My trades have in some way been influence by the U.S. Dollar Index’s continued uptrend, just over two weeks ago I wrote why that the pullback to the 20 period SMA close was simply a correction and that the greenback would continue its bullish ways. And it did.
So here we are again, another pullback within the context of what is still an uptrend. This time however I am going to be a little more cautious about my upside expectations.
I still expect there to be support within the 34EMA Wave however I am concerned about the ability for the greenback to press to higher highs; there was a great deal of congestion in front of today’s correction and for that reason, there is a greater chance of a market trend transition into perhaps distribution.
Remember that the U.S. dollar is still in an uptrend so to be bearish HERE would be premature and unjustified.
The U.S. Dollar Index has pulled back to the support of the 20 period SMA close this morning on more bullish headlines out of Europe.
This trend in the euro is headline-driven so the question then will be if the IMF is unsuccessful in getting and then lending (up to) another $500 billion, could this be where the euro’s climb ends?
In other words, has the short-term risk picture improved as much as it’s going to?
If so, the timing would put the EUR/USD right at the 20 period SMA close resistance within its daily downtrend.
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