leg.

Yen crosses as carry and oil maps

Yen crosses such as NZD/JPY were described as carry vehicles. As of October 2006 the NZD/JPY interest gap was given as 700 basis points, about 7 percent annualized. That gap is the carry-differential between a low-yielding funding currency and a higher-yielding long currency.

CAD/JPY was framed as an oil-linked intermarket spread because Canada is a net oil exporter with large reserves while Japan imports its oil.

Cross breaks as early cues

Breaks of support or resistance on a cross were treated as early turning-point cues for a linked dollar pair. Hourly bars were the shortest suggested horizon. Longer frames were described as more reliable.

A trendline-break is a move through a drawn rising or falling line that invalidates the prior swing structure. Support-resistance means prior swing lows, highs, or round-number zones used as testable reaction levels.

The EUR/JPY case on 4 October 2006

On 4 October 2006, a four-hour EUR/JPY chart was approaching a seven-day uptrend line, while the matching USD/JPY chart offered little directional information.

After EUR/JPY lost that uptrend line, the case treated USD/JPY as likely to follow lower under temporary yen strength. Both pairs later neared support around 149.00 on EUR/JPY and about 117.40 on USD/JPY.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
35 of 53 in the Trendline track
20071-3 pp.Next on TrendlineA case study in support, resistance, and trendline role reversal on currency chartsDraw an uptrend support Trendline through at least two rising lows and a downtrend resistance Trendline through at least two falling highs, and treat three or more aligned touches as stronger confirmation.
All readings on this track · 53 readings
  1. 1984Constructing the slow stochastic from a five-session range
  2. 1985Gold-proxy trendlines and a January support base
  3. 1988Construct a five-week new-highs total as a breadth chart
  4. 1988Stacked channel, trendline, and moving-average warnings in 1987
  5. 1989Auditing fifth-wave counts with equality, Fibonacci, and trendlines
  6. 1990Money-fund maturity as a companion Eurodollar chart
  7. 1990Constructing wave targets from ratios, triangles and trendlines
  8. 1992Nested time frames for trend and channel signals
  9. 1992A pre-trade checklist for trendline breaks and loss limits
  10. 1992Bond-fund timing inside trendlines, retracements, and dual averages
  11. 1992Two-point trendline construction from rise over run
  12. 1993Disposable chart ratings from confirmed level tests
  13. 1993When trend channels define fair value after dislocations
  14. 1993Valid trendline anchors for three-part reversals
  15. 1994Pairing stochastic divergence with trendline invalidation
  16. 1995Constructing measured targets after trendline breaks
  17. 1997A three-part pullback plan with RSI, Fibonacci retracements, and a tight trendline
  18. 1998Rule-based Trendline construction for testable entries
  19. 2000Constructing trendlines, breaks, and role reversal
  20. 2000Constructing speed resistance lines from trend extremes
  21. 2000Nasdaq tech cycle stages with a 15-day average and trendlines
  22. 2002Two-session candlesticks that test support, resistance, and trendlines
  23. 2002Constructing Fibonacci ratio grids from a peak and a trough
  24. 2002Evaluate trendline geometry before trusting a breakout
  25. 2002Trendline, volume, and breakout hypotheses versus cycle-end stories
  26. 2003Writing the long S&P 500 trendline and cycle junction as one hypothesis
  27. 2003A three-event trendline reversal checklist
  28. 2003Reverse-engineered Relative Strength Index price curves
  29. 2003Two-anchor trendline construction without cut-through
  30. 2004Treat a 15-minute e-mini stair-step as congestion under a daily lid
  31. 2005A 50-day average, a trendline break, and an open barrier flip
  32. 2005Matching a forty-day average to a crude trendline
  33. 2006Constructing a relative spread-strength oscillator for staged cycle confirmation
  34. 2006Constructing a log-change probability line for trend and range rules
  35. 2007Linked cross breaks as dollar-pair filters
  36. 2007A case study in support, resistance, and trendline role reversal on currency charts
  37. 2007Reading trendline breaks in a housing-sector case
  38. 2007Constructing replaceable trendlines for break signals
  39. 2007Reading trendline breaks before the mechanical signal
  40. 2007Trading choppy forex trends with channels and Fibonacci breaks
  41. 2007A stacked hypothesis from wave, trendline, ratio, and candle
  42. 2008Exit rules before entry: trendline, support, and stops
  43. 2008Capitulation headlines need trend confirmation
  44. 2008RSI divergence classes, ratio thresholds, and trendline tests
  45. 2010Support and resistance as falsifiable chart hypotheses
  46. 2012Reading a 2012 software directory as a breakout and channel case study
  47. 2013Treat a currency position as a regime, then map shared levels
  48. 2014Evaluating trendline swing size per market
  49. 2018Intermarket regime stress and the January 2018 trendline break
  50. 2018Weekly and daily Stochastic oscillator construction on a single daily chart
  51. 2018Constructing trendlines, support, and breakout targets from crowd exits
  52. 2019Trendline break and Fibonacci retracement as a falsifiable outlook check
  53. 2019Monthly S&P 500 false-break versus the decade trendline
By fieldIntermarket and spreads148 readingsBy year200773 readings
All 128 readings tagged Trendline
Also on Trendline5 readings
1992Commodity-bond ratio as an equity regime overlay1994Failed Treasury put-call signal and a dollar regime shift2001Constructing relative-strength ratios for spreads and rotation2013Treat a currency position as a regime, then map shared levels2018Intermarket regime stress and the January 2018 trendline break