Bears testing the strength of trend line

22 October, 2019

The decline on the US dollar index has ended. Monday’s candlestick remained within Friday’s range. The DXY index still closed down, but not by much in comparison to last week.

We’re starting to see signs of an impending upwards correction. Since the dollar collapsed on the back of geopolitical developments, technical factors currently don’t wield much influence. Only trading robots are sticking to their algorithms and completely ignoring the fundamentals. If a sell signal is formed against the trend, a short position is opened. But who knows, maybe some people have disabled their Expert Advisors until the Brexit situation is resolved.

In the US session, the dollar got a boost from positive news about a US-China deal. US10Y bond yields jumped 2.7% to 1.8046. The euro dropped to 1.1139.

US economic advisor Larry Kudlow said that if the first stage of negotiations with China goes well, the tariffs planned for December may be cancelled. US President Donald Trump has said that negotiations with China are going well, adding that he hopes to sign a deal at the APEC Summit in Chile.

Expectations of a correction were met. The pair revisited Friday’s high and reversed downwards. It missed the projected target by a few pips.

The euro is trading at 1.1151. The Kiwi, Aussie, and pound are trading up against most of the majors, so today’s forecast will be similar to yesterday’s. The only difference is that we don’t expect a fresh high today. Before breaking through the trend line, there’s likely to be a bounce, which will help gather momentum for the breakout. The pair could retrace 76% of yesterday’s drop.

The EURGBP cross is in the red. This means that the euro crosses are under pressure. Today’s calendar is devoid of any significant events, although it’s still worth keeping an eye on UK data.

Another discussion will take place on the Brexit deal in the British parliament today, after which a vote will take place. There may be talk on Wednesday of a second referendum. The boat might also be rocked by talk of a snap election.

In conclusion, the bullish impulse is waning. However, before we get a downwards correction, a false upwards breakout is possible. Around 1.1126 and 1.1110 is a good area for a correction.


Source  
Spanish armed forces stepped in to help deal with coronavirus16 Mar, 2020  

They are already patrolling the streets of Valencia, Seville, Zaragoza, Leon, Las Palmas and Santa Cruz de Tenerife...

Coronavirus pandemic continues to gather pace13 Mar, 2020  

A significant increase in the number of cases in developed countries serves only to provoke governments to take reactive...

Markets awaiting Lagarde's press conference23 Jan, 2020  

There is no forecast due to the ECB meeting and Christine Lagarde's press conference, scheduled for later in the day. Investors are not quite...


Euro hovering above bottom line of the channel22 Jan, 2020  

Bears have been strengthening their position since the Asian session. Today we have one scenario - a price recovery to the balance line...

Euro rebounds to 1.11 ahead of Fed meeting11 Dec, 2019  

On Tuesday the 10th of December, the euro was up at the close of trading. Strong ZEW data sparked a recovery to 1.1085 in European trading...

Euro on the verge of collapse27 Sep, 2019  

Trading on the pair fluctuated throughout the day. The bears took advantage of the rise to 1.0967 to open some short positions. The euro is still...


Gold is having a great time13 Aug, 2019  

Gold is having a great time at the moment, but we've just reached a crucial resistance. This is the combination of a horizontal and dynamic resistance...

GBPJPY: from a strong buy to a proper sell 14 May, 2019  

Last week was pretty terrible for GBPJPY. It all started with the denial of a proper buy signal and ended with the creation of a long-term signal to go short...

Gold fights to deny triangle pattern30 Apr, 2019  

One instrument which is currently in a very interesting place is gold. The precious metal has suffered a lot recently, mostly due to two factors. The first one is...