Friday, November 7, 2008
Forex Friday
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Notice the following on the weekly dollar chart:
-- Prices formed a double bottom in 2008 with the first bottom occurring at the end of the 1Q and the second bottom occurring at the end of the 2Q/beginning of 3Q.
-- Prices have increased 22% since early July
-- Prices are currently at levels not seen since 2006
-- Prices are above all the SMAs
-- All the SMAs are moving higher
-- The shorter SMAs are above the longer SMAs
-- The market is technically overbought right now
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Notice the following on the daily chart:
-- Prices have clearly been in an uptrend since the beginning of July
-- Prices have continually moved through upside resistance
-- Prices have used the 10, 20 and 50 day SMA as technical suppot
-- All the SMAs are moving higher
-- The shorter SMAs are above the longer SMAs
-- Prices are forming a consolidating triangle around the 10 day SMA
-- The market is technically overbought right now
Bottom line: both of these charts together imply we'll see a consolidation after a strong multi-month rally.