Wednesday, November 26, 2014
Dollar (DXY); Candle Quick
We saw some spotty technical developments earlier this month that warned of a possible break in the bullish advance. There was no immediate breakdown and instead, on Friday November 21st, the dollar index jumped to a new 4 year high. Price action since has removed more than half of that session’s open to close gain and today’s weaker prices may confirm the bearish implications of that reverse.
I have been privy to some strikingly good commentary on the dollar and absent have been any disparaging words for dollar projections. There is not word I would not have agreed with in these writings and am equally confident of the longer term bullish prospects for the U.S. dollar. These expectations are born of better economic prospects and a Fed that is likely to be first of the Majors to initiate a policy rate rise.
However, given the widespread confidences in this bullish dollar prospect, I wonder if the marginal dollar bull has not already been collected into the fold. If so could a weaker than expected U.S. holiday sales season, in high gear this weekend, knock the dollar temporarily off its pedestal? Maybe the jump in weekly jobless claims today, to a level not seen since early-September, might jar a marginal dollar bull.
A bullish trend defends newly attained ground. The 4 year high seen on Friday has not been defended by the bullish contingent. Until the bullish contingency is more willing to defend the trend, we would encourage buyers to wait for better bullish entry levels.