Thursday, 17 January 2013

USD - H/S formation ?

The US Dollar closed fractionally higher, +0.03%, settling @ 79.80. The weekly charts are offering a very clear head/shoulders formation. If this formation pans out, then we'll see a break below the key 79.0 level. The monthly lower bollinger band is around 74, so there is considerable downside room into the spring.

USD, daily

USD, weekly

USD, monthly2, rainbow


The various cycles are certainly mixed right now. The daily is arguably due an up cycle into next week, and even the weekly would tolerate 80.60 in the near term, without breaking too high.

That sure is a pretty clear H/S formation on the weekly chart, and you can kinda see it on the monthly rainbow chart - where we have two red candles warning of serious weakness.

Those equity/commodity bulls seeking a move into the sp'1500s this spring should indeed be very mindful of the dollar. If I'm right about the H/S formation, and we eventually break into the USD 78s..and lower, it'll certainly help to kick higher - or at least maintain current price levels.

As for tomorrow...

Perhaps we can finally see some decent dynamic price action. No more of this 5pts lower at the open, and then closing flat. I think even the algo-bots are growing tired of it!

The levels are clear. Bears need a break below the recent 1451 low..whilst bulls merely need a daily close >1474. With the VIX already having fallen from the 23 spike-high to the low 13s, I have to believe we'll at least see a minor decline to the low sp'1440s in the near term.

As it is, I remain short, and seeking an exit in the low sp'1440s. As an options trader - with Monday closed, I'd much prefer to exit before the extra long weekend.

Goodnight from London