USD Trend & Price Reversal

Written by Research | 22 December 2009

Market View Vol. 30

Fundamentals triggers the Move!

With the full backing of Abu Dhabi in supporting Dubai with a $10 Billion Dollar lifeline; has led the market in a buying frenzy from stocks to the US dollar. Risk appetite has risen altogether inspite nearing the closing weeks of the month of December.

Volumes have even increased, however these were both adjustment positions, liquidations and some stoploss orders were seen along the way up. As the negative sentiments gave way eversince the news of Abu Dhabi providing the bail out of dubai from its financial crisis. We have assumed the probablity, although the timing was incredibly early since they had until May to do so.

On a cyclical pattern, rom our previous market view on ' Tools of the Trade ' market analysis that there will be this US dollar trend reversal because of the behavioral pattern towards the end of the year that price re-adjustments and positions were a tradition. Normally follwoing where the market came from. So if it was down the next move will obviously be up. The USDX ahve shown its strength much more and at an earlier time table because of the increase risk appetite and parallel volumes to support it. As it registered a high at 77.33 as of this writing. And the EUR/USD working at 1.4531 low levels.

With that said the effects will be spread accordingly with the rest of the Foreign Currency without sparing Gold back to it low level currently working at $1113.30 and may eventually attempt some low before and after the year has closed.

USDX  DAILY CHART                              

EUR/USD

GOLD DAILY CHART

As we also mentioned before from our previous hub pages since the past few months that this cyclical market recovery for the dollar towards the year end and 1st quarter of the year 2010 may well sustain. The short trading weeks left for the year and the wavering shifts of hawkish to dovish sentiments by the Fed from the economic numbers leads to the governments stance of verbally intervention of the US Dollar still as the world's reserve currency.

A follow through in volumes has led the USDX register a 78.28 high as some traders without mentioning their surprise on the US dollars movement. Prompting some questions to pop-up as to how long can this rally last? As the GBP/USD also dropped to the 1.6078 low and the EUR/USD at 1.4322 respectively. Try to understand and learn the Fibonacci Theory as an example below and applying the theory with the USDX and the EUR/USD can only help. This is a matter of information which can be best applied in pratical trading plan while trading the Foreign exchange market.

Gold may consolidate and make some remarkable corrections both sides of the chart. Although, in the longer term outlook, the yellow metal will continue its trend upwards as it plays it's range now between $1,000 and the $1,226.38 registered high for the time being in the mid-range of 2010.

We shall maintain our outlook further towards the 1st quarter and please refer to the previous article " tools of the trade to have an overall picture which was done last December 7 2009. As we also would be taking our trading break from the market. check with us back soon.

Have a Happy Holiday this Season !