USDx TUG of WAR 2
| 05 December 2011
The concentration of the market is currently focused on the successive meetings with the European leaders in trying to find countless ways to prevent a fallout of the Euro as the ill-effects of the debt crisis still prevails. The market conditions towrds the end of the year's trading is critical.
However, after the round of central bank actions, most major participants would wait and players would have to go back to the drawing board where the technicals would be used to draw key price parameters thereafter every major event and where key levels would be identified as such for the next trade. Namely, the US dollar index still is our main focus. Please take the time to review our previous article before the thanksgiving holiday dated the 21th of November. The key levels to really pay a closer attention would be the the trading support levels at 77.90-78.10 range that should be able to hold. This is in contrary to the assumed double top daily formation for the US Dollar Index as shown on fig.1. The correction is quite distinct and recognizable. However, we do not discount the higher bottoms of the 2nd leg which would gain towards the end of the trading year with similarities from the 2010 year.
The typical market price reversal made last Oct. 27, 2011 at the 74. 72 should not be discounted. With an initial top at 79.70 resistance price levels in line with the Oct. 04, 2011 price of 79.83 basis point. Thus making a visible double top formation on the daily chart formation. This is where the TUG OF WAR between bulll and bears would be playing out towards the end and start of the 2012 trading year. Again, the probablity of having an across the board recovery in currency value would still have a light at the end of the tunnel where not a lot would really be expecting. There will be some equilibrium in price adjustments from any down movements to up, likewise between the European majors and the US Dollar Index towards the end of the year.
FIGURE 1 As of Dec. 05, 2011
FIGURE 2 As of November 13, 2011
Please take the time to review the market based on its price behavior.
