Thursday, July 29, 2010

The Dollar decline is showing strong signs of exhaustion and stress…

Please note that The Daily Forecaster will be taking its summer break from the 9th-13th August

The Dollar decline is showing strong signs of exhaustion and stress…

Yesterday was a tough old day… In most currency pairs the support & resistance levels performed exceedingly well but I can’t say the Dollar progressed quite in the manner I had envisaged. What it has done is provided pretty uniform signs of stress; daily bullish divergences across the 4 majors and price development which can hardly be described as rampantly bearish…

It’s a tight call but I can’t see that we have yet reached the final stalling points. The problem is that there is very limited wiggle room in which price can move before the entire decline begins to get… ummm bottom light… (That’s the opposite of top heavy I guess…) This will mean that we need the Dollar to make further inroads on the downside today but probably not by too much to allow a correction to still remain below Dollar resistances to permit a final dip to, or close to, targets.

The two which had threatened a deeper correction through their respective double bottoms (USDJPY & USDCHF) seem to have run into problems. Certainly the reversal from the 87.97-18 resistance which I have touted for some while worked very well and the decline does appear too deep to retain a bullish stance. USDCHF has made the deepest pullback it could within a bullish structure so break of 1.0537 would bring it back into line…

However, what also strikes me is the targets I have for these two which require quite a strong push lower in what appears to be an ever-shortening time period. GBPUSD is fine – it has met minimum targets already and should continue with its slow grind higher after a correction. Likewise EURUSD can be said to have met minimum targets, so it’s just these other two which bring to mind a sudden rush, maybe tomorrow, to at least attempt to get to new lows even if these may not be the ideal levels I have been targeting…

So today should be pretty similar to the past two days with pretty messy sideways moves followed by some gains to minor new highs but it looks more likely that the final Dollar lows will occur tomorrow.

Today’s free analysis is for AUDUSD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+45 pips)

Good luck
Ian Copsey

FX-forecaster Trader Package now available at €20.00 pm
For MT4 users

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