Potential Signal:I am fading rallies in this market every time they occur. If the market rallies, I will be looking for a long wick on an hourly candlestick between the 0.63 level and the 0.6350 level. I would have a stop loss at 0.6365 and would be aiming for the 0.6215 level.
For what it is worth, I think this is a market that remains very much the same in the sense that traders will be looking to fade rallies that show signs of exhaustion, with the 0.6350 level above offering a bit of a ceiling. I think ultimately, we have a situation where traders will try to pick up “cheap US dollars” whenever they can, and that’s especially true against currencies that are so heavily exposed to China. Technical AnalysisThe technical analysis for this market is obviously very negative, and the 50 Day EMA is all the way up at the 0.65 level. We are oversold, so I could envision a situation where we have a significant bounce, but that should only offer another opportunity to buy US dollars. Quite frankly, the lack of liquidity could cause a little bit of short covering rally as we head into the Christmas holiday, and of course New Year’s. However, if we have some type of event, we could see this market plunge due to the lack of liquidity as well. After all, if there is a sudden “risk off” type of scenario, the US dollar is almost always the first currency that people go looking to get involved with as it offers safety via the treasury markets.More By This Author:ETH/USD Forecast: Ethereum Holds SupportGBP/USD Forecast: Struggles Against The DollarUSD/CHF Forecast: Pulls Back Against The Swiss Franc As Rates Slide
