The US$ recovered some lost ground during the last 24 hours but this ‘Inside’ candle style move is hardly convincing of a major recovery effort. Price bounced off support from the major 92.50 level and recovered somewhat to test the broken Flag trend line but, for now, this test has failed and price is still trading below the Flag. Traders really need to see where the weekly candle closes with respect to this Flag pattern as the pattern is derived from the weekly chart.
I am on record in multiple posts on my FX Indices page saying that whilst the US$ trades between 100 and 92.50 I consider it to be in ‘no-man’s land’ and that remains the case. The current attempt at a Flag breakdown is bearish but a weekly close below the Flag, and then below 92.50, would need to be seen to convince me of the possibility of bearish continuation. Until such time, the ‘no-man’s land’ situation remains.
USDX 4hr: there has been a break of the Flag trend line followed by a test and then failure.
USDX daily: the index has printed an, essentially, ‘Inside’ candle which suggests ‘indecision’:
USDX weekly: the Flag trend line is being tested but traders need to see where the weekly candle closes wrt this trend line:
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Summary: watch to see where the USDX weekly candle closes:
- a close within the Flag trend line suggests more consolidation-style activity.
- a close below the Flag trend line is bearish BUT a close below 92.50 really needs to be seen to suggest bearish follow through.
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