Has Dollar Pullback Played Out or Is It In A Lasting Bear Trend?
• Trends are lasting moves with lower boundaries of influence while corrections are temporary and hesitant
• For USDollar, a bullish break this past session leads to a question of 'return to trend' or mere 'hiccup'
• We discuss what can help us assess the probabilities of short-term versus long-term bearing
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USDollar marked a notable break from its month-long bear trend, leading some to wonder whether a bearish correction has run its course or if this is just a hiccup in the new long-term trend. How do we differentiate a trend from a correction? Trends are characterized by a market move (bullish, bearish or flat) that lasts for a longer period of time but also shows a distinct affinity for certain fundamental and technical developments. In a trend, data and events that supports the market bearing generates a greater response while those that contradict are more likely overlooked. From a technical perspective, breaks 'with the trend' project more follow through and those 'against' peter out quickly. Corrections are temporary by nature. We can help differentiate temporary correction from lasting trend through fundamentals and technicals. We do that for the Dollar in today's Strategy Video as the currency makes a bid to rebound on its Tuesday break.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.