The strengthening of the US Dollar (USD) has really flattened out and now seems to be stuck in a range. After hitting its high point at the first of the month, the USD has not come close to that high. We are not at a point where we could say the USD is weakening enough to look at a reversal in trend.
There are many considerations when looking at a change in trend. A simple method we have mentioned before is a crossover in the moving averages. Some pairs have already had this happen while others have gotten really close.
There are some other things that we can look at to indicate the trend is ending or give us caution that the trend is ending. The first warning is a major move against the trend in 1 day. Usually moves against the trend are pretty minor; but if there is a significant big move against the trend, consider being warned.
The (9) exponential moving average flattening or reversing would be another warning. A greater confirmation would be when the (18) exponential moving average also flattens or reverses. Similar to this would be if the currency pair starts trading or crossing through the (18) exponential moving average.
The ADX indicator can also give us clues. Look particularly at the strength of trend line on the ADX and look for that to trend downward, not just weaken. If the strength of trend line drops below 20, your trend has ended.
Ultimately look for range trading as support and resistance levels start to form. In order for a trend to continue or reverse, the pair is going to have to bust out of a range by breaking support or resistance.
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