US Dollar Reversal Move? Interesting Dollar Pair Charts.The US Dollar is looking quite interesting currently. It has been smacked down the past few weeks, and as we market structure traders know, nothing moves down or up forever. Nor does price move in a straight line. All markets move in three ways only: an uptrend, range and a downtrend. And the US Dollar is showing some basing here.
Here is the daily chart of the FXCM Dollar Index. I just want to show you how this Dollar index actually hit a major support level on the daily chart. I must say, that on the daily chart, the Dollar has not yet retested the breakout zone around 98.30 so be wary of this. If the 4 hour head and shoulder holds, that zone would be our target.
As you can see, we are not retesting the head and shoulders neckline here at 97. You can see the previous lower high has been taken out which means the downtrend on the 4 hour is over and we are beginning higher lows in an uptrend. Holding this zone will be key.
What are some fundamental reasons? Well maybe it is a run to safety with the US Dollar being a safe haven. Maybe it is foreign money wanting to buy US Dollars to be able to buy US treasures or US stocks, which are currently pulling back to key support levels. Or maybe this is just a pullback in the price as traders take profits. The truth is the fundamental really does not matter much for us swing traders. We trade the markets we see, not the ones we hope or want to see. And currently, there is a reversal pattern on the 4 hour.
USDMXN was actually a trade I took earlier on with the break of the head and shoulders pattern. We hit the major target zone at 23. Once again, the daily chart shows the need of a lower high in a downtrend. The way to play this pattern on the 4 hour is see how price reacts at the neckline which it has not retested yet. From here we can assess if a higher low swing is being formed.
NZDUSD created a double top pattern and you can see we have pullbacked to retest the breakout. Two options for entry here: 1) you enter now with a better risk to reward ratio, but the probability of success is lower because you technically need a break below previous lows to confirm the retest. 2) You await for the break and close below 0.6390. The risk vs reward is diminished a bit but the probability of success is much greater.
The same can be said about AUDUSD, exact same pattern and approach.
USDCAD we have a double bottom. I have traded this short for the past weeks, and we hit my second target at 1.33. A large flip zone. The 4 hour chart created a double bottom here, and I am waiting to see how the retest here closes. Same principles apply. See how a candle is created here, or wait for the break above recent highs.
