Trade Recommendation: USD/ILS
The US Dollar/Israeli Shekel pair launched its bull run in August 2014 when it took out resistance of 3.55. The force of the breakout was so strong that the pair went as high as 4.0664 in March 2015. In less than a year, the US Dollar rose by almost 15% against the Israeli Shekel. The growth was enough for those who bought the breakout to take profits.
Unfortunately for people who bought at this level, 4.00 is one of the market’s strongest resistances. Bears responded by sending the market tumbling down to 3.7425 in June 2015. While bottom pickers bought the dip, they could only lift the pair to as high as 3.9865 in January 2016. The lower high was a clear signal that bulls were not going to take out 4.00 anytime soon.
The pair then posted consecutive lower highs and lower lows until it bottomed out at 3.3802 in January 2018. USD/ILS has been rallying since and may be reversing its fortunes soon.
Technical analysis reveal that the US Dollar/Israeli Shekel pair is on the verge of breaching 3.55 resistance and triggering an inverse head and shoulders reversal pattern on the daily chart. This assessment comes after the market generated another higher low of 3.4981 on April 11. In addition, the RSI has also managed to post a higher low. This is an indication that the pair is gathering momentum to complete the breakout.
The strategy is to buy the breakout at 3.55. If bulls take out 3.55, they will likely shoot for our target of 3.62. The process may take less than a month.
Daily Chart of USD/ILS
As of this writing, the USD/ILS pair is trading at 3.5121.
Summary of Strategy
Buy: Breakout at 3.55.
Stop: 3.518 after the breakout.
Featured image courtesy of Shutterstock