USD Reinforced Trend

Written by JS T. Alexander | 04 February 2010

Bullish Vs. Bearish Trends in the making!

The signals were clear when the Obama Administration stepped up its battle with the economy; as there were still mix reports on some of the economic numbers coming out were both negative to positive reports. As investors also shifted their positions at the start of the year.

YouTube URL: http://www.youtube.com/watch?v=hJ339G-Bmp4

However, with the latest ISM numbers were supportive of the US dollar and the policies set up by former chairman Paul Volcker's rule on in testimony were very much influential for this trend reation to go higher. This is on the fundamental stand point that we have pointed out from our previous market views for the past couple of weeks.

However, the USD re-inforced trend has been established and showed its singals specially from the Aussie Dollar's movement on a technical analysis and the behavioral price movements of the AUD/USD and the USDX since December 22 as indicated in our previous charts dated the 30th of January expecting that the USD would make its follow through. As the volumes and the open interest builds up its momentum for the Aussie to continue to move lower. Plus the inactivity of the RBA not to do anything with their interest rates report.

With the previous high of the AUD/USD at 0.9332 and 0.9328 respectively from Nov of 2009 and January 14 shows the lost and flat momentum for the AUD/USD to move higher. And that the closing bar for that month already showed a probable key reversal as shown on the chart below. If you would review our previous market views; we have stood firm on our position looking at a higher USD for the 1st quarter of the year and to this writing still hold a ladder-like formation for the USDX to move higher and for the AUD/USD still to move lower even to the first inital target at 0.8550. Of course, unless any other real negative reports comes out of the market.

The USD/CHF is also a replica of the ladder-like upward trend of the USDX while the Aussie and the Euro have been the exact mirror image of the US Dollar's trend. Although, with the traingular formations indicated on the charts below shows the same signals were being presented as the first weeks of January were taking place. However, the USD/JPY's movements were being held back as the cross-rate EUR/JPY is till dragging the USD/JPY lower. The cross between the EUR/JPY is very much influential for the USD/JPY to move higher in line with the USD/CHF as it already started its 1st leg towards the North of the charts currently working at 1.0647 as of this writing and the USD/JPY at 89.29 which is strengthening in value together with the

US dollar. The GBP/USD is in the same scenario working at the 1.5770 breaking its inital support of 1.5880. These signals are clear and simple although, it would present itself after the fact that it has moved. So anticipation, proper understanding of the process of deductions from December 22 would have been now a strategic trade. But there will never be any guarantees that these strategies would work as market conditions change every so often. There are no guarantees that the same result would happen.

YouTube URL: http://www.youtube.com/watch?v=hJ339G-Bmp4