18 Feb 2015
USD Index short-term correction likely – Commerzbank
FXStreet (Barcelona) - Karen Jones, Head of Technical Analysis at Commerzbank, explains that several technical signals point towards a near-term correction for the USD index towards 91.57/89.15 before the resumption of the bullish run.
Key Quotes
“There are several technical signals on the US Dollar Index that are pointing to a near term correction lower for the dollar ahead of further strength.”
“Our first signal is that the rally has paused just ahead of the 50% retracement of the entire move down from 2001 to 2008. This is located at 95.86, the recent high cuts in at 95.53, this long term Fibonacci retracement is likely to offer tough overhead resistance for the market.”
“We also note a TD perfected set up on the monthly chart – the second warning sign. This is a Tom De Mark signal given to indicate at least a pause in the trend.”
“Third signal is the divergence of the weekly RSI, the price made a new high but the weekly RSI did not and this denotes a loss of upside momentum.”
“The short term signal and last signal is that the market has also started to erode its 2 month uptrend.”
“We would recommend lightening up on long dollar positions/tightening stops looking for a short term retracement.”
“The Elliott wave on the daily chart suggests that we allow for slippage to 91.57/89.15 (23.6% and 38.2% retracements of the move up from May 2014).”
“We look for stabilisation and resumption of the upmove from circa 89.15.”
“Above 95.86 will introduce scope to 99.49 October 2003 high and the 101.50/61.8% retracement of the same move down from the 2001 peak.”
Key Quotes
“There are several technical signals on the US Dollar Index that are pointing to a near term correction lower for the dollar ahead of further strength.”
“Our first signal is that the rally has paused just ahead of the 50% retracement of the entire move down from 2001 to 2008. This is located at 95.86, the recent high cuts in at 95.53, this long term Fibonacci retracement is likely to offer tough overhead resistance for the market.”
“We also note a TD perfected set up on the monthly chart – the second warning sign. This is a Tom De Mark signal given to indicate at least a pause in the trend.”
“Third signal is the divergence of the weekly RSI, the price made a new high but the weekly RSI did not and this denotes a loss of upside momentum.”
“The short term signal and last signal is that the market has also started to erode its 2 month uptrend.”
“We would recommend lightening up on long dollar positions/tightening stops looking for a short term retracement.”
“The Elliott wave on the daily chart suggests that we allow for slippage to 91.57/89.15 (23.6% and 38.2% retracements of the move up from May 2014).”
“We look for stabilisation and resumption of the upmove from circa 89.15.”
“Above 95.86 will introduce scope to 99.49 October 2003 high and the 101.50/61.8% retracement of the same move down from the 2001 peak.”