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USD Graphic Rewind: Converging Trend Lines Suggest Break-Out is Imminent
Written by article default Tuesday, 07 June 2011 09:53
The dollar index traded quietly on Monday after some Asian markets were closed for a holiday and liquidity was slightly lower than normal. In lieu of that we are taking a step back to gauge direction over the coming sessions and days. We have drawn converging trend lines on this daily chart which could lead to one of three eventualities. Firstly, the range in the dollar index could continue to narrow as the trend lines converge with a breakout coming only in several weeks. Second, the index could break through the falling trend line, which falls at 9700 now, as it makes a move back toward the 10,000 region. And lastly, the index could slip below the rising trend line off the recent lows, re-test these lows and potentially make a break lower toward the 9,000 mark. At present, despite our year long bullish view of the USD, don’t have a near-term bias and are awaiting clearer directions and also watching Eur/Usd closely to see if it might form a lower top ahead of resuming its downward move, until clearer signals appear we are sidelined.
Written by Jonathan Granby, DailyFX Research Team