US Dollar Index - Daily Chart 28th May 2009
Yesterday’s candle was hardly a surprise given the reverse hammer outlined in yesterday’s market commentary for the dollar index which can often signify a reversal to the prevailing bearish trend, which is precisely what we saw with the day closing on a wide spread up bar. It is much too early to suggest that this small reversal is the precursor a major shift in sentiment for the US dollar, particularly as the close of the day finished below all three moving averages and more particularly failed to close above the 9 day. For any sustained move higher we will need to see several factors combine, not least a break above the resistance now in place in the 82 region, coupled with a penetration of at least the 9 and 14 day moving averages. If these events combine then we may consider that a reversal of some note has taken place but anything short of this will simply be the markets taking a breather before resuming the downward trend in the dollar index.
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