Thursday, November 18, 2010

U.S. Dollar - Short Trade Setting Up

Above is a daily chart of the U.S. Dollar and in the lower panel is the stochastic oscillator.  The dollar has been trending lower since June which means we are in a downtrend and we should be looking to short rallies. You'll notice I used a 60 bar moving average on the above chart mainly because this average has done a nice job at containing most of the pullbacks against the prevailing trend. As you can see in the above chart, the dollar has now rallied to the average and appears to be heading lower. The stochastic oscillator has also turned down adding confirmation to a possible short. In my opinion if the dollar takes out Tuesday's low, that will set the stage for a move lower with a downside target of at least a test of this month's low. Lets see what happens!

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