The Dollar Index has made an impressive recovery attempt this year, but technical levels on the medium term chart plus a particular interpretation of the Daily chart structure combine to suggest that a temporary reversal may not be far off.
- MONTHLY CHART: So far, two signs that long term bears are losing momentum are: the push above the significant 80.390 Dec-04 low, and the breach of the bear channel top projection.
- WEEKLY CHART: Continued strength here has now found resistance from the 76.4% area, which neatly coincides with the 87.330 Jul-06 high. The Daily chart below suggests that bulls could be getting tired.
- DAILY CHART: Recent strength found s/term resistance from around our 2.618 swing projection off prior 80.375-75.890 Sep pullback. A break through this would initially target the next projection at 90.40. But note that a clear 5-wave structure looks to be unfolding –if this is the case then the uptrend is maturing, the final, 5th wave in progress. A period of Dollar weakness may not be far off but, at the moment, this won’t be confirmed until 83.100/83.191 support gives way. [For the complete and illustrated version of this and future Updates be sure to sign up at www.sevendaysahead.com]
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