Pinchas Cohen | Nov 16, 2022 19:23
Concerns of a widening Russia-Ukraine conflict increased today after Poland claimed a Russian rocket landed on a Polish village, killing two Polish citizens. However, President Joseph Biden later told reporters at the G20 summit that the missile was a Ukrainian defense missile.
Surprisingly, given the dramatic developments, there were only mild fluctuations in the Polish zloty. The USD/PLN wavered between a 1.18% intraday high and a 1.73% intraday low.
On Sept. 28, the zloty fell to an all-time low, I assumed, due to the war in its neighboring country. However, the British pound, Chinese yuan, and Indian rupee also fell to all-time lows on the same day.
The dollar is down for the sixth straight week versus the zloty but is developing a weekly high wave candle, suggesting that the pair could rebound or stall. The location is on the dual support of the previous two channel tops, marked by the X.
If the price rebounds, it could extend its medium-term uptrend at a more sustainable ascent. Alternatively, it could be a short-lived rebound to the 4.8-9 levels, a return move after the steepest channel's breakout, which could be the making of an H&S top.
If the pair falls below the flag, at least after Thursday's close, it will have all the technical energy to fall to the bottom of the next channel. However, if the price breaks the flag to the topside, we'll have to wait and see whether it will climb above its previous channel or extend an H&S top.
Conservative traders should wait for the short-term downtrend to realign with the medium and long-term uptrends.
Moderate traders would short upon the flag's completion, registering lower than Nov. 15, then wait for a throwback finds resistance by the flag.
Aggressive traders could enter a contrarian trade, buying the USD/PLN at the would-be-flag bottom and turning to sell at the current range's top.
Trade Sample - Aggressive Long
Trade Sample Follow-Up - Aggressive Short
Disclaimer: At the time of publication, the author had no positions in the securities mentioned.
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