Past Performance: Past Performance is not an indicator of future results.
The left chart shows the USDOLLAR daily. Its price is in the bullish area, between the upper blue and upper red bands. The right side shows the H1 scale. The greenback has pulled back today. The reaction has been volatile, with the USDOLLAR retracing to the S3 pivot.
The reaction is the market reprincing the ability of the Fed to scale back as quickly as previously estimated. This is because of the risk-off sentiment from rising Covid numbers in Europe and the new Nu strain. There has already been a report of 2 suspected cases in Belgium.
However, given the strong daily, a shorter-term pullback may present an opportunity. Dollar bulls may be looking for support levels to hold and view the USDOLLAR's current levels as relatively "cheap."
Trade is likely to be thin today, given the Thanksgiving long weekend in the US, with equity markets having shorter hours today. Nevertheless, a bullish cross of the trend-following EMAs and the stochastic will make for a potential contrarian opportunity.
We do note that the current H1 RSI is oversold. This suggests that shorts may have limited scope at current levels. If the bullish crosses do take place, a movement by the stochastic to 80 will suggest that dollar bulls may be taking the gambit.
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.