New week, new trend for the Buck
Skerdian Meta • 2 min read
The US Dollar punches back!
Yesterday, we wrote about the weekly trends that US Dollar pairs have been making these last few weeks. The moves have been driven by the market sentiment towards the USD. The market sentiment in itself has been influenced by both the fundamental and the technical analysis. Fundamentally, US data hasn´t been reliable recently, especially in the last few weeks, which has led to some exaggerated moves and whipsaws. Technically, the support and resistance levels in EUR/USD and GBP/USD (i.e.goalposts from yesterday’s article), have done a good job in capping and reversing every move – no matter how strong the market sentiment or how bad the US economic data. They have kept the price confined between them in most USD pairs.
We also wrote yesterday that last week´s trend seemed over because the price was at the top of the range in most USD pairs. Then the sharp declination on the Dollar last Friday quickly reversed, erasing all the gains of the other currencies. When such uptrends or downtrends come to an end, the price usually fluctuates in tight ranges for one or two days until the new trend begins. So we planned to play both ways yesterday. But the consolidation didn´t really happen; these pairs are now about 200 pips down from the peak. So it seems this week the downtrend in EUR/USD and GBP/USD began immediately after last week´s uptrend and we got caught on the wrong side for these reasons. Today we will follow the new trend that has already started. We will try to buy the US Dollar on the dips. While we don´t rule out any pairs, USD/CAD and USD/CHF have the biggest profit potential, so we will keep an eye on them and probably open buy signals once the Stochastics indicator reaches the oversold level on the hourly charts. We will sell EUR/USD too if it reaches the 100 MA at 1.0730s. That level provided support several times last week during the uptrend, so it´s likely that it will turn into resistance now.