Follow up on US dollar Index Chart
Friday 06th of March 2009 07:58:50 PM
Gosh I must be crazy trying to call all these tops and bottoms. I made a bottom picking call on the Dow Jones Industrial Average and now I am still calling for a top in the US dollar index!
Again I absolute hate trying to call tops and bottoms and who doesn’t. It is not a very high probability business. But sometimes if you watch markets closely enough you can make a good case for either a top or a bottom. In this case we are looking here once again at the US dollar index chart.
This is actually the weekly US dollar index chart in candlestick formation. What I find interesting about this chart is that once again we have what appears to be an indecision doji weekly candlestick. A doji candlestick is something you want to watch out for when following price charts especially when they show up after a significant uptrend or downtrend. In this case we have an uptrend in the US dollar index since the December of last year time frame. But again keep in mind that this is a weekly chart and so the time implications are somewhat grander than daily charts.
Anyway the reason the doji is important is because it could be indicating a change in trend, in this case to the downside for the US dollar index. The two orange arrows show where two dojis appear. The other one that happened last year was the precursor (is that a word???) to a 4 week devastating plunge for the US Dollar Index.
We will have to see if it happens this time again. But even if it doesn’t, a weekly decline next week for the US dollar could potentially make the statement this this new marginal high was a failure and a false break to the upside which has bearish implications going forward.
Incidentally a plunging US Dollar for the next 4 weeks would fit in perfectly with a US stock market major major bounce as I alluded to at the beginning of this post (see link at the top of this post). It would also fit in quite nicely with a mega breakout in the gold price to new all time highs.
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