- USDOLLAR Index fails at neckline in head & shoulders pattern.
- EURUSD flagging, double bottom valid towards $1.1567.
- See the May forex seasonality report.
The US Dollar may have enjoyed a modest rebound over the past week, but there's sufficient evidence to deem that the greenback is engaged in a bearish market mindset in the short-term. The failure by price in the USDOLLAR Index to reclaim the neckline in the head & shoulders pattern on the H4 timeframe is technically picturesque, as charting theory dictates that after the initial breakdown in a head & shoulders pattern, price should ultimately retest but fail at the former neckline.
The same technical dynamic is being displayed in EURUSD, the engine of the current USDOLLAR Index breakdown. EURUSD rallied to former range support from February, failed, and then found support at former resistance - the post-FOMC swing highs near $1.1050/60. Ultimately, the hold of former resistance (now support) suggests the triangle breakout/double bottom interpretation may be valid still, suggesting greater gains possible towards $1.1567.
See the above video for technical considerations in EURUSD, GBPUSD and USDJPY.
--- Written by Christopher Vecchio, Currency Strategist
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