There is a chance that USD will end this week positively, triggering a mid-term signal for a correction. For instance on two main pairs with the USD, so EURUSD and GBPUSD we do have a potential for a double top formation and on the USDJPY the price made a false bearish breakout and is now aiming higher. To estimate the chances of the USD for a further appreciation, let’s look at the Dollar Index.
Here we are still in the long-term downtrend (lower lows and lower highs) but first attempt to end that was already made – the price broke the down trendline (black) and is heading significantly higher. Unfortunately there is a bit to early for a buy signal yet. What the price have to do to trigger it is to break the 92.6 resistance (blue colour). That one played and important role in August and September and now restricts the price from the top.
Interestingly, in the same place as the blue horizontal resistance we do have a correction equality pattern (grey rectangles). As we can see, those two previous corrections (in August) were almost the same in term of the depth. If we assume that we are now bouncing from the 92,6, the third one will be the same too! That being said, we can see that the 92,6 is crucial here and as long as we are below that level there is no buy signal yet. Actually we can have quite the opposite so sellers can use that as a good resistance and start selling again, dragging USD into the another bearish wave.
Chief Analyst – Alpari Research & Analysis Limited
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