American Dollar Tries A Small ReversalWednesday starts with the global recovery of the American Dollar but the general mid-term sentiment remains negative.
In this analysis, we have three interesting technical setups on the forex market, all of them involve the USD.
First one is the Cable, which is going down quite sharply. First signs of this possibility showed up on Monday, when the price created a shooting star candle on the daily chart. This pattern was later repeated on Tuesday. When you see two shooting stars in a row, especially on the daily chart, you need to expect something big. As for now, the price is respecting those two bearish formations and is going down. Natural target for this drop is the upper line of the recent rectangle. It looks like a decent mid-term support, which can be used to take bearish profits. Keep in mind though that the dominant sentiment here right now is a bullish one.
Second instrument is the USD/CHF, where we also have a shooting star in play. This formation was created on the last trading day of November on the crucial long-term horizontal resistance. December is so far a month of bullish suffering. Yesterday, we managed to break the important dynamic support. Today we are trying to test it as a resistance and as long as we stay below, we do have a proper sell signal.
Last one here is the USD/MXN, where last week finished with a very ugly bearish candle. We are still in the long-term symmetric triangle pattern but this kind of a price action is indicating a willingness to a bearish breakout.
This article is written by Tomasz Wisniewski, Director of Research and Education at Axiory