Intermediate-term Trend Shift for Greenback
Last week’s U.S. Dollar rally was strong enough to lift the index above its intermediate-term trend line, and leave it in a position to test the October high at 77.22 — see chart below. Given the number of headlines highlighting the U.S. Dollar’s demise in newspapers and websites world-wide in October, and most analysts poor track record at predicting market movement, I’d say 75.00 is looking like a better and better bet to hold as the 2009 low.
Currency and stock index markets across the board changed direction on a Weekly basis as of last Friday’s close, which could set the stage for a double botttom in the Dollar Index and a double top for U.S. stock indices in November, or even for a “V” turnaround. Before we can start to speculate on a long-term change-of-direction for so many of the world’s markets, there is still the matter of the monthly trends which are still down for the dollar and up for the major currencies and stock indices. Which brings us back the chart below. A weekly close above 77.72 would very definitely be a warning for long-term dollar bears to exit shorts. A breach of 144.80 in EURUSD would yield the same results for long-term Euro bulls, while 85.70 would be the equivalent level in AUDUSD.
The currency the Greenback won’t likley rise against just yet is the Yen, which actually shifted back higher last week, as everything else, including U.S. stocks gave way.
Jay Norris
www.trading-u.com
