The Old Resistance Has Become A New Pillar

There are many issues to consider when conducting a basic analysis of a given market, but this usually means that there is some shelf life for feedback. On the other hand, the feedback from the technical analysis may fail at the end of the next candle(depending on the time frame). At the end of the last trading session, we received the latest US GDP data. Market participants may have negative GDP for the second quarter in a row, so they are paying close attention to the report, which is considered as a rough estimate of when the economy will be considered stagnant. As expected, the GDP value is negative, but the financial market is not driven by a wide range of risk sentiment as expected.

Fundamentally speaking, the American economy is in a slump, because American consumers have been hit by the rise in interest rates against high inflation and high inflation. The outflow effect will become a downturn in the economies exporting to the United States, and eventually, when investor sentiment deteriorates, it will become capital flight from these countries. Needless to say, the market’s response to the last interest rate increase by the Federal Reserve(Fed) and the subsequent negative GDP growth completely caught me off guard. I put the money in my mouth, which means I can’t help being aware of the loss last week. On Friday, I adjusted at the last moment and continued to take risks, but it was enough to make up for some losses.

After entering this trading week, new goals are needed, so start from a broader perspective and expand there. Starting from the 15 year image(right panel), 50.0% of the level is highlighted as blue Fibonacci expansion. The chart shows that since 2017, the 50.0% level of the Fibonacci extension line is a resistance to the US dollar index price. We finally broke through the resistance level in June and July this year(see the 1-year figure). Confirm that the breakthrough of the dollar index is not the final signal of the breakthrough, and the price processing and the old resistance level will become the new pillar.

First of all, if the risk exposure momentum we ended last week continues into this week, I expect the US dollar will fall to 50.0% during the Fibonacci extension period. Second, if the level of support remains unchanged, the breakthrough will be confirmed, and from the perspective that the US dollar can rise, it will be more confident to take more risks. A stronger dollar also means that investors’ sentiment has shifted to risk aversion. This will make the financial market conform to my fundamental analysis again, which is an escape from the uncertain economy to the safe direction.