In few hours, we will find out who will the mid-term battle, hawks or doves. With this situation, there is no surprise that currently, on most of the instruments, we do have a sideways trend. Most of the assets are calmly waiting for a trigger.
First instrument of this kind is Oil, obviously strongly affected by the sentiment towards the USD. Since April to August, the price of Brent was stuck inside of the big symmetric triangle pattern. The beginning of August brought us a bearish breakout and now, we are having the symmetric triangle again. This time, this pattern is a bit smaller though. The way to trade it is simple: stronger USD will cause a breakout to the downside, so a sell signal and weaker USD, will cause a breakout to the upside, so a signal to go long.
When talking about Oil, we should mention the Canadian Dollar, which is one of the biggest commodities currencies. USDCAD is our next instrument and here we are also waiting for a bigger volatility. The price is forming a triangle too, but in this case this is an ascending one, so promoting a breakout to the upside. Everything can happen though, so we should also consider the breakout of the lower line of this pattern.
Last but not least is the EURUSD, where sellers are trying to gain control before the speech from the FED Chairman. The price is still locked inside of the sideways trend (rectangle) but the pressure to the downside rises. It looks that sellers are determined to set the new weekly lows ahead of the main event in the Jackson Hole.
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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