The latest drop in the dollar index is zeroing in on converging weekly trendlines in the 81.05-20 band which overlap monthly envelope supports in the 81.15 area. Weekly momentum studies do show a bit of bullish divergence in the sense that current readings are not much below those seen last December despite the greenback being much lower.
This means that the downside force currently in place is not quite as strong as might appear to be the case from an examination of the chart alone. That definitely does not mean we are endorsing purchasing the dollar at these levels, but think it is important to point out that some slowing of pressures could be developing as floors from late 2004 are approached. Weekly momentum has not bottomed out by any means, and any near-term bounce will attract ample selling. Daily resistance starts at 81.66-76.
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