All the EMAs are in a tight bunch, indicating a lack of overall direction from the market. This means last weeks break-out was a false break-out, and we're left waiting to see that happens.
The dollar has been consolidating for the last few months in a classic triangle consolidation pattern. The EMAs are tightly bunched, indicating a lack of conviction from traders. In addition, we've already seen one false break-out to the upside over the last few weeks.
The dollar has been buffeted by the EU and Washington debt talk situation. The closer Europe has come to a deal, the less people want the dollar relative to the euro. In addition, the recent noise from the various ratings agencies about the negative impact of a budget stalemate has led to downward pressure on the dollar.
Let's take a look at the chart:
The chart shows the dollar has broken out to the downside on strong volume. However, we have yet to see the EMAs follow through -- which they wouldn't be doing at this point.
Ideally, we'd see the dollar in a relief rally sometime over the next week or so to provide confirmation of the downside break-out. This is when I'd go short.
The dollar has been buffeted by the EU and Washington debt talk situation. The closer Europe has come to a deal, the less people want the dollar relative to the euro. In addition, the recent noise from the various ratings agencies about the negative impact of a budget stalemate has led to downward pressure on the dollar.
Let's take a look at the chart:
The chart shows the dollar has broken out to the downside on strong volume. However, we have yet to see the EMAs follow through -- which they wouldn't be doing at this point.
Ideally, we'd see the dollar in a relief rally sometime over the next week or so to provide confirmation of the downside break-out. This is when I'd go short.
