The US Dollar Index lost 10-day support last week, underpinning a spike lower that rejected at 71.31 (daily pivot). Although, bull channel support has been lost, the fact that price-action has held up around 71.86 (May trough) highlights possible platform support. Wednesday’s reversal day ended of a series of intra-day lower top’s, suggesting a move to 72.35/45 (10-day moving average/ 38.2% retracement) if former channel support turned resistance at 72.14 is broken. We continue to recommend shorting the US Dollar while trading below the 10-day & 20-day moving averages. An early clue to a possible shift in our strategy will be whether the EUR/USD can maintain 10-day support (currently at 1.5827) and if the USD/JPY can reclaim the 50-day (currently at 105.80). Other factors to watch will be whether the GBP/USD can maintain 2.00 and it’s 200-day (currently at 1.9960) and if the USD/CAD can maintain support near parity and the 200-day (currently at .9992).
Strategy Summary: SELL USDX AT 72.40 FOR 71.314 (TARGET), STOP AT 72.65
LONG EUR/USD FROM 1.5816 FOR 1.5932 (REVISED TARGET), STOP AT 1.5777 (REVISED STOP)
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