Currency Analysis Report 5-2-18 Buy The Rumor, Sell The US Dollar

The U.S. dollar finally broke out from a wedge pattern recently and turned positive for 2018 yesterday.

Yesterday, the Federal Reserve’s two-day interest-rate meeting kicked off as well. The consensus is the US central bank will keep rates on hold today, but could hint at increasing rates in June to try and tame inflationary pressures. So will this be a case of buy the rumor and sell the news or in this case sell the US Dollar?

On the monthly chart, price is in the middle of the curve or in the middle of the range between $80 and $102, but is trending down. However, on the monthly chart, the monthly candles have been closing higher than the previous candle since Feb, signaling bullish price action.

On the weekly chart, the trend is down, but price is pulling back into a weekly supply zone, within a monthly supply zone. Thus, there are tons of sell orders in this area and it’s going to be difficult for price to move higher. This creates a nice opportunity to get sell short and continue to ride price down to my 1st target at $85.

The set-up is the following on the daily chart:

• There is a stack of sell orders sitting at $93. One can sell this level, but only after have confirmation on the 15 minute chart that price wants to go down.

• If set up #1 doesn’t work, there is another stack of sell orders higher level at $94.25. This level I would be willing to enter the trade as an limit order.

NOTE: price has been forming demand zones on the way up, so if shorting these should become your mental targets. However, usually higher time frame zones, such as weekly and monthly zones, trump daily zones, so those level should only serve as speed bumps on the way done. Also, the weekly trend down should serve as tailwinds to over these speed bumps as well.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.