Is this the end of the US dollar bull trend?
The US Dollar Index has been in a bull run since the beginning of February last year, as we can see in the daily chart below.
If we focus on the activity over the past month there is a potential double-top formation after the rejection of the April high last week. Last Thursday’s negative engulfing candle indicates that the bears are starting to fight back and, in my opinion, helps to confirm the double-top pattern.
Let’s have a look at some dollar pairs for confirmation.
Although there is no particular bullish pattern in AUD/USD, the pair has clearly broken above the five-week bear trendline as you can see in the 60-minute chart below. Note how the blue 100-minute moving average has just crossed above the red 200-hour moving average to form a bullish golden cross buy signal.
We have halted exactly at the 23.6% Fibonacci resistance at 6840/45 but I think we will eventually beat the green 500-hour moving average (at 6950/55 as I write) for further bullish confirmation.
NZD/USD formed a bullish engulfing candle on Thursday last week when the dollar reversed. This was backed up by another big blue-bodied candle on Friday to suggest bulls are fighting back.
The NZD/USD 60-minute chart below clearly shows the pair breaking above the two-month descending trendline as well as the blue 100-minute moving average and the red 200-hour moving average, both of which are also crossing as they turn higher for a buy signal.
Lastly, EUR/USD looks likely to have formed a double bottom in a near mirror image of the US Dollar Index double-top. An impressive bullish engulfing candle formed on Friday with another big blue-bodied candle the same day for further positive confirmation.
A break above 1.1265 confirms the double-bottom buy signal, with a measured target of 1.1420 in the weeks ahead.
Technical Analyst & Trader
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