Greenback weakness. Really?

• Posted by Raghee Horner
• on November 28th, 2011

No. not really.

It’s a matter of (bearish) perspective as the 80.00 level remains elusive and ready to put on the pain if the bulls venture toward it. The level has been broken but momentum faltered soon after. If you’re looking at the shorter-term, intraday charts of the day, the dollar’s weakness seems much more impressive than it really was as compared to the shallow pullback seen on the daily.

The (bullish) dollar perspective is that we’re looking at a morning following a record-breaking shopfest filled with more Black Friday deals (that seemed to start Wednesday no?), pepper spray, and random midnight stampedes that rivaled a general admission concert. Europe spat up some bullish headlines and no clarity and the lack of clarity – as we already know – is the real buzzkill. This is today. Tomorrow brings the shopper’s remorse: Go broke saving money. 

I’m not trying to put a damper on the equities rally but I am interested in the reality of this risk appetite and how long stomachs will be growling. Probably not long.

The U.S. Dollar Index $DX_F did not even make the shallowest of retracements, falling well short of the 23.6% Fibonacci level.

The U.S. Dollar’s $DX_F weakness today was not impressive and not surprising considering the 80.00 major psychological level overhead. The brief break of 79.00 looked promising for the bears but lacked enough momentum and subsequent resistance at the “00″ to keep the greenback pressured. But don’t ignore today’s doji candle which could signal a potential top in the uptrend…IF risk appetite can hang around.

The doji left behind in today’s session should none-the-less be respected as a move lower through 78.92 would not only be a major psych level break but also confirm a minor high reversal.

Interestingly my afternoon was fueled by dollar-strength…

The five-minute $DX_F chart shows just how much the bulls took back control of the dollar once the greenback hit 78.95. The support surrounding a major psychological level is five pips above and five pips below and this bounce showed just how much support kicked in as the 79.00 was tested.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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