Friday, January 29, 2010

Forex Fridays

Overall, the dollar is in the middle of a rally that so far has three legs - up (A), sell-off/correction (B) and a resuming of the trend (C). Let's break this down.

In the first leg up, we had some major gaps higher (1) indicating there was a fundamental shifting in supply and demand.

Prices rallied to previous highs before forming a pennant pattern (B). Prices sold-off to the 50% Fibonacci retracement level.

Prices resumed their rally (C). Along the way they have gapped higher several times (1) and broken through previous levels (2).