USD Index: Back Above 80 With 80.50 In Sight
Matt Simpson | Dec 13, 2013 02:21AM ET
Looking at the price action alone it is hard to decipher if we are witnessing a rounding top before a bearish acceleration, or simply a deeper bearish correction before an acceleration of losses.
Assuming the swing high of 81.50 is indeed a top, when you compare it to the previous 2 swing highs 82.60 and 84.75 the timing of the recent swing high seems plausible. So, taking this assumption any gains towards the 80.50 resistance zone could provide additional shorting opportunities if accompanied by bearish setups.
However, on the near-term I think a test of 80.50 is likely so the USD strength across the majors could be considered for intraday trading for the remainder of this week and possible next week. Yesterday's closed confirmed a Morning Star Reversal pattern at support, which I find tends to be a reliable swing pattern.
I had previously been anticipating continue USD strength whilst we were trading above 80.50, I have not removed this scenario, it has been bought into question and I would need extra confirmation from price to be convinced the run-up from 79.00 lows was indeed impulsive. The main trouble I have now is the levels of resistance it has to face to get above 81.50, and even then we have the broken trendline to break back through.
So, moving forward I favour near-term USD gains and will reassess on Monday when I see the weekly close price. A break below 79.50 opens up 79.00.
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