Dollar Finds Support

By Colin Twiggs
November 12, 2009 2:30 a.m. ET (6:30 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 support at 75, the blue candle astride the support line indicating pressure from buyers. A rally above 76.5 would indicate that the primary down-trend is ending, but continuation of the down-trend is more likely and failure of support would offer a target of 74*.

US Dollar Index

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


The euro is testing resistance at $1.50; two doji candles at the resistance level indicate uncertainty. Breakout above $1.505 would signal another primary advance with a target of $1.52*, while reversal below the lower channel line would warn of a secondary correction — confirmed if support at $1.47 is penetrated.

Euro US Dollar

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

Pound Sterling

The pound retreated below the new support level at $1.66; penetration of the rising trendline would warn of a test of support at $1.60. Recovery above $1.66 would offer a target of $1.74*, while failure of support at $1.58 would signal a primary down-trend.

Pound Sterling

* Target calculation: 1.66 + ( 1.66 - 1.58 ) = 1.74

Japanese Yen

The dollar broke through support at ¥90, indicating a decline to the December 2008 low of ¥87. A long tail on the latest candle indicates buying support, however, and recovery above ¥90 would signal another test of the upper channel border. Breakout above ¥92.50 remains unlikely, but would signal a primary trend reversal.

US Dollar Yen

Australian Dollar

The Aussie dollar is hesitating at resistance at $0.93. Follow-through above $0.9350 would signal an advance to $0.96*. Reversal below $0.89 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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~ Thomas Paine, The American Crisis (1776 - 1783)