Great long-term setup on a very exotic instrument
This pair will be in our article for the first time but definitely worth it as the current technical situation is very interesting. Today we are aiming at the USDDKK, which is having very nice long-term bearish setup.
This pair is in the downtrend since the beginning of the year. In July, sellers managed to break ultra important support on the 6.44, which changed the long-term sentiment into a negative one. After the breakout, the price went lower but eventually made an inverted head and shoulder pattern, which helped to trigger a correction. The reversal was pretty small as it allowed to retrace only 23,6% Fibonacci. The place, where bullish movement stopped was not random as it aimed the 6.44 and tested it as a resistance. The battle was won by sellers and the price went lower. Instead of the inverse head and shoulders pattern (grey) we got bearish wedge (blue lines). Last week, the price broke the lower line of the wedge which actually triggers the long-term sell signal on this pair.
Your capital is at risk
First potential target is the support of the 6.15 (orange). As long as we stay below the yellow area, chances that we will get there are very high. The only problem with the short position here are the swaps. DKK has negative interest rate so buying it against the USD can be pricey.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis