USD/PLN At Inflection Point, Watch Consolidation Breakout
Cory Mitchell, CMT
Since October the USD/PLN has been in a downtrend. On Jan. 22, in the Forex Oddballs Trade Idea, the USD/PLN was discussed as it had the potential to rally out of a consolidation. It did.
Now the price is consolidating again, below the October and November swing highs. Overall the pair is still in a downtrend, but this consolidation could break in either direction.
I see an upside breakout as having less potential, since the price is likely to stall around the November swing high, from 3.9150 to 3.93 (target area). That said, with a daily close above 3.90 or an intraday rally above 3.9050 to signal a breakout, that still leaves a fair bit of room for a short-term trade.
In waiting for the consolidation to develop on the daily chart, we have already seen a false breakout to the upside. And the price has now broken to the downside. As of this writing, the pair is near the breakout point.
The downside target is 3.8150. This is just above the bottoming pattern that occurred in January.
Rollover in this pair is minimal. The USD rate is 1.75% and the PLN rate is 1.5%. A small amount of interest is paid on the short side.
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By Cory Mitchell, CMT. Join me on Twitter @corymitc.
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.