The U.S. Dollar's bounce from 74.48 has been holding since the 22nd. Seven days later we're seeing some weakness in this rally.
While there still appears to be support in the move, the ceiling has shown itself to be at between 75.58 and 75.72. The sellers have camped out here and this will be the next hurdle for the long climb up for the dollar. Not that we re assuming this is going to happen now
Stepping back from the rally that s most evident on the intraday charts and focusing on the daily chart, it s clear that this move has merely established a bottom and not nearly come close to anything more than a bounce within the context of an overall downtrend.
I m focusing in mainly trending patterns as the dollar sorts out what it wants to do next with trend following in mind.
That s not to say that there are not some differences in this bottom. Afterall, we ve seen bottoms before most notable at 80.00.
This low which could be a bottom has a cast of characters that makes it a slightly more interesting scenario. Namely the EUR/USD and USD/CAD.
The Fed is getting increasingly less dovish. As far as the dollar s downtrend, that s a start.
So in playing with the most common-sense approach to this movement in the dollar, this correction, it would be best to find trend following plays as the dollar is not even remotely close to a reversal until it reaches the 76.50 level.
And with each trading session, the level at which the dollar would make the shift from correction to reversal seems to be tightening. For that reason, many traders are looking to shorter time frames to find opportunities in a dollar that is heading lower but not with the same conviction and market sentiment. Can a market be too bearish to be shorted? A lot of traders think so.
Let s take a look at some 60 minute set ups for today.
All charts used with permission from Autochartist chart pattern recognition software.
