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Dollar Index Daily Chart – 18th March 2010

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Thursday, March 18th, 2010
USD index daily chart

Daily Chart For The US Dollar Index - 18th March 2010

The US dollar index on the daily chart, continues to struggle in the 79 to 81 price region, as once again yesterday’s price action closed below all three short term moving averages, but with substantial clear water to the 200 day moving average below. This failure to break above the 81.50 price point is now becoming a worrying sign, which is further reinforced with the rounded top pattern now being created as a result. Yesterday’s candle provides little in the way of any meaningful analysis, ending the day as a small doji cross, and with the 9 and 14 day moving averages now adding further downwards pressure, the short term outlook for the US dollar looks mildly bearish. As outlined in several previous market commentaries for the USD index, the series of candles with deep upper wicks, during mid to late February, were the first signal of a change in sentiment, with the rollover on the daily chart as a result. Longer term the outlook for the index remains bullish, provided we see a break and hold above the 81.50 price region in due course. Once this has been achieved then we can expect to see the dollar index break higher with the current sideways congestion providing a strong platform of support, with the recent price action simply indicating an extended breather for the market and the US  before the index moves firmly higher once again. Any move to the downside, if it comes, should find good support from the 200 day moving average, so any test lower should be limited to the 78 price point or just below.

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Categories : Currency Option Trading
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Currency Options Trading – USD Index 2 Nov 2009

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Monday, November 2nd, 2009
USD Index - Daily Candle Chart 2nd November 2009

USD Index - Daily Candle Chart 30 Oct 2009

The US dollar index continued its short term recovery on Friday, emerging from the depths like some half drowned swimmer, exhausted but still alive, and just managing to break the surface for air, or in this case the 40 day moving average, supported from below by some buoyancy tanks knows as the 9 and 14 day moving averages! Clearly both of the above are positive signals for the US dollar, and for currency options trading this week we need to be extremely careful as the middle of the week sees the FOMC meeting, followed by the Non Farm Payroll data on Friday. Last week of course saw the US economy emerge from recession and into positive growth once again, and should the FED see this as a sign that the economy is finally starting to turn, then they could signal that interest rates may have to rise sooner rather than later. This of course would be presented in the usual coded way in the associated statement to the interest rate decision ( rate will be kept on hold!) and if so, then this would provide a positive boost to the US dollar, and a possible longer term change in sentiment as the prospect of higher yields beckon. This would be further reinforced should the NFP data come in better than expected and add to the feeling that the worst is over.

Technically of course there is a long way to go yet, and the first barrier is the resistance all the way up from the current price point, through 78 and then above the 80 to 81 price region. Should all these be cleared then we can assume that the recent downwards spiral has come to an end and will be followed by  a period of upwards US dollar momentum for currency options trading over the next few months.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

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Currency Options Trading – Daily USD Index Chart 22nd October 2009

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Thursday, October 22nd, 2009
USD Index - Currency Options Trading US Dollar Chart

USD Index - Currency Options Trading US Dollar Chart

For currency options trading, the slide in the US dollar index is remorseless and unrelenting, with the 9 day moving average bearing down heavily on any attempt to turn higher, and with the strong resistance level now firmly established above the 76 price point, there is little in the technical or fundamental picture to suggest that this spiral lower is likely to end in the short term. Indeed, today’s weekly US unemployment figures simply added further bearish sentiment to an already waterlogged currency, which continues to flounder ever deeper in the mire of an ultra low interest rate and a constant stream of poor economic and fundamental news. With the US dollar now resigned to the low yielding currency of the carry trade, this pattern of bearish sentiment towards the US dollar will remain in place, if and until the FED signals a rate rise, which seems a long way off at present ( and even further away after today’s news!) So for currency trading options the outlook remains the same as for the last few months which is to sell the US dollar until the technical picture tells us something different!

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

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Currency Options Trading – Dollar Index Candle Chart 30th September 2009

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Thursday, October 1st, 2009
USD Index - Currency Options Trading 30th September 2009

USD Index - Currency Options Trading 30th September 2009

The technical picture for the US dollar continues to get worse with each passing week, with the last five days simply adding to the gloomy picture, and suggesting that last Thursday’s positive up bar, was simply a one trick pony, and unlikely to provide any platform for a sustained recovery in the short term. Indeed, on every occasion of the last five days, the high of the trading session has stalled at precisely the same point each day, confirming the bearish view ( if any were needed, ) despite the fact that we are still trading marginally above both the 9 day and 14 day moving averages which have just crossed giving a potential bull cross signal. Given the repeated failures outlined above, this seems highly unlikely, and with the ADP figures early today coming in far worse than expected, this does not bode well for Friday’s NFP data, which if they follow a similar pattern will push the prospect of rate rises ever further over the horizon, leaving the US dollar as the low rate yield for the carry trade, replacing the once popular Japanese yen. If the figures are bad on Friday, then this could push the index below the 76 floor, and open up a much deeper move possibly as far as 71 or 72 in due course.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

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Categories : Currency Option Trading
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Currency Options Trading – USD Index Chart

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Tuesday, September 22nd, 2009
Currency Options Trading - USD Index Chart 21st October 2009

Currency Options Trading - USD Index Chart 21st October 2009

For currency options trading today, the weekly USD index chart continues to look extremely fragile with last week’s narrow spread down candle simply adding further pressure to an already battered US dollar. The only positive signal US dollar bulls can take from last weeks trading in the USD Index is that the spread was relatively narrow and failed to pick up the momentum from the previous week. Indeed many currency options traders and analysts had forecast a sharp reversal in the US dollar, as many now believe the currency is oversold and due for a reversal higher in the short term. However this failed to materialise last week, but with the FOMC meeting and rate decision taking place on Wednesday, this could provide the trigger should the statement hint at any concerns over the ongoing weakness of the US currency. For currency options trading this week therefore, we need to be cautious ahead of Wednesday, as this could be the catalyst that the markets are now waiting for, and as we have seen many times before, when everyone is trading in once direction, then a reversal is almost certain to occur, and with increasing numbers of retail traders now involved in currency options trading, the same principles apply as in the spot forex markets. However should this fail to spark a US dollar revival, then there is very little to stop a further fall to the next level of support in the 72.50 price point, where we could see a rebasing of the index in due course.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

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USD Index – Daily Forex Chart USD 10th September 2009

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Thursday, September 10th, 2009
USD Index - Daily Chart Dollar Index 10th September 2009

USD Index - Daily Chart Dollar Index 10th September 2009

A defining day yesterday on the daily chart, as the USD Index finally broke below the 77.50 very platform outlined in previous posts, and closed the trading session with a wide spread down bar with a very small wick to the bottom of the candle. The USD index is now extremely bearish, with all three moving averages pointing sharply lower, and with only minor support between the current level and the next floor at 71, a deep move lower now seems likely for the US dollar, with the euro vs dollar already a major beneficiary of this sustained and continued dollar weakness. The weekly chart for the USD index paints a similar picture with the only question now being whether the support in the 71-72 price region will actually prevent a collapse in the US dollar. In the short term there is little but ‘fresh air’ on the daily chart, and over the next few days we are likely to see increasing momentum in the downwards move, as equity markets continue to draw investors into the market as their appetite for risk remains undiminished, and until this sentiment changes then the USD will continue to fall. This bearish picture has also been given impetus for the Chinese who are now offloading their US dollars in favour of gold, which triggered the recent breakout in gold prices of the last few days.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

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