On Wednesday, the December U.S. dollar-index futures (DX Z0) hit a fresh six-month low following a downbeat FOMC statement Tuesday afternoon that hint more quantitative easing is ahead, which is dollar-bearish. The dollar index is a basket of six major world currencies weighted against the greenback.
The U.S. dollar index bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next downside price objective for the bears is to produce a close below solid technical support at
79.00. Bulls' next upside price objective is to close prices above solid technical resistance at 82.00.
The value of the U.S. dollar is one important "outside market" that has had an influence over many other markets in recent months. My friend and market analysis software pioneer Louis Mendelsohn has been studying this markets relationship phenomenon, called Intermarket analysis, for decades. No trader should overlook or underestimate the importance of the Intermarket phenomenon.
From an Intermarket analysis perspective provided by VantagePoint Intermarket Analysis software, it also appears there will be some more downside price movement in the U.S. dollar index in the near term.
VantagePoint is a valuable trading tool from which a trader can glean clues on potential near-term price trend changes or continuation of present trends. The near-term clues VantagePoint provides can and do give a trader a key edge.
Note the VantagePoint daily bar chart for the December dollar index. The Predicted Medium Term Crossover study shows the blue predicted 4-day exponential moving average is below the actual black 10-day simple moving average close, and both lines are trending lower, which is a near-term bearish signal.
The Predicted Medium Term Crossover is the predicted 4-day exponential moving average of typical prices two days ahead (P4EMA+2) crosses above or below the actual 10-day simple moving average close (A10SMA).
Also, see at the bottom of the daily chart for the December dollar index that VantagePoint's Predicted Neural Index (PIndex) is also in a bearish mode, with a reading of “0.” The PIndex is a proprietary indicator that predicts whether a three-day simple moving average of the typical price will be higher or lower two days in the future than it is today. The Predicted Neural Index compares two three-day moving averages to one another – today’s actual three-day moving average with a predicted three-day moving average.
When the predicted simple three-day moving average value of typical prices is greater than today’s actual three-day moving average value, the Predicted Neural Index is “1,” indicating that the market is expected to move higher over the next two days. When the predicted simple three-day moving average value of typical prices is less than today’s actual three-day moving average value, the Predicted Neural Index is “0,” indicating the market is expected to move lower over the next two days.
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