Correction On The USD Comes To An EndLast week was week of comebacks. It was a week of small, mid-term corrections, going against the main long-term trend. Corrections are useful, they create an occasion to jump in into a trade for those who were initially late. Thanks to corrections, they can open trades with more desirable prices.
First example is the USDCHF, where the price reversed to test the long-term up trendline as a newest resistance, together with the horizontal line of 0.973. On Friday, USDCHF created a shooting star on the daily chart, which can be an invitation to go south. Currently, the price is creating a flag and the sell signal, will be triggered, when the price will break its lower line.
Similar setup can be found on the USDCAD, where we also had a pullback testing recent supports as closest resistances. The small difference is that here, the price created a shooting star on Thursday, not Friday. Currently, we are below three major resistances and as long as it stays this way, we do have a sell signal.
Those two setups are rather negative for the USD. Now, time for a one, which seems friendly for the American Dollar – EURUSD. Here, the price created a wedge in a downtrend and is currently close to its lower line. It seems that we also had a false breakout above the 1,12 and the major down trendline. Those factors are promoting a further decline, so in consequence – the strengthening of the USD.
This article is written by Tomasz Wisniewski, Director of Research and Education at Axiory