In the chart above we see the Dollar Index depreciating because the FED has increased its interest rates. In my blog last week, I was expecting the retracement, but most of all I was expecting a further appreciation in the US Dollar. It clearly did not happen and as a result, we started to break through a few supports. If you would like to hear more about the broken support, please go and watch the video by clicking here.
Last week the US Dollar finished the New York session bouncing off the support marked with the long diagonal yellow line, which is quite significant for technical analysts as it implies a possible appreciation from there. In this coming week, I see a definitive appreciation in the US Dollar until at least the 101.00 price area, which will retrace nicely to the volatile move that occurred on Wednesday 15th March. If the 101.00 price acts as a resistance, we will see another depreciation in the market.
In my blog last week, I wrote about waiting for the Euro retracement vs the US Dollar to then expect an appreciation in the market. If you don’t remember you can go and read it under the trade idea where I was looking to buy at either the 50% or 618% Fibonacci retracement.
Last week the EURUSD closed below the previous high which places this currency pair in a Symmetrical Triangle pattern. Such a pattern communicates that the price could break higher or lower. At present, the Inverted Head and Shoulder pattern is still in force which implies that the market is turning and the Euro eventually will start to appreciate only after it breaks the neckline.
Trade idea: Since we are at the top of the Symmetrical Triangle, common sense tells us to sell before getting involved in a buy. The first target is @ 1.0640 price area which is marked by the 382% Fibonacci level. If the price continues to sell, the second target is @ 10.600/580 price area which will be the support marked with the white bottom diagonal line.