The Dollar May Reverse Today…Here’s Why
We hoped
that the FX market would present a decent opportunity this week to go long the
dollar. As we have shown in our weekend report and daily updates we saw the potential
for the dollar to make a marginal new low this week followed by a reversal.
USD/CHF made a marginal new low this morning in pre-London trade and we
think this offers a low risk opportunity to go long with stops placed just below
this morning’s low at 1.2545.
We went long 1/3 of a full position at 1.2255 with tight stops at 1.2540.
As we see it, the dollar is near term oversold and if it cannot bounce today
then it may indicate that our expectation for a last ditch rally to 92 is not in
the cards and lower prices would be needed to attract buyers. Nevertheless, we
are drawn to these tight win or lose trades near key inflection points in the
market because if we score, we can score big relative to the risk involved.
In USD/CHF, the daily downtrend
resistance line crosses at 1.2620, which is close enough to suspect that it may
be broken today. As such, we initiated 1/3 the position before the potential
breakout and would look to add on a move above 1.2620 today. If not, we are
stopped out for a small loss and we will update our outlook tomorrow morning.
Below we show the same chart from
our Morning Market Comments. We are now positioned via USD/CHF (with tight
stops) for a reversal from support at 87.00/50 and a potential rally towards
initial resistance at 89.00.
Jes Black
Â
FX Money
Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
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Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
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Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.