Dollar on the Back Foot

American Dollar got destroyed yesterday but that was not a surprise for the technical analysts as they for sure saw many signals that this was coming.

Let’s take a look for example on the EURUSD. Trend was bullish and we were inside of the trend continuation pattern (pennant). We also defended the 1.138 support. Because of that, the upswing was more probable. Now traders use the recent resistance (last two local tops) as a closest support (1.144). After the first contact we can see a demand here but the question is: is that bounce sustainable?

Another instrument is Gold, where the weaker USD allowed to create an Inverse Head and Shoulders pattern. Price broke the neckline and then the horizontal resistance. The only problem is that they could not hold that resistance as a support which increases the chances for a false breakout. The thing is that we all know that false breakouts can get nasty sometimes.

Interesting price action setup can be visible on the EURGBP, where the price used the ascending triangle for an upswing (as the theory says). They broke the horizontal resistance and now we do have high chances that we will use that as a support but to check that, we still need around 35 pips.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis