If you recall, the red trend lines are the boundary of the main down channel. The pink lines are the inner wedge. Over the last month or so of trading, the dollar looked like it was strengthening (or at least finding a bottom). The lower channel of the main trend line hasn't had a visit for over 20 sessions. In addition, the upper trend line has been attacked three times in the same time period, if you include the remarkable reversal we had on Thanksgiving evening. I think the dollar is at a very critical juncture. We have had a test of the lower wedge trend line and a test of the upper trend line of the channel - all within 24 hours. That is a swing from 74.200ish to 75.700ish - or 1.5% in 24 hours! Think of the wealth creation and destruction with that swing!
We now sit with a nasty gravestone doji near the top of the upper trend line within the wedge and the equities markets are in a state of indecision. Where does the dollar go? Do we retest the bottom of the wedge or are the last two breaks of the upper trend line a sign that the dollar is going to breakout on a third attempt?
I wish I knew! I am inclined to believe that the dollar will sink - but until the equities market decide on a course, I will not take a heavy position either way. I am going to watch for a break down or bounce off of 74.750.
Good luck next week everyone!
3 comments:
Hi again David ,
The $ is certainly painting between the lines , and the lane is getting narrow .
I was hoping for a throw under and a break back over the top , we did not get either one .
Washington is doing everything they can think of to destroy the value the $, just our luck , the one thing they have going on that is working .
Perhaps all hope of a $ rally will need to fade before one can happen.
Dave
Sorry to hear you were sitting on your hands respecting Thanksgiving. Never mind, good TA as you are you will be back with a vengeance.
Funny enough $ finds some support with other counties (Japan/Swiss) protecting their currency buying US and the dubai flight to safety. Don't forget the US treasuries sold well this week.
So things are not as grim (for now) as payline suggests, although they ought to be.
Dave, I did the same thing. I was going to short Wed and Friday, but I did not like the action in the stocks that I wanted to short Wed so I waited. I think we may have blown off already. Lets hope we get another bounce so that ew can short the weak sisters.
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