Best Financial Markets Analysis Article During 2009 the US Dollar Index has enjoyed a deep pullback. Its current position doesn’t exactly excite, but an interesting technical level is being tested and we here highlight what would be taken as the first bull signal.

The FX Trader’s view

MONTHLY CHART:

The recovery from early 2008 low found good resistance from the 38.2% retracement.

In the process it breached a bear channel top projection suggesting long term bear momentum was waning.

Subsequent deep pullback does not invalidate this observation.

At this stage we are awaiting reaction after the test of the 76.4% pullback level – these can sometimes be very good supports.

DAILY CHART:

Recent support came from a falling support line here, at the same time as the test of that long term 76.4% level.

As we have repeatedly stated in the FX Specialist Guide it is possible we are seeing a third/final downleg (from 81.466 08-Jun high) in the move that commenced from the 89.624 Mar high.

At this stage a close above the 76.817 03-Nov high would also violate the small bear channel top projection and provide an initial bull signal.

The first hurdles facing s/term bulls would then be prior 77.428/77.688 lows, ahead of the 23.6% recovery level.

Mark Sturdy
Philip Allwright

Seven Days Ahead
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Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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