Watch this key level on the Dollar
Even with the host of economic reports coming out this morning, the Dollar has resisted moving outside its very early morning range set during the London open. The slow move lower that began as soon as the Retail Sales number was digested, has yet to take out lows established last week.
Considering the impact 8:30am hot zone, the Dollar was stubborn and traded within the range of the 86.99 high and the 86.83 low. These near term support and resistance levels have withstood both the data. But these levels are not the only levels the Dollar will have to contend with.
This action further indicates how important a level the Dollar is testing and it’s not the just the 87.00 psychological level. Between the 87.05 and 87.33 is pure price action “muck” as the collective resistance that these area presents will slow any move higher in the Dollar if it is to head higher. This is a decision level that also has a downside if prices cannot find support above 87.00 which thus far as been unsuccessful as every attempt since June ’06. The level to watch to the downside, if 87.00 initiates a sell off, is the 86.71 level which was the low set on October 12th. Also worthy of noting is the low the Dollar rallied from during last week’s Retail Sales number of 86.78.
The EUR/USD on the daily chart is sitting in a similar situation only instead of a decision level at resistance; the Euro is at a decision level at support.
Note the last three significant lows; even if the Euro were to head below the 1.2500 level there is support going back to June at 1.2479 and 1.2459 so there were buyers waiting at the levels in the part. I will assume it will still be so until or unless these levels are broken. Until then I will expect a bounce as the U.S. Dollar battles with 87.00.
*All charts are done on eSignal Premium with the EZ2 Trade Software Collection. www.ez2tradesoftware.com
Raghee Horner is an trader with more than 15 years’ experience in the markets. Ms. Horner has taught her brand of technical analysis and charting strategies to students all over the world. She is also the author of the bestselling “Forex Trading for Maximum Profit” and “Thirty Days of Forex Trading”. Emphasizing charting and price action and continues to teach the tools and strategies that encourage self-directed traders to pursue the study of chart analysis and market psychology. She is a much sought after public speaker who has conducted seminars in the US, Canada, the Caribbean, and Asia. For more information on Raghee’s analysis and trading email cs@raghee.com or visit www.raghee.com.