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Dave Floyd is a professional FX and stock trader based in Bend, OR and the President of Aspen Trading Group. Dave's approach to FX combines technical and fundamental analysis that results in trades that fall into the swing trading time frame of several hours to several days. For a free trial to Dave Floyd's Daily Forex Alerts click here.
This week's move lower in the Dollar Index (DXC) has been dramatic. Naturally the question remains, do we go lower from here?
While this is certainly the ‘higher probability’ outcome, a pull-back/rally would be the better scenario from which to establish short positions. The current technical backdrop (i.e. oversold) makes establishing all but longer-term shorts a bit risky.
The hourly chart of the DXC below highlights the present technical picture. The inverse Head & Shoulders suggests that a break above the 88.20-30 level should allow for a move back towards 88.45-60 is not out of the question. Combine that with a bullish RSI divergence and oversold stochastic on the daily chart and as mentioned above, shorts here are a bit tricky.
We continue to remain very selective as trading conditions have been tricky, we are however short AUD/USD expecting to see a move lower back towards .7480-90.
Some other key levels we are watching for are as follows:
EUR/USD: 1.2225 & 1.2330
GBP/USD: 1.7840 & 1.7920
USD/CHF: 1.2585 & 1.2690
As always, feel free to send me your comments and questions.
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