Dollar pushed lower off wave resistance
November 9th, 2006 12:10pm EST.
The longer term Dollar weakness — and by longer term I mean the daily chart — is nothing new. It’s vital to clarify end-of-day versus intraday trends. The daily chart shows that the Dollar had shifted to the “weak” side of the Wave (the 34 period EMA on the high, low, and close) on October 26th. This is an important transition because the Wave support prices enjoyed as they climbed higher turned into Wave resistance. Note how many times prices rallied into, but never through the Wave.
On the reverse side is the Euro which has been trading higher off Wave support. The transition from Wave resistance to Wave support occurred on the 26th as well; Dollar weakness, Euro strength.
The intraday chart set ups should not be limited to the direction of the daily chart; however, the overall trend should be something that can measure. Equally as important is the ability to recognize a flat markets or one that is coming out of a trend.
The Yen is one such example as the uptrend has given way to a sideways Wave and a transition into a consolidation phase. There’s no prevalent trend here. A triangle pattern has shaped up so now it’s a matter of patience and waiting to see if the downtrend or uptrend line will be tested.
The Dollar Index Chart has some big levels it is poised above as prices tested the 85.06 which is nearing the last low prices made on September 25th. The 85.00 level is not going to break easy and even with the sharp move lower at 11:00am EST this morning, prices still managed to stay above this key psychological support level.
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.