The Dollar is starting to look bullish

Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
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Observations & Trade Ideas


– like all pairs overnight, USD/JPY put in a powerful move higher overnight as
Mid-East tensions send traders scrambling for the dollar.  Nonetheless, the
116.96 level represents a possible resistance area for this pair as it is a bull
trend-line on the daily chart.


Naturally, for now, this is a level worth watching, not an area to look for
short entries.  Currently the market is too dollar bullish to be looking for
‘reversal’ trades.


We will
note in some forthcoming postings that many pairs are very extended on the heels
of the overnight action, but given the current climate, these pairs could simply
become ‘more extended’ – this is not a market for picking tops and bottoms.



— modest upside seen despite bearish RSI divergence



– As noted earlier, NZD/USD (and the NZD crosses) are quite firm.  The last
30-minutes has seen a nice rebound in NZD/USD and prices are poised to trade
through the overnight highs at .6227 – this level is actually a bear trend-line
drawn in from the Dec 5, 2005 high


– in response to higher oil prices, has begun to move lower with solid
conviction.  The current inverse correlation between this cross and the price of
oil is at 70% – assuming this remains somewhat constant, higher oil will push
this cross lower in the days ahead.  Look for 7.9135-75 to cap any rallies

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Aspen Trading Group