After analyzing many charts, I can say that so far, it looks like we are denying strong movements that were created at the first half of the month and vast majority of assets are going in an opposite direction to the one from the beginning of May.
The first instrument is the USDCHF, which a few weeks ago had a very strong buy signal. The price broke the horizontal and dynamic resistances and created a nice looking correction. USDCHF broke the upper line of this correction, which gave us a proper buy signal. That was a false breakout though and the price dropped like a rock. We came back below the green area and this week, the price successfully tested that as a resistance. As long as we stay below, we do have a sell signal.
The next one is Gold, where we also are under the influence of the false breakout pattern. That false breakout happened after the price broke the upper line of the bullish wedge pattern. Instead of climbing higher we reversed and went lower. Now, the price is below two major resistances, fighting on the last hope of buyers – a yearly up trendline.
The reason for a weak gold lays in the stronger USD. EURUSD is currently close to the monthly lows with huge chances to go even lower. The situation here is very simple. On the 13thof May sellers defended a major horizontal resistance and on the 16th, they broke a major dynamic support. After those two actions, the signal to go short is pretty strong.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis
This article was originally posted on FX Empire
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