One Thing Is For Sure Thus Far In 2005…
Dollar Index Snubs Bears
When the FX markets opened on Sunday afternoon,
it seemed as though the key 82.35 level was going to give way. By early Monday
morning that level did in fact fall and the index made a low at 82.30. However,
technically speaking, it was not confined by the stochastics, and frankly, it
just did not “feel” as though there was going to be a push lower.
We covered our short in USD/CHF from Friday
(1.1625) for a modest profit (1.1595) simply because with no follow through, any
upside corrective move would/could be sharp. This turned out to be the right
decision, despite believing at the time the trade was entered that there was
more downside than simply 30 pips. We/you can always get back in.
We are revising our short-term opinion on the
Dollar Index (DXC). We now see the most
likely price objectives over the next several hours as 82.60-65 and 82.93. Our
favored trade under this scenario would be to short EUR/JPY.
One thing is for sure thus far in 2005: despite
seeing some solid macro trades developing, we have been unable to stick with
them for too long given the choppy nature of the market. The result has been
taking our macro analysis and then executing it off intra-day time frames (60
and 240-minute charts). Trades now last 12-24 hours versus several days.Â
Regular readers will recall that we have been
expecting a tradable bounce in the dollar, which has yet to be sustained.Â
Today’s technical “victory” might be the start of yet another upward assault.
As always, feel free to send me your comments and
questions.