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USD Index 8 Feb 2010

Dollar Index Candle Weekly Chart 8 Feb 2010

Another strong performance by the dollar index last week which closed with a wide spread up bar once again making this three in a row and confirming the positive US dollar sentiment across all the markets.   However, whilst last week’s close ended just above the significant 80 level and touched the 200 week moving average there are two technical issues on the weekly chart which need to be considered very carefully.  First is the 200 week moving average itself which now sits above the current price action and until we see this key indicator breached with a hold above then any rally could falter at this point.  Secondly the index is now hovering in an area of deep potential resistance which was created during mid 2009 and once again for any rally to be sustained we need to see a break and hold above the 80.5 price handle and should this occur then coupled with support from the 200 week moving average these factors combined do present a degree of comfort to dollar bulls.

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