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USD Flexing its Muscles

December 18, 2009 10:04 am by Dean Morel

The USD is reminding us who is boss. It has broken out of its downtrend and in so doing is altering the price of many other assets.

usd-20091218

I’ll let someone else state my opinion.

Within a strong bull market, a price correction back down to the 50 day moving average (50DMA) is considered healthy. A further correction back down to the 200DMA, if the price holds at or above that level is considered by many to be a “back up the truck” moment.

The dollar is in a bear market. So, as far as the dollar chart is concerned, the price of the dollar index has risen and the 50DMA has been punctured from the downside. I would consider this to be a healthy correction still within the dollar bear. The 200DMA is falling and it looks as though right around the 78 level would be the testing of the resistance.

I wouldn’t even begin to consider the dollar bear over unless we see the close above that level (above the 200DMA).

Anything in between I consider to be within the normal “noise” parameters.

via TMF: Predicting dollar & S&P500 from bond rates / Macro Economic Trends and Risks.

There was another quote in that thread which I really liked.

“Mind you, 99% of trading seems to be human psychology … which doesn’t change one iota between generations.”

Disclosure: Short position in USD. Though overall net long exposure to USD.

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