Email of the day (1)
"I attended the Sydney chart seminar. You mentioned you were thinking about putting in some DXY long positions. Very nice call. I doubted the likelihood of the move. It never ceases to amaze me how humbling trading financial markets can be. Well done."
Eoin Treacy's view Thank
you and I agree that the markets offer an excellent avenue for self-discovery.
At the Sydney seminar earlier this month, the US Dollar Index had become quite
overextended relative to the 200-day MA and had returned to an area of potential
support. Sentiment at the time was also distinctly bearish. On seeing the assassination
of Osama Bin Laden, my first instinct was to open a Dollar long position, suspecting
that it may offer a short-term catalyst for a return of demand.
As it
happens, my internet connection at the hotel was too slow and I could not access
my trading account so I could not successfully follow this hunch. On returning
from Asia, I did not wish to chase the Dollar higher and since I would be travelling
again the subsequent week I was reluctant to open new positions.
The Dollar
Index declined steadily from 2002 to 2008 and over the last three years
has at least lost downward momentum. The rally
from the early May lows has broken the five-month progression of lower rally
highs and unwound more than half the oversold condition relative to the 200-day
MA. A fall back below 74.85 would be required to check short-term potential
for some additional upside. The Index will need to find support above the early
May low following a meaningful reaction to indicate that a low of medium term
significance has been reached. While the US Dollar has lost downward momentum
against currencies such as the Euro, Asian
currencies remain in a relatively consistent medium-term uptrend against it,
despite short-term scope for a reversion towards the 200-day MA. .