ISRAELI SHEKEL

US Dollar is gaining strength against developed and emerging market currencies. Some believe that US economy is not strong and its currency can’t appreciate in value while others argue that what happened in 2008 can repeat and a massive de-leveraging can increase demand for the dollar. I’m in the second camp. As I go through my charts I’ve been seeing more and more emerging and developed market currencies forming major base formations (H&S, double bottom, rounding bottom etc.). One perfect example is USD/ILS. Though it might not be the best example given the liquidity and accessibility of this pair, it is a perfect example of symmetry and text-book inverted H&S pattern. Shekel has formed a clear inverted H&S pattern with the neckline as resistance at 3.78 level. The H&S pattern is very similar to the one that formed in 2008.

A confirmed breakout above 3.78 will push the cross rate towards 4.2 levels. This will signal dollar strength versus many other currencies.