Dollar Fall Continues

By Colin Twiggs
October 15, 2009 6:00 a.m. ET (8:00 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 76, signaling a down-swing to test 74.50*. Recovery above 77.50 is most unlikely, but would indicate that the primary down-trend is bottoming.

* Target calculation: 76 - ( 77.50 - 76 ) = 74.50

Dow Jones Industrial Average

The Dow is testing a key resistance level at 10000. Breakout would signal another primary advance, while reversal below 9500 would indicate a secondary correction.

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

Euro

The euro broke through resistance at $1.48, signaling an advance to $1.50. Reversal below $1.48 is unlikely, but would warn of a weakening up-trend. In the long term, breakout above $1.50 would signal an advance to the 2008 high of $1.60*.

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

Japanese Yen

The dollar respected short-term resistance at ¥90 and is likely to test the 2008 low of ¥87. Breakout above the declining trendline (and ¥90), however, would warn of a rally to test the upper channel border. In the long term, breakout below ¥87 would offer a target of ¥80*.

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

Australian Dollar

The Aussie dollar broke through its key resistance level of $0.90 against the greenback, signaling an advance to the upper channel border around $0.98. Expect retracement to test the new support level, but failure of support is unlikely. The long-term target is parity*.

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

Help to keep this newsletter free! Forward this link to friends and colleagues 

Know what you want to do, hold the thought firmly, and do every day what should be done, and every sunset will see you that much nearer to your goal.

~ Elbert Hubbard