Is the dollar six year decline coming to an end? The monthly chart shows a descending wedge which could soon give ammunition to dollar bulls. We will need two important confirmations. The first would be a monthly close above the 10 month moving average, presently at 74.73. The second and most important test will be a close above the confluence of two major trendline resistances between 76 and 76.90. An all clear would be a close above the 2004 low of 80.39.
If you are entering this treacherous game, be aware that the easiest trading pattern in the dollar usually comes during the last three months of the year. When that trend is set, don't fight it. For now, we could still be in for some chop and even a possible test of the bottom of the wedge, although I think that is very unlikely. My guess is that bears will have a hard time pushing EUR/USD above 1.5627, major resistance and there is always the specter of a double bottom for the summer around 1.52/1.53. But if I had to throw out a year end number, my bet would be EUR/USD around 1.45.
Currency trading is trading, not investing, unless you are a Warren Buffet with a very long term horizon. Remember that when you see a target profit in your trade, take it.
This entry was posted
on Saturday, June 14, 2008 at 6/14/2008 12:15:00 PM.
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