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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Thursday, October 27, 2011

How low can the US $ go?

As the markets gorged themselves on the long side today, the US $ broke below a near-term support level of 76.00 and its 200 sma (pink)...it sits on another fairly major support level of 75.00 at the moment, but is not far away from a very significant support level of 74.00. There is intersecting regression channel confluence at 74.00...if price drops to that level, we'll see whether it holds, or whether the US $ is, in fact, doomed, since a potential reversal of the Golden Cross to form a Death Cross could so predict.

The Major Indices (Dow 30, S&P 500, Nasdaq 100 & Russell 2000) and the Financials sector (XLF) ended at major resistance levels on their Daily charts as shown below.

Correspondingly, the YM, ES, NQ & TF also ended the day at major resistance levels as shown on the 4-hourly charts below. The YM, ES & NQ ended just below the +2 deviation level of the downtrending regression channel...this level is significant since a break and hold above could very well see price breaking through major overhead resistance and ultimately making a new high this year...the NQ isn't far from accomplishing that now, while the TF is still lagging.

The TF is trailing the bullishness, but it's one to watch to see if it begins to outpace the others on a move upwards over the next days/weeks in order to reach a new high by year's end...looking at a 5-day 5-minute chart below, we can see that the Russell 2000 has led the other Major Indices (on a percentage-comparison basis) in this latest segment of the rally, with quite a move ahead on today's action...I'll be watching to see if this trend continues, or if it was just a "flash in the pan" event.

This latest push up in the markets could either be the desire for month-end gains by fund managers with a drop to follow, or the beginning of major short-covering with the rally gaining momentum...we'll see what happens after the end of October.