The US dollar has come under a lot of pressure in recent weeks and with oil trading above $45 for the first time since the oil market crashed in the beginning of the year, let us look at potential short positions on this pair.
Looking on the daily time frame, we can see that yesterdays candle closure was extremely bearish, engulfing the wicks that were created whilst it was consolidating as well as closing below the ascending trend line and with the current candle pushing higher, we could find opportunities to short this pair by looking at the lower time frames. A daily closure below the ascending trend line would signal further downside on this pair.
On the 4 hour chart above, we can see how price found support on the ascending trend line in line with previous support as well, shown by the highlighted region. The horizontal ray plotted at 1.30450 highlights a key support/resistance level which recently acted as a strong support level, could offer resistance. Looking at the fib tool drawn, we can see that the horizontal ray almost lines up perfectly with the 61.8 retracement level. If there is no candlestick confirmation around the 61.8, one would wait to see if the 78.6 can hold as resistance which lines up with the set of double bodies illustrated by the arrow tool.
On the hourly chart, price is making lower highs and lower lows and since bottoming out at 1.29900, we have been making discreet higher highs and higher lows. Looking at the highlighted region drawn from the double bodies directly to the left of current price, we can see how previous support has now acted as resistance. If price can break above this level and continue into our preferred fib levels, it would offer the opportunity to go short on this pair.
Remember to always wait for candlestick confirmation around the zones you are looking to execute from in order to optimize risk management. Subscribe to our blog to receive updates sent directly to your e-mail.