Is USD Reverting?
Jesus Aldana | Oct 15, 2017 11:42AM ET
US Index
Under the past weeks I've been posting a dollar reversal scenario, this week we are closer to that output. US Index broke a 6 month resistance downtrend on late September. Oscillators on 1W chart were showing enough strength to break resistance line and it happened. It rallied four straight weeks and found resistance at August Peak before correcting.
On this week an inverted Head & Shoulders pattern was brought out into the light. Although a reversal is not yet confirmed until price manages to break neckline at 94.25. Signs of reversal are already piling up:
- 6 Month Resistance Broken late September
- Rally to August Peak
- Support found this week
- Inverted Head & Shoulder pattern showed up this week
- Hammer candle on Friday 13th
- Economic Data support a stronger dollar: ISM, PMI, ADP NFP, Jobless Claims, Unemployment Rate, PPI
There are enough signs at this stage that support a US Dollar reversal. However time will tell if this is just a false breakout which leads to further deterioration, or a neckline breakout is confirmed. Fed Interest Rates are strongly driving dollar sentiment, along with NK tensions.
EUR/USD
The EUR/USD chart is similar to the US Index if we rotate it 180 degrees. Which means that same signs are showing up:
- 6 Month Support Broken late September
- Rally to August Peak
- Inverted Head & Shoulder pattern showed up this week
- Inverted hammer candle on Friday 13th
- Economic Data support a stronger dollar: ISM, PMI, ADP NFP, Jobless Claims, Unemployment Rate, PPI
Behavior of both charts being similar, along with Head & Shoulder pattern formed in both charts, gives a strong belief in a Dollar Rally.
EUR/AUD
Supporting a Euro Reversal. EUR/AUD rallied to resistance 1.523, however in my last week post I stated technical indicators didn't support a breakout. This week we saw it happen, price reverted to 1.491 on only two days. On a daily chart an ascending triangle is formed. Time will tell if it has enough strength to break support, or if it will return back to resistance and break it.
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