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The recent rally in the U.S. Dollar has shifted from an uptrend to neutral which is to say that the next leg -- whether a correction or a continuation -- is yet to come. But now is when the pause is yielding congestion setting up potential breakouts on a few pairs.
The U.S. Dollar has already tested the 78.50 support level and while it did dip below this level, th recovery was quick as prices now hover just aboe this key level. While the U.S. Dollar moves sideways it's only after it was rejected at 78.69. It's likely that the Dollar will continue within a 78.69 to 78.46 as Non-Farm Payrolls will keep traders from stepping too far beyond the current range.
The daily chart of the U.S. Dollar/Japanese Yen is breaking to the upside through 116.00 - there is significant intraday resistance at the minor psychological 116.80 level. The triangle pattern breakout will face significant resistance at both 117 and 118.
The daily chart of the British Pound/U.S. Dollar has already broken to the upside and has found resistance at the 2.0500. The "cable" has not pulled back too sharply as it currently sits at 2.0340 with 2.0280 support. If the next leg of the U.S. Dollar breaks below 78.46 look for the "cable" to rally.
Raghee Horner is a private forex, futures, and stock trader based in South Florida. She is the author of two best-selling forex trading books and founder of EZ2Trade Software. All charts we used with permission from eSignal and Autochartist. For a 21-day trial of Autochartist chart pattern recognition software, videos, articles, and more - visit www.autochartistu.com.
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