USDCNH to drop soon?

Aug 5, 2018

this short seems like a very obvious play given the bearish divergence on momentum indicators and a strong bearish shooting star which is a classic reversal pattern, but I feel like theres a catch somewhere here: Either we will see a large consolidation that many will see as a bull flag and long just to get stopped out, or we will have another weak rally with obvious signs of divergence before we fall. Either way I feel that the end is near for this rally, but this is a trade that will require patience to play out. Why? because the technicals for the dollar look strong and this push up has almost no slope change causing me to believe that there may be a little bit more to rally, or we may consolidate to even out the slope because it's less likely to see such a rally followed immediately by a steep drop, usually takes a consolidation and signs of weakness (momentum loss, lower high, dollar drop etc..) causing a slope change and then a drop. A lower high would cause a more drastic drop, I believe, but if we break the previous high I would look for a correction target around the .386 and , .5 from the top. I would start accumulating pieces to a short position slowly and watch the dollar closely but this should be a nice short play in the near future. May be early but I doubt it. Reversal plays are the riskiest so play this smart and good luck.