- USDOLLAR triggers multi-month H&S pattern
- USD correction just getting started?
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
The FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP & AUD) has been under steady pressure since the middle of last month. During this time the index triggered a couple of negative technical patterns including a head & shoulders and a double top. Both patterns saw their respective objectives met in recent days. While not a textbook example, one could also make the case that the USDOLLAR triggered a broader multi-month head and shoulders pattern on the move through 11,740 earlier this week. This pattern has much more ominous implications for USD and would suggest a much a much deeper correction against the primary trend is starting to take shape. Near-term the index looks a bit overdone and susceptible to a bounce, but as long as trendline resistance around 11,770 holds the immediate negative structure will remain intact. The 61.8% retracement of the December – April advance around 11,660 looks to be a clear downside pivot with a daily close below this level needed to signal that another round of USD weakness is underway.
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USDOLLAR Daily Chart: May 15, 2015
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 11,750 (Fibonacci), 11,770 (Trendline)
Support: 11,660 (Fibonacci) 11,600 (Gann)
Strategy: Sell USDOLLAR
Entry: Sell USDOLLAR at 11,750
Stop: Daily close above 11,770
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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