Technicals | Oct 02 2013
Editor's note: The US dollar index, known as the DXY or "Dixie" is, a trade-weighted index of the US dollar against the currencies of its major trading partners. They are the euro, yen, pound, Swiss franc, Swedish krona and Canadian dollar. The Dixie is the most watched measure of "the US dollar" and while the Aussie dollar is not included in the weighting, the general trend of the US dollar will mostly provide a converse trend for the AUD-USD.
Bottom Line 01/10/13
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Technical Discussion
[The US dollar index] price has pushed lower since our last review, and this was not totally unexpected. Yet the daily and weekly charts are now both well oversold. And even though no bullish divergence is present basis last nights intraday swing lower, combined with strong support sitting at 79.50, there is certainly scope here for some sort of short term reprieve to kick in soon, with opportunistic buying potentially coming into play as traders start to lean on 79.50. Last night price probed lower and tagged 80.11 before recovering slightly. Yet 79.50 is now potentially only a single trading session away from present levels, so anything is possible.
We still have our overall neutral stance on this whilst the wide trading range continues to hold. Resistance sits at 86.00 – 87.00 with support around 79.50. And these lines in the sand have been in place for well over a couple of years now. Yet as we keep mentioning , we still see scope for lower and therefore continue to favour a break to the downside that has the potential to achieve levels more towards 70.00 if the move triggers. Perhaps even lower. Historical lows presently sit at 76.08 set back in May 2011. So a break below 79.50 that sticks will see the potential for these major lows to be surpassed. A newsworthy item on a global scale to say the least.
Trading Strategy
Our preference is to continue to look for a shorting opportunity. Yet we are not interested in trading the longer term range, even though it is quite wide. Been there done that via a couple of attempts over the past year or so, yet the overall break even results reflect our new found thoughts on the matter. What we are on the look out for is a trigger that signals a change to the longer term routine. And that will only come below 79.50 or above 86.00 – 87.00 from a bullish stance. So still no formal recommendation forthcoming here, although at present levels, the USD is now on our watch list as a potential shorting opportunity.
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