Ahead of the holidays, there is no change in the longer term bullish view in the $ as a major low is seen in place, and with at least a few months (and likely longer) of gains ahead. Nearer term however, the buck appears to be within a week or 2 period of correcting lower, after the last few weeks of sharp gains. Note too, given the thin and thinning market conditions through the end of the year, there is some risk for a fairly deep retracement, before resuming the bigger uptrend. This was the reasoning behind getting very aggressive with trailing stops on the emails (for the $ versus most currencies) over the last week.
More specifically in the case of eur/$ in the Dec 17th email, affirmed the short position (sold on Nov 30th at 1.5000), but warned of the rising near term risk and said to use a very aggressive stop on a close above the week long bearish trendline (Dec 11th high) to compensate. Broke above there yesterday (then at 1.4315, closed at 1.4335), flattening the short position with a 685 tick profit (nice way to end the year). For now given the thinning conditions, would let this week or 2 period of correcting higher play out (or can trade shorter term ranges with an upward bias), but with the expectation of a bigger picture chance to reshort for new lows after (and likely at higher levels). Key resistance levels to watch are 1.4560/75 (38% retracement from the late Nov/early Dec double top at 1.5140) and 1.4665/80 (50%).
Longer term, long held view that the market is within an extended period of wide ranging, remains in place. Warned last March (and the market just above the 1.2335 base) of the potential for gains back to the Dec 2008 high at 1.4715 and even a bit above. Reached there in Nov, testing the ceiling of the year long bullish channel, and have been warning since of the potential for declines toward 1.4125/75, 1.3750/00 (50% retracement from the Oct 2008 low at 1.2335) and even the base of the channel (currently at 1.2750/00, see “ideal” scenario in red on weekly chart/2nd chart below). So for now, would maintain the longer term, bearish bias (switched on Nov 2nd at 1.4825).
*A final note, emails and updates to the scrolling commentary will be somewhat limited due to the Holidays (most likely resume later on Tues next week, Weds and Thursday).
HAPPY HOLIDAYS
