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Source: www.tradingview.com
The top chart shows the daily real rate, with FXCM’s USDOLLAR basket underneath and their correlation coefficient (cc) at the bottom. Yesterday’s real rate candlestick closed above a reference candle’s high (black sideways arrow). This price action suggests a potential higher trough (top red arrow), which lays a platform for the next impulse move up.
The cc is a meaningful 87 on the daily chart. As such, if the real rate has charted a higher trough, we would expect dollar strength to follow. As such, we are monitoring the green sideways arrow – if the price closes above, the greenback may also have charted its higher trough. This will be bullish, creating a potential foundation for USDOLLAR‘s next upswing.
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