The exchange rate is reduced by a reduced ATR and moves at a lower rate. In this case, a triangular formation is expected, also called a flag formation
. From this figure, when an upside-down occurs, the exchange rate can go out with a sharply increased momentum and speed. Because the base build required for the rise occurs within the triangle. If the theory is correct, we are heading for a re-strenuous US dollar
strengthening. If the exchange rate drops down from the triangle, you can look forward to a long sideways.