Dollar Index And Dow Technical Analysis

Dollar Index

Yesterday was an important day for the dollar as it gave up to break the 40day average and close below it. Last week i discussed why the Euro could bottom out and start its move toward 1.30, so has it? The rising euro is the clearest reason for a falling dollar. This week however I remained on watch for upside in the dollar because even as the dollar closed down last week, completing 3 waves up, wave c<a and so wave c was short.

So there is always risk of extension; that can never be ruled out. The dip in the dollar therefore can either be wave 3 down long term or an x wave within the larger counter trend move up. Supports are 93.41 at the 20wma and 92.45 at 61.8% of the rise so far. If wave 3 down starts right away then we are looking for 83.50 next. Sentiment for the dollar bulls was at 87% at the recent high but not extreme, also positions are more short than long. These were other reasons to wait. That said the bigger view is that the dollar is in a bear market so any move towards a declining trend should be taken seriously. Also weekly momentum is back above zero [see on chart] so the up cycle has done its minimum requirements.

Work with the presumption that the larger trend down has started till there is evidence otherwise. If the larger trend is down for the dollar why did commodities give up overnight? Maybe it was a knee jerk reaction or just time for a correction in all dollar assets.

DOW

Dow hourly charts indicate a 5 wave decline from the 5th wave top. The fall broke the rising channel. A brief bounce in wave 2 is all that we should get before wave 3 down.

Dollar Index, USDJPY & USDINR Technical Analysis

DOLLAR INDEX

The dollar index completed its first impulse wave since the bottom in Sept and at the wave IV high of the previous decline. So we are dipping in wave II down and should find support at 93 or 92.60 after which wave III up may start.

USDJPY

USDJPY completed a 5 wave advance and is pulling back in a minor wave ii. 38.2% near 111.20 is a normal pullback. 110.50 and 109.70 are the next two important retracements.

USDINR

USDINR – 3 wave correction complete in a channel the next move should be higher. Wave v up should be next and may either test the wave iii high at 65.90 or stretch as far as 66.45 before it is complete.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd