In April we were bearish on the dollar with the chart suggesting a downside target near 0.85 was a possibility. Support near 0.885 had no historical precedent so traders were ready to short the US dollar on any fall below the consolidation area near 0.885.
This did not develop, and the 0.885 level provided a good consolidation point. The breakout at the beginning of May was strong and quickly moved above the initial resistance level near 0.91. The strong rally pushed through the next trade band target near 0.93 and then peaked at resistance near 0.95.
The rally was stronger than expected and provided good long side trading opportunities. The key question now is about the strength of the pullback and the potential to develop a new rebound rally.
Trend analysis is applied using the Guppy Multiple Moving Average indicator (GMMA). The GMMA analysis shows the long downtrend has the potential to change.