May and June saw the currency range-bound between 4.43 and 4.53 per dollar.
By SETH FREEDMANshekels 88(photo credit: )
The shekel has enjoyed big gain of more than 10 cents against the dollar during the last week on speculation the Federal Reserve's policy of interest rate hikes has come to an end, but technical analysts say the currency is rapidly approaching serious resistance to its ascent.
May and June saw the currency range-bound between 4.43 and 4.53 per dollar. Towards the end of June, however, the shekel began to rally sharply, and the rise has continued unabated in July. It now stands at a 13-month high, and nearly 8% above the lows of November, when it took 4.75 shekels to buy a dollar.
The next move would appear to be up for the shekel, however the resistance at 4.36 may cause traders to hold back from further buying.
During May of last year, when the shekel was trading around 4.35, the 4.36 level provided support for the currency, and every time the shekel tested 4.36 buyers stepped in and caused it to rally once more. However, once the support was broken, 4.36 became the new resistance level. Resistance refers to the price level where, historically, selling has proven to be strong enough to prevent a further advance in price.
In effect, the shekel's strong run of late looks set to taper off the closer it gets to reaching 4.36. If it can consolidate around the 4.40 mark for a number of sessions, it could be building up for another surge, though that is not likely to happen in the short-term.
Technical analysis is the study of trading based on previous performance, focusing exclusively on price movements rather than the fundamentals of the index/currency involved.
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