Tuesday brought us the strength of the American currency, which is a continuation of the movements seen on Thursday and Friday. This movement was anticipated on the main pair – EURUSD, after Monday’s trading brought us a small bullish correction. That was a great occasion to open a short position, which we did. The big picture here is that we are still under the influence of the false breakout, which happened after the more-dovish-than-expected FOMC from the week ago. Sell signal on the EURUSD is on.
Next instrument is the USDJPY, where yesterday we had a rectangle pattern. That should have resulted with the movement to the downside but it didn’t, which became a good occasion itself. If the price does not want to go down, it should go up. Here, we also opened a position but this time a long one (both anticipating the appreciation of the USD), which is also on profit. As long as we stay above the orange area, the sentiment is positive.
The last instrument in this short analysis is DAX. We all know about the high correlation between indices and USDJPY, so we should not be surprised that the situation here is similar. The price managed to climb back above a major horizontal resistance and as long as we stay above, the buy signal is back on track.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis