In today's technical analysis, we're revisiting the American Dollar to Polish Zloty (USD/PLN), which, while it may seem like an exotic pair to some, is an excellent instrument for technical traders. This pair has been showcasing some interesting movements lately, proving once again that it follows technical patterns quite well.
August saw a significant decline for USD/PLN, but toward the middle and end of the month, we observed a few days of corrective action. This correction seems to have come to an end yesterday. The price reached new local highs within the correction, only to hit a strong yellow resistance level. This level has historical significance, having served as a robust support since late 2023, and is now being tested as a resistance.
The test of this resistance level is crucial. Yesterday, it resulted in the formation of a shooting star candle, marked in orange on the chart. A shooting star pattern forming at such a critical resistance level typically signals a sell. So, while the sentiment is currently negative, the beginning of Tuesday's session has seen the price attempting to push higher. This scenario requires vigilance, as the market could break either way.
If the price manages to break above the yellow resistance, it would signal a buy. However, if the price continues to bounce off this resistance, as observed yesterday, and makes new weekly lows—surpassing Monday's low—this would reinforce the sell signal. Traders should keep both scenarios in mind and prepare to act accordingly.