USD/DKK positioned south

The US Dollar is trading in two patterns simultaneously against the Danish Krone. The senior formation is a four-week channel up. In addition, the Greenback has entered a minor consolidation phase, thus forming a descending triangle.

All indications point to a possible fall in the hourly and daily time-frames, starting from technical indicators and ending with descending triangle being a bearish pattern. Likewise, the rate has already reached the upper channel boundary.

The rate still managed to realise the small upside potential up to the 6.26 mark due to a sudden surge. However, the Greenback is expected to allay this bearish sentiment and reverse to the downside, thus moving below a cluster formed by the 55-, 100– and 200-hour SMAs at 6.25. The nearest bottom limit is the weekly S1 at 6.1923.

Comment:

USD/DKK has been trading in a channel down since August 25. The rate provided two bottom confirmations of this pattern; however, as apparent on the chart, it has since failed to reach the given mark.

This diminishing trading range might suggest that the market sentiment has altered to a more bullish one, thus resulting in a possible breakout north. This assumption is supported by the fact that the second bottom confirmation which was reached on September 8 was the lowest level since early 2015.

It might be possible that the Greenback edges lower in this trading session until the upward trend-line circa 6.22 is reached. However, it still faces the weekly PP and the 200– and 100-hour SMAs along the way that could stop the pair from reaching this line. By and large, the subsequent movement is expected to be northward.