The US CPI is out on Thursday, which is key, but the reason that we think this week is important for the Dollar is a technical one. We had previously been viewing this as a potential bull flag, however last weeks price action has negated that view, why? When a market breaks higher from a bull flag pattern it tends to be quite dynamic and directional, the break higher should be maintained and that is not what we are seeing here. This, for us, negates the bull flag pattern.
So, where does that leave us? Well, it’s not a bull flag BUT it has not done enough to negate the bull trend either… (definition of a bull trend is higher reaction highs and higher lows) and we can see quite clearly that the reaction back is finding some support at the 20-week and 200-week ma at 95.11.
For the bear camp argument, we also have a LARGE divergence of the weekly RSI, which reflects a significant loss of upside momentum.
So how to proceed? I’d leave well alone until a clearer chart picture emerges…. However, if you must trade it, we would suggest a light and nimble touch here is needed. Drop down into the hourly chart and we can see the market is starting to nibble through the top of an hourly cloud, which implies some very near-term strength, but stops should be kept close and the most recent low on the hourly chart was a 95.34, so I would be utilising stops below there…
Slightly longer term, the KEY support is going to be the 94.61, the January reaction low, as failure there would imply that the bears are winning and introduce scope to the 55-week ma at 93.04 currently. As we say, we suspect this week will be crucial for the Dollar and let’s hope that the US CPI triggers further directional impetus.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
So, where does that leave us? Well, it’s not a bull flag BUT it has not done enough to negate the bull trend either… (definition of a bull trend is higher reaction highs and higher lows) and we can see quite clearly that the reaction back is finding some support at the 20-week and 200-week ma at 95.11.
For the bear camp argument, we also have a LARGE divergence of the weekly RSI, which reflects a significant loss of upside momentum.
So how to proceed? I’d leave well alone until a clearer chart picture emerges…. However, if you must trade it, we would suggest a light and nimble touch here is needed. Drop down into the hourly chart and we can see the market is starting to nibble through the top of an hourly cloud, which implies some very near-term strength, but stops should be kept close and the most recent low on the hourly chart was a 95.34, so I would be utilising stops below there…
Slightly longer term, the KEY support is going to be the 94.61, the January reaction low, as failure there would imply that the bears are winning and introduce scope to the 55-week ma at 93.04 currently. As we say, we suspect this week will be crucial for the Dollar and let’s hope that the US CPI triggers further directional impetus.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
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