The top chart shows the daily real rate, with FXCM's USDOLLAR basket underneath and their correlation coefficient (cc) at the bottom. Yesterday's real rate candlestick closed above a reference candle's high (black sideways arrow). This price action suggests a potential higher trough (top red arrow), which lays a platform for the next impulse move up.
The cc is a meaningful 87 on the daily chart. As such, if the real rate has charted a higher trough, we would expect dollar strength to follow. As such, we are monitoring the green sideways arrow - if the price closes above, the greenback may also have charted its higher trough. This will be bullish, creating a potential foundation for USDOLLAR's next upswing.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.