Here’s a situation that just might develop into something next week after all the Brexit dust has settled.
Despite last night’s rally, the US Dollar has declined over the past week. Unwinding of the Brexit flight to safety factor has been the main influence but the more cautious stance of last week’s Fed meeting is also a factor.
Traders will have their own ideas but my long term bias on the US Dollar is bullish. It remains the case that the Fed is likely to increase rates at some stage this year while other central banks are neutral or easing policy. On that basis I think the US Dollar is a good chance of holding around or above the support formed by its early May lows against the Dollar Index. Current Dollar weakness might be a long term buying opportunity.
The Kiwi Dollar chart might provide some useful resistance levels for a sell Kiwi (buy US Dollar strategy). Looking at the long term weekly chart above you can see it has hit the resistance of the February/March low around .7177. This is also the resistance line of a potential trend channel. A peak in the Kiwi at this level followed by a move below support around .7050 could indicate medium term weakness.
All that said, upward momentum still looks quite strong in the Kiwi. The weekly candle is green and close to its high. The slow stochastic in the box below the chart is approaching but not yet in the overbought zone.
A bit of an overshoot of this resistance level would not surprise and here the daily chart below might be useful. This shows another potential trend channel across the more recent uptrend. Potential resistance here is up around .726. A peak around here before too long could also be one of John Bollinger’s M reversal set ups (peak above the upper Bollinger Band followed by a second one below, it indicating declining upward momentum and a bearish reversal).