Dollar Index Daily Candle Chart - USD 30th July 2009
The US dollar index, and hence the US dollar, received a much needed shot in the arm yesterday on the daily dollar index chart, ending the session with a wide spread up bar, which followed the long legged doji that I outlined in Wednesday’s analysis as a possible turning point for the US dollar. The dollar duly delivered and ended the session above both the 9 day and 14 day moving averages – a positive signal but insufficient to signal anything other than a short term reversal at this stage, rather than any longer term structural change in sentiment. For this to occur we need to see two things. First we have to penetrate and hold above the deep resistance now immediately ahead in the 79 to 81 price band, coupled with strong support from all three moving averages. Secondly we then need to see a sustained effort to break back above the 86.50 region and beyond. If these elements combine in the next few weeks, then we should see a resurgence in the US dollar as a result, however, this could simply be a short lived breather in the market, before the index heads lower once again – only time will tell, but the above analysis should provide us with a better clue for the future as we watch events unfold on the fundamental news front.
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