After a quiet market open and recovery in the U.S. Dollar, we can expect the sell-off of the U.S. Dollar to resume as the outlook for a rate hike in the remaining of 2015 looks highly unlikely. The U.S. Dollar holds a near 1-month low, but we expect further downsides from the technical levels holding up right now.
Taking a look at the hourly level, the lower high chart setup is a personal favorite marking an initial sell-off psychology followed by a recovery from a combination of short covers and buyers. The second lower high selling marks the majority of sellers looking to enter as buyers fail to push the price higher.
This looks especially promising also by the candle count. The sharp 70 or so pips drop occurred over the period of two bars or two hours. The recover took 3 times as long or 6 hours and not even able to recover the loss over the two hours of selling. While I’m not a fan of the current slowing sell-off, but I expect it to pick up throughout the night on the downside.
Switching over onto the daily time frame, we have a very simple chart setup. The first is the trend-line breakout. I prefer more of a DeMark style trend-line plot. I’m not really looking for a trend-line retrace or correction simply because the rally appears almost exponential and so I do not see the immediate benefit of predicting an ascending trend-line retracement so far away. My key takeaway here is the downside pressure that’s looking to bring this pair lower. The initial leg down has ended and we are currently stalling with a slight pull back before the next major wave sell off begins. The two horizontal rays served as my indecision zones where I viewed the market as not having a clear direction. Current trade setup is to sell into this second leg with a stop just above this horizontal zone. An additional confirmation is the 60-EMA serving as a dynamic support and resistance level. This exponential moving average setting is also another personal preference of mine. It works very well on this pair and price is currently resting just below this line. This is another expectations for a further downside movement.