Tuesday 18 January 2011

USDX + €$ Critical support on the DX...will it hold?

The DX is bang on the support area at 79.00 and EurUsd at 1.3395 (with a current low on DX H11 of 78.85). It has found some support in the second RL in the d-sloping light blue fork shown here...but will it hold.
The €uro looks like it is consolidating after its break above the 2 main long term reaction lines shown below. Remember this is not our first 'visit' to these RL's and this is the 4th or 5th
(depending on how you count) time we have been hammering away at this RL level.
We now have 100% RT of the sell off in early Jan and price action is steep in the 60/240 & daily charts and it would be unusual but not impossible for this to be the top. I have no strong feeling yet either way but will consider a long € if we break up from the RL and conversely a short if we break down but ni am flat on the DX & €$ and have no intention of getting slaughtered while the trend is sideways . I am aware that the DX has been ranging for some time and failed to break the 81.50 level convincingly and we have ended up with a double top and this is the reaction resulting from that powerful pattern. All is not lost for the $...yet, but it will be a critical few days in my opinion and I may well have to rewrite/ re-evaluate my short to medium term view of being bullish for the USD.


















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