Updates On The Euro & The US Dollar
- Posted by TheArmoTrader
- on September 12th, 2011
We have seen some crazy action in the currency markets since I last blogged about the Euro and Dollar. In my last Euro post, I talked about how the Euro was looking real vulnerable and was poised to breakdown. In my last Dollar post, I talked about how I had turned bullish on the Dollar based on some technical and fundamental analyses. Well, its time for an update on what I think we see next from both Currencies.
$EURUSD - Euro / US Dollar Weekly Chart
The Euro has gotten slammed since I last did my post. It not only lost the trendline, but it also closed below the all-important 1.41 level-thus, in my opinion, putting it in an intermediate bear market. While I would not go short here, I would watch for some a weak retrace or some bearish sideways consolidations in order to establish any new short positions. Now broken, I fully expect the Euro to go and test 1.30 sooner or later.
But first, the Euro needs some consolidation before it tries to break below 1.35. The daily RSI(14) today during midday when it hit the LOD was <4 (@Ldrogen beat me to this tweet by literally 2 minutes). I pretty much agree with his analysis as well. I dont think the Euro sees 1.30 (barring any news) before Friday (Sept 16).Also, with the Forex market being heavily $MACRO related, make sure you follow all the news and events that com out of Europe.
$USDX – US Dollar Index Weekly Chart
The dollar has had a huge rip since I last blogged about it. It was trading at around 73.60, a short term support level it held very nicely before the rip occurred. Today it hit a high of 78.30 before retreating some at the end of the day when the Euro and market caught a bid. However, the bull run is far from over, but I would not be establishing new long positions tomorrow. Just like the euro, I was to see some consolidation. Either in price or time. I would prefer time (sideways price consolidation) because it shows that there are strong bids underneath. As long as it closes above 76.50 on the weekly time-frame, there is no reason to be technically bearish on the dollar.
TA-wise, the dollar finally ripped out of its summer range. On the weekly timeframe, it is looking A LOT like it did in 2008 when it trading from the low of 70.7o to a high of 88.46 (also 1 week before QE1 was announced). If we measure a similar move to 2008′s move, it means the dollar will hit a high of 90.46. That would be some move (also would be a 5.5 year high). Do I expect this to actually happen? No. But if you have been following me, you know that I expect the Dollar Futures ($DX_F)* to hit at least $80. $81.30-83.40 is also not out of the question (remember, this is Sans QE3).*=The Dollar Index and Dollar Index Futures have a small price difference between them (5-10 cents). Make sure you know what chart you are looking at. Below is the Dollar Index, though I like watching/tracking the Dollar Index Futures.
FULL Disclosure: Have been Long $UUP Calls since 08/31
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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