Price Action in USD is Aligning for Bullish Continuation

– The one-two combo of Chair Yellen and Mario Draghi helped to re-lift short-term cost movement in a U.S. Dollar over a past 24 hours. And this brings a intensity for short-term movement in a Greenback to line adult with a longer-term bullish up-trend.

– With a Inauguration of President-Elect Donald Trump holding place tomorrow, traders will expected wish to be on-guard as markets have been extremely understanding to any innuendo from a President-Elect. This can emanate a rather illiquid sourroundings that can serve expostulate volatility.

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In yesterday’s article we looked during how a U.S. Dollar defended a bullish long-term setup, though on short-term charts matters were utterly different. Near-term cost movement in a U.S. Dollar has been considerably bearish given shortly after a open of a New Year. And this is uninformed on a heels of a near-historic run in a Greenback on a heels of a U.S. Presidential Election.

In existence – not most has altered over a past dual and a half weeks, outward of short-term price action, of course. The one object that competence hang out as a intensity motorist for USD-weakness could be President-Elect Trump’s comments opposite a ‘strong Dollar policy’ in an talk a integrate of days ago; though given a executive branch’s miss of control over financial process (Executive bend of a U.S. Government impacts fiscal, not financial policy) those comments competence not be as applicable as what we competence hear from Fed Chair Janet Yellen. And yesterday Chair Yellen offering comments that were broadly understanding of serve rate hikes this year, echoing a bank’s sentiments from their Dec rate pierce in that they also pronounced they were awaiting 3 hikes in 2017.

The net response was a burst-higher in a Greenback as Chair Yellen was speaking, assisting a banking to mangle behind above a before indicate of ‘lower-high’ insurgency that had contributed to defining that bearish near-term directional position yesterday. From a 15-minute draft below, we can see short-term cost movement in a U.S. Dollar attempting to pierce in to a some-more bullish-state by violation adult to uninformed higher-highs and higher-lows, helped in vast partial by Chair Yellen’s debate yesterday.

Price Action in USD is Aligning for Bullish Continuation

Chart prepared by James Stanley

For those that wish to pierce towards a U.S. Dollar in a bit some-more of a regressive manner, and given a probable reorganization opposite markets around tomorrow’s Presidential Inauguration that could be a judicious approach of going about matters right now, there’s a longer-term turn of intensity insurgency that traders can use as a ‘litmus test’ to confirm either this short-term detonate aloft might have a sustainability to continue to align with that longer-term, bullish up-trend.

On a draft below, we’re looking during a Monthly draft of DXY to paint a U.S. Dollar, with concentration on a 61.8% retracement of a 15-year pierce in a Greenback. This turn during 101.80 was quickly breeched in Dec and again in January; though as of nonetheless markets haven’t been means to find a proclivity to expostulate a Dollar significantly above this section of resistance.

Price Action in USD is Aligning for Bullish Continuation

Chart prepared by James Stanley

And on a draft below, we pierce in a bit closer to demeanour during a Daily setup. Resistance from final year is display adult as near-term support around a 100-level on DXY. But of specific significance to this medium-term regard is a fact that a 61.8% retracement of a 15-year trend was breeched, despite temporarily when a Federal Reserve hiked rates in December. Price movement hold above this turn for a integrate of weeks, though proclivity was lacking to expostulate a banking further-higher, and after a near-historic run after a U.S. Presidential choosing – it creates clarity that view had gotten a bit overbought. But as we mentioned formerly – this does not meant that a trend is over.

Given a fact that we’ve seen a short-term higher-low uncover adult as we looked during above, cost movement violation above this turn during 101.80 could align short, middle and longer-term observations on a U.S. Dollar in sequence to demeanour during what could be a really appealing continuation-pattern. This would also have a advantage of a essential macro backdrop that could continue pushing a U.S. Dollar-higher as a Federal Reserve is simply one of a few vital Central Banks questioning tighter process options.

Price Action in USD is Aligning for Bullish Continuation

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

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