Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

US Dollar Index Shook Out Bulls Below 200-Day Moving Average

By

The US Dollar sold off just enough to stop some traders out, and now looks set to resume trend higher.

PrintPRINT
The US Dollar Index shook me out after breaking the 200-day moving average to the downside, and it now looks set to resume the trend higher. Typical of the market to move against participants to the point of maximum pain, and then turn right back around! As frustrating as this can be, it still requires us to manage risk when the market doesn't move as expected. While this DX rally might consolidate here below the May highs, it looks like the advance is strong enough to resume the longer-term uptrend in the US dollar. I would look to add back long DX exposure starting here, and scale larger back below 83. If this uptrend is indeed intact, we should not see another test back down toward the 200-day moving average around the 81 level. See the US Dollar Index setup below.


Click to enlarge

The euro also had a significant reversal month in June, and it is now below the 200-day moving average. It seems to be sitting on top of a cliff at this 1.30 level, and it could move swiftly lower if this level is broken convincingly. Again, this market moved just enough to scare some shorts out, and now it might be in a weaker position to complete the larger head-and-shoulders pattern that has been forming over the past year. Longer term, there is still downside in the euro to below 1.20, so I would be careful of this market.


Click to enlarge

The British pound is acting even weaker than the euro, and it certainly looks like it could be on the verge of breaking some key levels. It failed right at the 200-day moving average in June, and it now looks poised to test a small uptrend line just above 1.50. This market could see a major move lower if that 1.50 level is broken, and I would look to sell any rallies in the British pound. This underperforming currency could have downside to 1.40 if the US dollar has in fact resumed the uptrend. Be careful out there!


Click to enlarge
< Previous
  • 1
Next >
Positions in DX, M6E, M6B futures.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE