Monday, August 31, 2009

What is the Dollar trying to tell us ?

I posted a chart of the $USD Dollar a few days ago mentioning that 79.750 (and above) will send me long on the Dollar.
The chart you see above is a weekly chart.
Is that scenario possible ? (see green arrow)
1) Trend line (red) is quite clear ; broken (on huge volatility) ; sending the $USD Dollar zooming up to form "A" (ABC pattern).
2) Dollar came back fast ; finding "B" ; then zoomed up again to trigger "C".
3) "C" failed ......
4) The $USD Dollar crashed, and is now finding support around the "B" level once again.
What is it trying to tell us ????
Euro and the Pound are showing a potential reversal pattern.
We know need to see light crude oil close the week below 69$ (to go long on the Dollar).
Shangai crash means investors look for the Dollar as a safe heaven ???
Its a funny puzzle, where one often makes mistakes trying to figure out how to solve "that puzzle".
The facts ;
1) Oil is facing a VERY big resistance
2) Dollar is way oversold
3) No, there is no other currency ready to take over ..... at least right now .....
Keep that chart in mind and always expect the unexpected

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