Israeli Shekel Breakdown Continues: USD/ILS Crosses the 4.00 Handle

Israeli Shekel Talking Points:

• USD/ILS has broken out to another fresh eight-year high, crossing the psychological 4.00 handle along the way.
• The breakout in USD/ILS has found a bit of resistance at a prior swing taken from around the 4.0200 level; and there’s so far been follow-through support at prior resistance.

The USD/ILS breakout has continued to run and yesterday produced the first test in the pair above the psychological 4.00 level in more than eight years. That spot of resistance was last in-play from December of 2014 through April of 2015, when it held five months of resistance tests before bears were finally able to re-take control of the pair.

I had mentioned the importance of this level last week when the breakout was in process and bulls have since continued to drive to fresh highs, with a strong thrust through that level to begin this week’s trade.

USD/ILS Monthly Price Chart

When I had last looked at the pair on Thursday, prices had already begun to breakout, and were getting very near the 4.00 handle. As I had shared there, chasing could remain as a challenge, but given the strength shown over the prior week there were a number of possible support levels to investigate.

Bulls remained aggressive, and it was the most nearby support level that ultimately brought buyers back into the mix to allow for that breakout over the 4.00 handle, which took place yesterday. Bulls did not slow down, either, as price made a near-immediate jump up to 4.0200 before finally settling down. This presents a similar image as what I had looked at on Thursday, where price remains elevated after a fresh breakout that hasn’t really pulled back all that much.

USD/ILS Daily Price Chart

USD/ILS Short-Term

From the four-hour chart, we can see bulls showing support following that recent breakout. This can be seen by the underside wicks sitting below each of the past four completed candles on the below chart, and notably this indicates defense of the 4.00 as support. This could keep the door open for breakout continuation, but bulls should remain cautious as the move has already put in a sizable jump over the past week; and when a breakout extends to that degree, the corresponding pullbacks can be large, as well.

There remains support potential inside of the 4.000 handle. The price of 3.9842 comes back in the picture, as this was the initial high after the impulsive breakout move to start last week. Below that, the 3.9466 level sticks out, but the concern there would be that a re-test may be highlighting a strong response from bears, which would indicate cooling in the topside theme.

USD/ILS Four-Hour Chart

--- written by James Stanley, Senior Strategist