A USD/PLN Breakout with the Best Kind of Confirmation
- Dual Fundamental Catalysts for USD/PLN
- New Breakout from Descending Channel
- Step-by-Step Parameters for Taking This Trade
In the past few weeks, however, PLN stayed surprisingly resilient despite the headwinds from the Fed tapering announcement and the overall slowdown in emerging markets. Actually, in comparison with other currencies like the Turkish lira (TRY) or South African rand (ZAR), PLN was a rather stellar performer.
However, from a technical standpoint, the dollar found some support against European currencies, and a possible move to the upside could be brewing right before us.
Guest Commentary: Descending Channel Breakout in USD/PLN
The best trades often occur when fundamentals align with technicals, and in this case, tapering by the Federal Reserve combined with a breakout from the descending channel is signaling that USDPLN may be ready to move higher.
The only scenario that could help the Polish currency gain ground would be vigorous economic growth in the Eurozone, and given the confluence of bearish forces there, that scenario is difficult to envision.
From a risk/reward perspective, current price levels in USDPLN look appealing, and tight stops below 3.00 could be used while aiming for a potential price target well above 3.15.
By Ariel Witulski, Guest Contributor, DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.