Dollar fails again above 93! When should the bulls get worried?
On Wednesday, the Dollar Index topped at 93.19, and with the help of the market reaction to the CPI report, the bears restored control and pulled the index, again, below the 93-point landmark. After a shy recovery attempt on Thursday, the drop was resumed, even stronger, on Friday. (On Wednesday, the Dollar dropped 0.18%, On Friday, the greenback lost 0.49%).
So, is it time to worry for the Dollar bulls? Not yet, but that does not mean they do not need to be on alert!
Topping twice at levels very close to each other is always a reason to expect the prices to drop. Wednesday hi was exactly equal to July 21st hi. The same high, exactly 3 weeks apart, is definitely a bearish observation, but we are still trading above the main rising trendline on the daily chart, and above the MA 35/49 band, which are both bullish. However, it is very important to specify a level where this bullishness will no longer be valid.
There are 2 short-term retracement levels that are very close to the bottom of the MA band & the rising trendline on the daily chart: The Marji 71.4% level at 92.18, and the harmonic 78.6% retracement level at 92.08. This last level is exactly equal to July 9th lo, which the index used as a cushion to reach its 4-month hi less than 2 weeks after that.
The area between 92.18 & 92.08 is the one that needs to be watched in order to estimate the health of the short-term uptrend for the Dollar Index. As long as the bottom of this area is not clearly broken, the uptrend will be expected to continue trying to overcome the resistance levels above the 93-point landmark and move towards levels not seen early November, but once 92.08/18 is broken in a clean & clear way, the short-term uptrend will be interrupted, and the bigger-picture downtrend will be resumed, so keep your eyes on 92.08/18!
In case we keep trading above this area, or even if we test it & it survives, going back above 92.60 will be the first sign that the Dollar is going to resume its medium-term recovery attempts.
Munther Marji CMT
So, is it time to worry for the Dollar bulls? Not yet, but that does not mean they do not need to be on alert!
Topping twice at levels very close to each other is always a reason to expect the prices to drop. Wednesday hi was exactly equal to July 21st hi. The same high, exactly 3 weeks apart, is definitely a bearish observation, but we are still trading above the main rising trendline on the daily chart, and above the MA 35/49 band, which are both bullish. However, it is very important to specify a level where this bullishness will no longer be valid.
There are 2 short-term retracement levels that are very close to the bottom of the MA band & the rising trendline on the daily chart: The Marji 71.4% level at 92.18, and the harmonic 78.6% retracement level at 92.08. This last level is exactly equal to July 9th lo, which the index used as a cushion to reach its 4-month hi less than 2 weeks after that.
The area between 92.18 & 92.08 is the one that needs to be watched in order to estimate the health of the short-term uptrend for the Dollar Index. As long as the bottom of this area is not clearly broken, the uptrend will be expected to continue trying to overcome the resistance levels above the 93-point landmark and move towards levels not seen early November, but once 92.08/18 is broken in a clean & clear way, the short-term uptrend will be interrupted, and the bigger-picture downtrend will be resumed, so keep your eyes on 92.08/18!
In case we keep trading above this area, or even if we test it & it survives, going back above 92.60 will be the first sign that the Dollar is going to resume its medium-term recovery attempts.
Munther Marji CMT