Dollar Breaks Support

By Colin Twiggs
November 26, 2009 3:00 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 broke through support at 75, the tall red candle indicating strong selling pressure. The short-term target is 74*, but the medium-term target is the 2008 low of 71. Expect retracement to respect the new resistance level at 75.

US Dollar Index

* Target calculation: 75 - ( 76 - 75 ) = 74


The euro broke through resistance at $1.50, offering a short-term target of $1.52* and a long-term target of the 2008 high at $1.60*. Momentum holding above zero confirms a strong up-trend (this is a new indicator due for release with the next Beta version). Expect retracement to respect the new support level.

Euro US Dollar

* Target calculation: 1.50 + ( 1.50 - 1.48 ) = 1.52 and 1.50 + ( 1.50 - 1.40 ) = 1.60

Pound Sterling

The pound found support at $1.65 and is headed for a test resistance at $1.70. Breakout above $1.70 would offer a long-term target of $1.80. Reversal below $1.65 is unlikely, but would test the band of support between $1.58 and $1.60.

Pound Sterling

* Target calculation: 1.70 + ( 1.70 - 1.60 ) = 1.80

Japanese Yen

The dollar broke through support at the December 2008 low of ¥87 after last night's close, but has since encountered buying pressure. Expect a test of the new resistance level, but the medium-term target is 84*.

US Dollar Yen

* Target calculation: 88 - ( 92 - 88 ) = 84

Australian Dollar

The Aussie dollar encountered resistance at $0.93 and has since retreated to $0.92. Recovery above $0.93 would signal an advance to the upper trend channel at $0.96*, while failure of support at $0.91 would signal a test of $0.90. Reversal below $0.90 remains unlikely, but would warn of a secondary correction.

Australian Dollar US Dollar

* Target calculation: 0.93 + ( 0.93 - 0.90 ) = 0.96

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