Danske Research Team
Danske Bank A/S
This week we present one strategy: stay long USD Index
USD Index – Major multi-year base projects gains to 104.50
Strategy Summary – Stay long or buy into any dips for long-term gains to 104.50. Place a stop under 79.906.Note that technical recommendations can diverge from recommendations based on fundamental research.
USD Index – Major multi-year base projects gains to 104.50
Strategy Summary – Stay long or buy into any dips for long-term gains to 104.50. Place a stop under 79.906.
The USD Index has broken 85.590, the trendline that runs through the 2009 and 2010 peaks. Above this point will complete a major multi-year reversal pattern and tightening band. This follows the long-term bear cycle which, commenced from the 2002 peak at 121.02 and ended at 70.698 in 2008. Although the Index has already had a sharp upswing, following an earlier 12-month reversal this strength could only just be the start of what has the potential to be a very powerful longer-term bull cycle.
MACD is supporting/confirming the reversal structure and initial strength is favoured to test the 88.708-89.921 region. This area encompasses the 2009 and 2010 peaks and 38.2% retracement level of the 121.02-70.698 decline. Moderate levels then lie at 92.630 and 94.130, ahead of 95.859 and 101.797, the 50% and 61.8% retracement points. Further out, however, the reversal and tightening band projects gains to 104.50.
Immediate support rests at 83.864, although only a loss of the former 12-month reversal ceiling at 81.020 neutralises the current positive outlook.
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