Is It Time To Buy The US Dollar?
Yesterday we wrote about how we feel that the Euro is headed lower due to overvaluation, the technical picture, and market positioning. In light of that we thought that we would show the technical picture of the US Dollar index.
In the chart below you can see a chart of the US Dollar index all the way back to 1971. In the lower panel we have plotted the distance from the 200-day sma shown as a percentage. Not surprisingly the index rarely strays more than 10% away from the 200-day. In fact since 1971 it has only gone above or below by 10% 11 times. Since 1992 it has only breached the 10% level once back in 2008 in the midst of the financial crisis. Right now we are close to the lower levels of a typical move. Could it go lower? Of course the answer is that yes it can, but if history is any guide we doubt that we have much lower to go before a decent sized bounce. (Click on chart twice to enlarge)
US Dollar Index
Happy Trading,
Disclaimer-In The Macro Trader newsletter we are currently short the EUR/USD
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Title: Is It Time To Buy The US Dollar?
URL: http://www.themacrotrader.com/2009/12/10/time-for-us-dollar/
