Daily View - Dollar Index, 15 Oct 2013

Trend: Down since Sep 2013.

Mode: Cyclic, but one Cycle Indicator has indicated beginning of down trending prices which has to be confirmed by a daily major cycle.

Cycle Analysis: A minor cycle has reached near its bottom and prices can bounce along with it. If price remains below 80.45, then 79.8 is possible in few days. If the major cycle unexpectedly turns up, prices can see 82 after crossing major hurdle of 80.76/86.

·         Sell Signal: Since cycles are on downside and there is warning of down trending, plus there is a short cycle peak, so more downside may be expected. Sell signals can be expected on a rise near 80.7.

·         Buy Signal: Pullback can be expected today.

  

Conventional Technical Analysis:

Bearish setups –

1.       Price is below 61.8% retracement of 81.23

2.       Price is below the last support of the speed resistance lines

3.       Price failed to close above peak of 80.69 (point ‘a’ closing price) at its next peak of point ‘c’.

Bullish setups –

1.       The momentum indicator (bottom panel), had given a clear re-accumulation buy signal at bottom point ‘b’, where the indicator had a higher bottom compared to its previous bottom. The re-accumulation is shown by green rising arrow in indicator panel and blue declining arrow in price plot. But there are also indications that the effect of this bullish signal is already over. The prices had been rising after ‘b’ for a week, and they even went above the peak of ‘a’ in intraday rally.

Though there are more bearish indications, but since momentum and cycles are indicating probability of a pullback so caution should be adopted in trading. One can still take chances and sell on rise near 80.7/8 with SL at 80.9. There is a crucial level at 80.45 and if price remains below this level, further downside is very much possible.

Key S/R Levels:

·         Resistance Levels: 80.76 – 80.86 – 81 – 81.2 – 82 – 82.8

·         Support Levels: 80.45 – 80.34 – 79.98 – 79.85 – 79 – 77

Risk: There can be breakout spike above 80.86 or a downside spike below 80.45.

Recommendation: More indications are for a downside, especially if prices remain below 80.45. Sell on rise near 80.7/8 with SL 80.9 and targets 80.45/80.34/80.