The Dollar Index Move Was Important
- Posted by Greg Harmon
- on September 19th, 2013
The Fed did nothing yesterday, like they said they would, and the markets moved higher. Maybe more important the US Dollar Index ($DX_F, $UUP) took a massive dive lower. In fact it made a new 7 month low. Currency Wars in full force. The move now brings the Measured Move lower to 78.58 into play. The daily chart below shows that is a pretty important support level. A broad channel between 78.5-79 and 84-85 has been in place for over 2 years. Are we in a new era of a
major downturn in the Dollar Index? Maybe. The clues come from the monthly chart. The Index is testing support of the symmetrical triangle with the Simple Moving Averages (SMA). The indicators are lining up to support a move lower as well. The RSI is breaking the mid line and the MACD is about to cross negative. It is only halfway through the month so this could all change but a continuation through support would signal a major target lower at 40. Will it get to 40? Wow that is a long way and hard to think about. But think about what would force that to happen? A major lack of faith in the currency, loss of reserve currency status, a ramping up of the currency debasing against other countries trying to do the same. These are not that far fetched. A sad case but becoming more possible everyday.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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