08/07 - USD/CAD position adjusted

08/06 - DXY confirms hourly double bottom

The US Dollar Index has confirmed an hourly double bottom just below the December 2008 spike low while the EUR/USD confirms a double top. The measured move objective for both formations coincide with a 38.2% retracement and the 10-day MA. It may offer an attractive entry point for dollar bears and could possibly mark a throw-back off a EUR/USD 2-month internal trendline. Meanwhile, since the DXY trades below the 10-day MA, there remains a chance for a panic-type sell-off towards 75.00/76.00 (near 78.6% retrace/Q3 2008 base) if this week's double bottom is cleanly lost.

08/06 - Position/orders adjusted

08/05 - DXY stabilizes as stocks distribute

The US Dollar Index has managed to stabilize as equity markets finally put in an overdue distribution day. The S&P and Dow Jones Industrial Average both broke below rising wedge support on Tuesday on stronger volume to possibly hint of a short-term correction. Meanwhile, the DXY continues to consolidate near the December 2008 low, but remains well below key moving averages (10 & 20-day MA's). 4-hourly studies suggest temporary basing, but will require a move above 77.85 (Tuesday's high) to confirm a near-term double bottom. Below this week's lows at 77.43/45 could trigger a panic sell-off towards 75.00/76.00 (near 78.6% retrace/Q3 2008 base). If equity markets continue to correct, however, the Greenback should receive a well-deserved boost and revisit last week's pivot (78.22/30).

08/05 - USD/CAD revised buy strategy

08/04 - Loonie's possible wedge formation

The USD/CAD weakened Tuesday on the back of comments regarding excessive currency appreciation. Bullish 4-hourly MACD divergence invoked a corrective rebound that has since stalled near last week's swing low at 1.0740. It appears that this pair may be forming a falling wedge, typically a reversal pattern. A relatively low risk entry point would be 1.0583, where wedge support and a key fibonacci retracement coincide. Meanwhile, the bearish structure remains intact while the Loonie trades below the 10-day MA (now at 1.0829) and a clean loss of 1.0583 could trigger a capitulation-type move towards the 1.04 region.

08/03 - DXY slammed to fresh 10 month lows

The US Dollar Index has fallen to a fresh 10-month low as risk appetite continues to flourish. Last week's rejection at a key fibonacci retracement and the 20-day moving average hinted that the brief recovery was about to end. The Cable's (GBP/USD) subsequent ascending triangle breakout triggered further losses, causing the Greenback to fall back towards the once hopeful double bottom base. Monday's follow-through has been tempered by demand near the December 2008 spike low. The obvious support at 77.64 could allow for a pullback back towards last week's base at 78.22/30, which would present a good opportunity to short. A capitulation-type move could be at play towards 75.00/76.00 (near 78.6% retrace/Q3 2008 base) until the 10-day MA is broken to the upside.

The EUR/USD found support at a key fibonacci retracement and the 50-day MA last week to establish a fresh 2009 high on Monday. The brief relapse tested the top-end of last week's 1.40-1.42 range. The ensuing rally to 1.4444 has validated the symmetrical relation to the previous 400 pip range and represents a 61.8% extension. The 78.6% proportion comes in at 1.4514 and the equality range target or 100% proportion is 1.46. This level is also the 61.8% retracement pivot of the 2008 high & lows and should provide decent resistance since both the 38.2% and 50% levels acted as very relevant pivots. A pullback to the 1.4289 region would be the third test of a two-month internal trendline and would be an attractive long entry point. Meanwhile, the medium-term bullish structure remains intact while this pair trades above key weekly RSI pivots and the 50-day MA.