Aug 30th – The Empire Strikes Back – Classic USD Bear Trap: By Greg Matwejev

Overnight the Force Awakened ! The market was watching the DXY index very closely for some time. The multi year low at 91.90 was the level being watched. Technically below here support gaps away and would be very bearish for the USD. Yesterday we got that break and initially it was followed by a fresh wave of USD selling , however it was exhausted . What followed was a move back above the key break level and a close well above at 92.25. It was a false break and a classic bear trap. On the candle stix it printed a bullish hammer. This is certainly a very meaningful move and sign the USD is basing.

There was no clear catalyst for the move however with positioning extreme short USD the risk was always hanging on the market for a point of exhaustion. With payrolls and ISM manufacturing on Fri there is a decent catalyst for the move to continue. Payrolls and ISM Manufacturing have been trending well and solid prints expected again Fri. Use the Force and start looking at rebuilding USD longs.

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