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We wanted to come back to the U.S. Dollar today as it is in process of surpassing another significant obstacle. Our chart above is of the daily spot U.S. Dollar index. We began our recent coverage of this market with a description of a stage 1 breakout (Dec. 1 blog). Then on December 4 it closed above its 50 day moving average for the first time in approximately eight months and has remained above ever since. Now what has perked our interest is that it has poked above its 100 day moving average which it had stopped dead against just two days ago.
We suggested that there was a rough estimate for a target of 7800 when it broke out of its downward sloping trading channel. It looks like the Dollar is on track to attain this. We like the chart construction. We think it is emerging out of a small accelerator pattern and although 7750 or so will be the next chart barrier we believe it will have the momentum to carry through to the near term target.
Looking ahead it would seem logical to expect and proclaim that a period of retracement and consolidation will occur. But anything can happen and usually does as we like to say. Markets that have been beaten down for a prolonged period of time frequently have a way of catching many by surprise. In the bigger picture, we would not be surprised to see the Dollar continue its ascent over a period of many weeks or perhaps months.
Interested in further discussion of this or other markets let us know.
Good Trading to all
Jeff
CB&S
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