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Yen Bounce As Dollar Weakens

By Colin Twiggs
October 22, 2009 4:00 a.m. ET (7:00 p:m AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.



The US Dollar Index is testing short-term support at 75. Breakout below 76 offers a long-term target of 71.50*, the 2008 low. Recovery above the declining trendline is unlikely, but would warn that the primary down-trend is bottoming.

US Dollar Index

* Target calculation: 76 - ( 80 - 76 ) = 72

Dow Jones Industrial Average

The Dow retreated below the new support level at 10000. Follow-through below 9900 would give preliminary warning of a secondary correction. Bearish divergence on Twiggs Money Flow (21-day) warns of selling pressure. Failure of supoort at 9500 would confirm a secondary correction, while recovery above 10100 would signal a new primary advance.

Dow Jones Industrial Average

* Target calculations: 1000 + ( 1000 - 900 ) = 1100 and 1000 + ( 1000 - 700 ) = 1300

Euro

The euro broke through resistance at $1.50; follow-through would signal a long-term advance with a target of $1.60*. Reversal below $1.50 would warn of a test of the lower trend channel.

Euro US Dollar

* Target calculation: 1.50 + ( 1.50 - 1.40 ) = 1.60

Pound Sterling

The pound is strengthening as a result of efforts being made to reduce government debt. Breakout above $1.66 would offer a medium-term target of $1.72*.

Pound Sterling

* Target calculation: 1.66 - ( 1.66 - 1.60 ) = 1.72

Japanese Yen

The dollar broke through the declining trendline and resistance at ¥90, signaling a rally to test the upper trend channel. In the long term, breakout below ¥87 would offer a target of ¥80*.

US Dollar Yen

* Target calculation: 90 - ( 100 - 90 ) = 80

Australian Dollar

The Aussie dollar continues its rise against the greenback. Expect retracement to test the new support level at $0.90, but failure of support is unlikely. The long-term target is parity*.

Australian Dollar US Dollar

* Target calculation: 0.90 + ( 0.90 - 0.80 ) = 1.00

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