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US Dollar Bulls Stirring, But Not Yet Wide Awake

Currencies / US Dollar Dec 18, 2009 - 03:21 AM GMT

By: Seven_Days_Ahead

Currencies

Best Financial Markets Analysis ArticleOver the last few months the US Dollar Index has continued to grind lower, recently reaching/eroding a long term 76.4% ‘support’ level. Subsequent to this there has been a positive reaction, with s/term bull signals beginning to mount.


The FX Trader’s view

MONTHLY CHART: The main sign in 2008 that long term bears were losing momentum was the breach of the bear channel top projection. Subsequent resistance was found from the 38.2% recovery level. The 76.4% pullback level is so far having a supportive influence (note this has worked well in EUR/USD too – see last week'). .

DAILY CHART: In the FX Specialist Guide we have repeatedly stated that it is possible we have been seeing a third/final downleg (from 81.466 08-Jun high) in the move that commenced from the 89.624 Mar high. The recent violation of the bear channel top is encouraging for early bulls, while a close above the 76.817 03-Nov high now provides an initial bull signal. Recovery through prior 77.428/77.688 lows (with current 23.6% level just above) would provide next confirmation of a temporary Dollar recovery underway, and we could next target the 80.000 38.2% recovery area. S/term dips would be viewed as temporary.

Philip Allwright
Mark Sturdy

Seven Days Ahead
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Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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