In the Oct 14th email on the $ index, said that no important top was in place with eventual gains back to 83.20 (Oct 10th spike high) and even above. The market rallied from that day (unfortunately did not reach the buy area), surging past the 83.20 high and today into resistance at the ceiling of the bullish channel since Sept (currently at 85.90/00, see daily chart below). Though this area may provide temporary resistance, the shorter term term upside patterns of the $ are not “complete” (see shorter term charts at www.fxa.com/solin/comments.htm ), and suggests a resumption of the gains to new highs after. For now, would buy 84.75/85 and initially using a wide stop on a close below the base of the month long bullish channel (currently at 82.65) as there is risk for a deeper correction/longer period of consolidating before the new highs are seen.
Longer term, the market has indeed surged above longer term resistance at 83.90/84.25 (both the ceiling of the multi-year bearish channel and a 62% retracement from the Nov 2005 high at 92.60, see weekly chart/2nd chart below). Though overbought after the sharp gains since the July low at 75.90 and even the upside since the March low at 70.70, the shorter term upside is not “complete” and suggests at least some further upside ahead. Don’t forget that larger, more important tops start with smaller ones (still not in place).
Next upside resistance/targets are seen at 87.30 (July/Oct 2006 highs) and 90.00 (38% retracement from the July 2001 high at 121.00), while important support is at the recently broken 83.90/84.25 resistance area.
