Dollar rallies off key support level
As a forex trader there are two things I do before I sit down to my charts and trade: 1) take a look an international economic calendar for hot zones I need to be aware off and 2) see where the U.S. Dollar is heading.
The Dollar was sitting on Wave support last week (see my commentary “Dollar weakness going into the Asian session”) and that meant that support levels were also found in the Yen and Swissy. I will always “assume support” at a support level or “assume resistance” at a resistance level up until that level breaks. So in this situation there is no reason to think the Dollar was going to tank until the 86.00 level and the bottom line of the Wave, especially when the Wave is heading upwards between 12 and 2 o’clock.
This morning (actually about 1:30am EST) showed the buyers were reading to rock and roll and the U.S. Dollar rallied to just beyond the 86.80 level.
In the total scope of things this rally is not any more significant than the fact that the 86.00 area is still not one that sellers can break down below but in terms of the high looking at the 30 minute chart, prices have stopped short of the major downtrend line that sits just above the 86.80. The Wave has ofcourse with the rally transitions from a sideways three o’clock to the 12 to 2 o’clock angle and now will provide support going into two huge hot zones this week. First the interest rate decision on Wednesday and then the GDP number on Friday. I expect consolidation going into Wednesday and then perhaps Wave entries (short cycling) going into Friday. I will discuss this scenario tomorrow.
*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.