US Dollar Index Candle Chart - 3rd August 2009
Friday’s wide spread down bar on the Dollar Index daily chart was pivotal in many respects as it finally broke below the 78.5 floor of the current support level which I have outlined in several previous posts and given that this has now been breached we can expect an extended period of US weakness which has already been effected in today’s trading. The same picture is apparent on the weekly chart with the Index closing last week’s trading session with a deep upper wick which found resistance at the 9 week moving average. With virtually no support between the current level at 77.6 and the major support in the 73 region we could see the Dollar Index fall both far and fast in the next few weeks. The only level of support which now lies in the way is that between 75.50 and 76.50. The monthly chart also points to an identical scenario with the 9 month moving average having already turned lower and with the 40 month average weighing down heavily as the Index moves lower. It will now take a considerable shift both technically and fundamentally to reverse the current fall and more worryingly for Dollar bulls a complete volte face on investor attitude to risk.
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