Here’s Why I’m Watching The Dollar
If
history is any guide, the next two weeks in the FX market will be
quiet, but dotted with moves that in retrospect make one wonder if they had been
more vigilant would they have been able to capitalize. This really boils down
to ones desire to scope out last minute opportunities or fold up the tent and
call it a year. We have one open position, long EUR/CHF from a week or so ago
but will likely sit tight until 2005.
Nonetheless, we are watching
the Dollar Index closely as it is wrestling with some key technical levels, that
if breached might be enough of a catalyst to draw in some larger players.
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The
BLUE upward sloping line is the neck-line from a Head & Shoulders pattern
completed back on December 14th.
The
BLUE downward sloping line is a 2 standard deviation trend channel going
all the way back to mid-August. This line marked the top of the most recent leg
higher in the dollar and has managed to contain any upside since.
The horizontal
BLUE line is simply an area of support and
congestion going back two weeks.
For the remainder of 2004 my
daily articles will begin to look ahead to 2005 and some of the major themes
that we see developing as well as trade ideas to capitalize on them.
As always, feel free to send me
your comments and questions.