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The US dollar, with its colossal oversold status, is holding up pretty well in the outsider mode, perhaps investors are wary of the new White House administration, or perhaps the insane speculative backdrop of 2020 played this way.
Is it worth it to give up on the dollar? I don't think it will be the right decision, there is still a chance of a rebound from the bottom, and it's worth holding on to, so that later you don't regret not getting into a profitable trade.
Those who follow my analytical reviews know that EUR/USD and GBP/USD are at the levels of 2018, where the risk of a reversal is growing, and if we consider that there has not been a full-size correction for a long time, we can ride on a local collapse.
As for the status of oversaturation of short positions on the dollar, it still takes place in the market, following from the data of the CFTC (Commodity Futures Trading Commission), where their level concerns historical values. At the same time, citing officials of the new US administration, the Wall Street Journal claims that the new Treasury Secretary Janet Yellen welcomes the rational exchange rate of the US dollar and will not look for methods to weaken it in order to gain competitive trade advantages.
What happens on trading charts?
The Euro-Dollar currency pair found a resistance point at 1.2349 in early January, where a primary pullback arose in the direction of the variable pivot point of 1.2130.
For most of the past week, coordinates 1.2130 kept sellers from further depreciating the euro, but on Friday everything changed, the level of 1.2130 fell, and traders managed to stay below 1.2100, which opened the way to the predicted coordinate 1.2070.
The correction movement is confirmed only on hourly periods, on the daily section the correction status will be confirmed only when the level of 1.2000 is touched.
The market dynamics over the past week has an average daily indicator of 80 points, which is 3% higher than the average level for the overall dynamics of EUR/USD. The coefficient of speculative transactions is growing following the volatility, which may lead to sharp price changes in the market.
The Pound-Dollar currency pair, after three control touches of the resistance area 1.3690 / 1.3710, nevertheless moved to a decline, which was a kind of victory for sellers, considering how long we went to this.
Everything would be fine if the scale of the price movement in the process of price rebound from the area of 1.3690/1.3710 would be 300-400 points, but so far we have only 180, and this is very small.
In fact, the quotes, as before, is at the peak of the medium-term upward trend, where the reverse is not excluded.
To confirm the true intentions of sellers for further weakening of the pound sterling, it is necessary to keep the quotes lower than 1.3430 in the four-hour timeframe.
The market dynamics for the past week has an average daily indicator of 113 points, which is comparable to the size of the average level for the overall dynamics of the currency pair.
Market expectations and prospects
Based on the economic calendar, nothing particularly important awaits us today. The US is not working today in connection with the celebration of Martin Luther King Day. US exchanges will be closed, which may affect trading volumes.
Analyzing the current EUR/USD trading chart, we see price fluctuations within the local minimum on December 9, which just reflects the area of the pivot point at 1.2070. If the price is kept below 1.2060, a subsequent downward move towards the psychological level of 1.2000 is not excluded.
Indicator analysis reflects a sell signal relative to the minute, hourly and daily periods. This signal was formed in the market due to the stage of correction and finding the price in the area of the local minimum of December 9
Analyzing the current trading chart of GBP/USD, we will see the downward movement 1.3708 ---> 1.3515, where the quotes slowed down the downward movement a little, concentrating on the area of 1.3550, which reflects the stagnation line from the beginning of the month.
There is a prospect for a further depreciation of the pound sterling on the market, for a start, it is necessary to stay below 1.3510, which will open the way to the local minimum on January 11 - 1.3450.
For the strongest price change, sellers need to lock below 1.3450 over a four hour period, which will give us a chance for a full-sized correction.
An alternative scenario for the market development considers a sideways movement at the peak of the medium-term trend, which will last from two weeks to a month and a half.
Indicator analysis reflects a sell signal relative to the hourly and daily periods. This signal was formed due to the price rebound from the local maximum area. The minute interval signals a buy due to a price rollback to the area of 1.3550
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