Monday, October 11, 2010

USD Index--Monthly

It has been a while since I've blogged about the USD Index. You can see on the monthly chart below that it's moving towards its uptrend line. This is around 76. The concerns about the Fed increasing its quantitative easing as well as the many dollar bears out there may hasten this move down. At that point there will most likely be a bounce.

It's difficult to not notice the large symmetrical triangle on the chart. Often these are continuation moves. If so, there will be significantly lower lows for the USD. If you look at the triangle from an Elliott Wave perspective, then it can also be expected to break downward. However from that perspective it hasn't yet touched the "D" point so one can expect a move up to E before it broke down completely. Given that so many of the USD pairs are over-extended in their moves it's another piece of evidence that one will want to be short Euro and long the dollar at some point, probably sooner rather than later.

Here's a monthly chart:

© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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