US Dollar at a Crossroads
The US dollar remains at a technical crossroads, with last week finishing considerably off best levels (+0.3%).
Price action on the monthly chart shook hands with support from 99.67 (complemented by two neighbouring Fibonacci ratios [38.2% and 61.8%] at 98.72 and 98.95, respectively) last month and staged a recovery. Adding to this, the monthly scale reveals that price action has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed a noteworthy correction from 114.78 (from channel resistance), which remains active in 2023. Consequently, this timeframe remains USD positive in the longer term (unless we explore space beneath 98.72).
Predictably, due to the fractal nature of the markets, the Q4 (2022) correction on the monthly chart has displayed a visible downtrend on the daily chart, which also remains active. As evident from the daily timeframe last week, the unit whipsawed north of its 50-day simple moving average at 102.38 (as of writing) and crossed swords with an AB=CD bearish pattern from 102.65 (denoted by a 100% projection that’s situated a touch under resistance at 102.92). When using the AB=CD pattern, it's common to set downside targets based on the 38.2% and 61.8% Fibonacci retracement ratios of legs A-D, which correspond to 99.59 and 102.84. Specifically, these targets are at 101.59 and 100.82, respectively.
It's important to note that sellers appeared on Friday, suggesting a sell-on-rally approach in line with the current downtrend on the daily chart. Although the monthly timeframe suggests buyers could pursue higher levels in the longer term, the downside support targets derived from the daily chart’s AB=CD formation are still likely to be achieved in the short term this week.
Price action on the monthly chart shook hands with support from 99.67 (complemented by two neighbouring Fibonacci ratios [38.2% and 61.8%] at 98.72 and 98.95, respectively) last month and staged a recovery. Adding to this, the monthly scale reveals that price action has been northbound since bottoming in 2008 at 70.70 if one focusses on the longer-term swings. Q4 (2022), as you can see, printed a noteworthy correction from 114.78 (from channel resistance), which remains active in 2023. Consequently, this timeframe remains USD positive in the longer term (unless we explore space beneath 98.72).
Predictably, due to the fractal nature of the markets, the Q4 (2022) correction on the monthly chart has displayed a visible downtrend on the daily chart, which also remains active. As evident from the daily timeframe last week, the unit whipsawed north of its 50-day simple moving average at 102.38 (as of writing) and crossed swords with an AB=CD bearish pattern from 102.65 (denoted by a 100% projection that’s situated a touch under resistance at 102.92). When using the AB=CD pattern, it's common to set downside targets based on the 38.2% and 61.8% Fibonacci retracement ratios of legs A-D, which correspond to 99.59 and 102.84. Specifically, these targets are at 101.59 and 100.82, respectively.
It's important to note that sellers appeared on Friday, suggesting a sell-on-rally approach in line with the current downtrend on the daily chart. Although the monthly timeframe suggests buyers could pursue higher levels in the longer term, the downside support targets derived from the daily chart’s AB=CD formation are still likely to be achieved in the short term this week.
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