USDX Tech Outlook

Written by JS T. Alexander | 13 April 2010

The USDX has corrected as we have speculated from our previous Market View. It had a strong finish on the 1st quarter of the year and for the correction to last longer may not be as predictable as a short term analysis. so looking at the USDX give and take a few days off when we mentioned that the start of the downturn correction would begin on April 7 and the 2nd week of April.

From a previous high of 82.25 as shown on this interative data chart just to show its comparison from a metatrader4 charting system that it does not make so much of a difference in price references as long as the trend and pivotal points on both the high and the low would be indicated. The price page indicator is more effective and the correlations with the rest of the Majors can be identified. Significant highs and lows comparing them with the USDX would lead to where prices were at during such time from historical data. Some would disagree but for our own trading experience it is quite significant as we could price in the data with the correlation price of the USDX. the clue to this strategy and measurement is based on the contributing factor of the major pairs corresponding to the trade-weighted average share of each pair in the USDX.

Any price between or lower than the 79.80- 80.20 levels as we have time and again have stated would lead to a further correction until the signal for a price reversal can again be identified from the price page indicator. Although, the registered and considered major support is at the 74.50 bp way below its current price. Meaning that the obvious trend from the low has been up as indicated on the chart below.

The next retracement can be calculated with the Fibonacci theory which would only provide a logical retracement from its basic parameters as everyone would know. Breaking or not the key prices above stated would now depend whether the market would be technically driven or by the fundamental reports. so one needs to weigh the circumstances as to which one weighs heavier. there maybe some false penetration for the prices on the down side but the overall trend on the long term is still intact. On the recent fundamental, 

The US Dollar currency resumed its decline against majors after today's news showing that U.S. trade gap swelled in February above expectations. The dollar index, a gauge of the dollar movements versus six major currencies, slipped to 80.34 from the day's opening at 80.55 while it is expected to get support at 80.07. The retail sales on the fundamental side for this week will try to influence and provide the fundamental reason for the technical out look in the near term. Its inital targe objective may weel be within the range of 78.50 - 79.10 give and take a few.

Our responsibility to our trades is to be able to pinpoint and find the true signals of a pivotal price reversal not necessarily a trend reversal. It is always easy to say after the fact or movement has happened to some Forex traders and analyst but what we need to find is how to see the bottom line from the trades. In short, the key prices are within the range of the correction. When it does the next turning point would be defined. A combination of the three Fibonacci methods including the fan and the extensions would be used to measure when this occurs. A more reliable tool would be added such as the Volume and open interest on the USDX futures contract would have to be in line with the analysis. These are just a few technical tools that we combine other than what the rest of the other traders use that they feel that works for them.

As a matter of guideline; please check out our latest article on " Trade with Confidence " found on the Methodology section in the Main menu.

Good Luck and only the best to your trades.