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There are significant hot zones waiting for traders at 8:30am, 9:00am, and 9:15am EST this morning. The most major of which is the PPI at 8:30am and the TIC Report at 9:00am. It's no surprise that with this much data on the horizon that the short term Dollar chart has consolidated in front of it.
The triangle pattern is not ideal as I had to be aggressive when looking for a uptrend line close to the current price range. Take a look at the highest of the uptrend lines and you will see what I mean. This is not a great chart in term of confirmation of the trend. Prices are piercing the resistance of the downtrend line while the MACD Histogram is still (barely) sitting below the zero line.
The consolidation is clearer on the daily chart. Prices have been rallying well since breaking the 84.00 psychological level, the MACD is well positive, and it's easy to see that currently there is selling pressure at the 0.886 Fibonacci and buying support at the 0.786 Fibonacci. Prices are also above a angled up Wave and while it is not a 12 to 2 o'clock Wave, it is angled up none-the-less. The main issue is the 85.00 level and the 85.13 level which has been tested three times within the last 24 hours.
So what do I do with this knowledge? Overall, and based mainly on the daily time frame, there is more reason to believe there will be strength in the Dollar than weakness. The two near term support levels are the aforementioned 0.786 and the lost significant low at 84.64. If the rally is to continue, keep an eye on the way prices act at 85.00 and 85.13 and more importantly if prices can established support at these two levels by retracing slightly and finding buyers above 85.00. Because of the hot zones, a pierce of these levels would not be surprising, but this can be short lived, so keep an eye out for prices to show support and not just temporarily breaking resistance.
All charts are done on eSignal Premium with the EZ2 Trade Software Collection. www.ez2tradesoftware.com
Raghee Horner is an trader with more than 15 years' experience in the markets. Ms. Horner has taught her brand of technical analysis and charting strategies to students all over the world. She is also the author of the bestselling "Forex Trading for Maximum Profit" and "Thirty Days of Forex Trading". Emphasizing charting and price action and continues to teach the tools and strategies that encourage self-directed traders to pursue the study of chart analysis and market psychology. She is a much sought after public speaker who has conducted seminars in the US, Canada, the Caribbean, and Asia. For more information on Raghee's analysis and trading email cs@raghee.com or visit www.raghee.com.
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