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Faraday: Dollar bulls beware

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The US dollar was sold off heavily on Friday and according to Thomas Light from Faraday Research this dollar weakness looks set to resume this week.

Looking at the daily candle chart, USD has been trading in a broad range since this summer. Friday’s sell-off indicates that the dollar has once again failed to break through resistance and there is plenty of scope more selling pressure, Light says.

With this in mind, he is looking to pair the US dollar against the Canadian dollar which is starting to show some decent levels of relative strength.

USDCAD’s daily candle chart shows that the market has started to rollover at the 61.8 Fibonacci retracement level. Light says short-term momentum is now bearish and he expects to see this market press down into its October lows. Light is looking to place his stop above Friday’s high at 1.3197 with profit targets coming in at 1.2870.