| DXY/USDCAD Short Continuation post New Years | Steadytradeai
Despite the fact that the US Dollar spent the majority of the year in a range, it was a fantastic year for volatility. The currency began 2021 at full speed in a downward trend. About the 90.00 handle, a substantial level had developed, which coincided with a Fibonacci level showed around 89.92. This is a 38.2% retracement of the large increase from 2001 to 2008. When the door opened into 2021, a persistent grind at this level in January resulted in a rise in February and March. That increase was powered by the possibility of the reflation trade, punctuated by the hope that immunizations will someday put an end to Covid and allow us all to get back to living our lives. That did not occur, and the USD's bullish flare deflated in Q2, with price action returning to the 89.92 Fibonacci support level, which held the lows in May. That optimistic narrative in the US Dollar was very loud in Q4, beginning even before the market began. As I predicted in my fourth-quarter forecast, the US Dollar was creating an ascending triangle, signaling the prospect of a bullish breakout.=
+699++9
That breakthrough happened immediately following the September FOMC rate decision, when the bank began to anticipate rate increases for next year. This gave a brief respite, but it looked that inflation numbers, which continued to grow throughout the quarter, did the most of the pushing. This propelled the USD to a new 2021 high before price action hit a confluent zone of Fibonacci levels spanning from the previously described 38.2 percent retracement to the 96.47 level, which is the 23.6 percent Fibonacci retracement of the 2017-2018 large increase.
That price was also the final target from the Q4 technical prediction, and as we approach the 2021 open, it will very certainly be in play as we go into 2022 trade. Price action placed a series of dojis on the chart at that confluent area. After such an incredible run, that's a lot of uncertainty. A doji candlestick near a critical resistance level after a very strong run would normally favor pullbacks, but the fact that price hasn't pulled back after several weeks of equalized price movement in this tight territory is deductively optimistic. This implies that there are purchase defending the line in the sand, which is one of the reasons why the US Dollar's Q1 Technical Forecast is upbeat.
However, because a retreat cannot be ruled out, timing that topic may be problematic. The question therefore becomes, even if a pullback occurs, will it disrupt the broader trend? I don't believe so, and there is a good place for that retreat to go: the 38.2 percent retracement of the 2020-2021 sell-off move. This was also a point of resistance that arose soon after the fourth-quarter breakthrough, but it has yet to be tested for support t. On the plus side, breakout potential is still at current highs, with the timing likely determined by how strong inflation data persists in early 2022 trade. However, another boost began to appear before to the start of the fourth quarter, as the Fed finally began to hint at a higher rate regime on the way, mostly in response to stubbornly rising inflation. This catapulted price action all the way up to the 38.2 percent retracement of that same major move, and as we approach New Year's Day 2022, that price is assisting in the USD's near-term support. Our goal for 2021 is dynamic, but it is also totally based on reinforced intelligenc
The technical forecast for the US Dollar in the first quarter of 2022 remains positive. And the reasons aren't entirely technical, since the underlying context is, in my opinion, too compelling to ignore. The Euro is an important component of US Dollar pricing, accounting for more than 57 percent of the DXY quote. When looking at USD forecasts, it's vital to consider the Euro. The gap between the two economies appears to be too large to allow for a continuous range.
However, when the USD encountered this substantial level of confluent resistance, the EUR/USD pushed down to a major zone of confluent support - implying that the problem will likely require a push before new highs or lows in the USD or EUR/USD can be produced. This motivation, I feel, might stem from one of two sources: Either the US inflation rate remains so high that the trend deviates from the underlying reason. Alternatively, the US Dollar falls to about 94.50, while the EUR/USD pushes for resistance at 1.1448-1.1500,, at which point the overall trend may profit from USD gains and EUR/USD weakness. The 38.2 percent retracement of the preceding bullish trend corresponds to 94.11, which may be combined with the 94.47 level to form a 'zone' of prospective support to look to for bullish continuation opportunities.
+699++9
That breakthrough happened immediately following the September FOMC rate decision, when the bank began to anticipate rate increases for next year. This gave a brief respite, but it looked that inflation numbers, which continued to grow throughout the quarter, did the most of the pushing. This propelled the USD to a new 2021 high before price action hit a confluent zone of Fibonacci levels spanning from the previously described 38.2 percent retracement to the 96.47 level, which is the 23.6 percent Fibonacci retracement of the 2017-2018 large increase.
That price was also the final target from the Q4 technical prediction, and as we approach the 2021 open, it will very certainly be in play as we go into 2022 trade. Price action placed a series of dojis on the chart at that confluent area. After such an incredible run, that's a lot of uncertainty. A doji candlestick near a critical resistance level after a very strong run would normally favor pullbacks, but the fact that price hasn't pulled back after several weeks of equalized price movement in this tight territory is deductively optimistic. This implies that there are purchase defending the line in the sand, which is one of the reasons why the US Dollar's Q1 Technical Forecast is upbeat.
However, because a retreat cannot be ruled out, timing that topic may be problematic. The question therefore becomes, even if a pullback occurs, will it disrupt the broader trend? I don't believe so, and there is a good place for that retreat to go: the 38.2 percent retracement of the 2020-2021 sell-off move. This was also a point of resistance that arose soon after the fourth-quarter breakthrough, but it has yet to be tested for support t. On the plus side, breakout potential is still at current highs, with the timing likely determined by how strong inflation data persists in early 2022 trade. However, another boost began to appear before to the start of the fourth quarter, as the Fed finally began to hint at a higher rate regime on the way, mostly in response to stubbornly rising inflation. This catapulted price action all the way up to the 38.2 percent retracement of that same major move, and as we approach New Year's Day 2022, that price is assisting in the USD's near-term support. Our goal for 2021 is dynamic, but it is also totally based on reinforced intelligenc
The technical forecast for the US Dollar in the first quarter of 2022 remains positive. And the reasons aren't entirely technical, since the underlying context is, in my opinion, too compelling to ignore. The Euro is an important component of US Dollar pricing, accounting for more than 57 percent of the DXY quote. When looking at USD forecasts, it's vital to consider the Euro. The gap between the two economies appears to be too large to allow for a continuous range.
However, when the USD encountered this substantial level of confluent resistance, the EUR/USD pushed down to a major zone of confluent support - implying that the problem will likely require a push before new highs or lows in the USD or EUR/USD can be produced. This motivation, I feel, might stem from one of two sources: Either the US inflation rate remains so high that the trend deviates from the underlying reason. Alternatively, the US Dollar falls to about 94.50, while the EUR/USD pushes for resistance at 1.1448-1.1500,, at which point the overall trend may profit from USD gains and EUR/USD weakness. The 38.2 percent retracement of the preceding bullish trend corresponds to 94.11, which may be combined with the 94.47 level to form a 'zone' of prospective support to look to for bullish continuation opportunities.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.