The higher they climb, the harder they fall
Skerdian Meta • 2 min read
During the second half of March and the first few days of April, all the currencies had a solid go at the US Dollar. The Euro and the British Sterling reached what seemed to be the ‘make-or-break’ levels. As we have mentioned in the past, those levels come at 1.1050 for EUR/USD and 1.50 for GBP/USD. The quick escalation was either a correction of the broader downtrend in these
However, this retrace/correction didn´t last long. Last week, we saw investors rushing back to buy USD and pairs lowering against the USD. Some of them even moved below bottoms that were placed several years ago, such as GBP/USD, falling to the lowest levels in more than 5 years. True to the title of this post the higher and the faster any currency climbs against the USD, the harder it falls. The Euro is more than 500 pips (5 cents) down this morning and the GBP/USD is about 450 pips down. There´s a new saying that has been around in the last 7-8 months: “you can´t be wrong if you are USD long”, and today we are trying to buy the dips in the USD.
Game plan: we´ll sell EUR/USD once it gets close to 20 MA because this pair has been the weakest recently.
We hesitated too long to open a sell signal this morning at 1.0615 and missed our chance, which would have resulted in 80-90 pips. That being said, the retraces on the smaller time frames are always good opportunities to grab a few pips and that´s why we opened a sell USD/CAD signal. The Canadian Dollar has been the strongest of the major currencies apart from the USD, so if we see a retrace in EUR/USD, the CAD is likely to be the biggest winner.