In Tokyo on Wednesday  Secretary of the Treasury Tim Geithner once again vigoroulsy stressed the need for a strong Us dollar. Where have i heard this before? I feel these meaningless (and completely ineffective) comments need to be in those Saturday Night live skits with Amy Proehler. You know the skits where Ms Proehler rants against a recent  inane situation by repeatedly asking “really?” while dripping sarcasm.     The US dollar has gone straight down since early 2002 inspite of constant lip service by both the current administration and the previous one.  The daily chart of the dollar has shown many ABCD buy set ups in recent weeks but none have triggered more than a slight bounce in the market. The current down trending parallel channel remains firmly in tact. Until the market breaks out of this channel it’s difficult to to call a bottom.

In fact,   bear trends as emotional as this slide in the Dollar often need a dramatic capitulation before a bottom is found. While the sell off has been pervasive it has been orderly.  So at this point i can’t say that i’ve witnessed the emotions i expect to see at the lows. By stepping back and looking at the bigger picture we see that while a break below the 2008 lows will be a headline event…there is strong monthly support just below those lows. A 1.27 extension of the up swing from 1994 to 2002 comes in at approximately 68.00 as does a more recent ABCD buy pattern. If the wheels come off the dollar and this slide morphs into an avalanche….keep an eye on that level for technical signs of a reversal.

Kevin Riordan

This entry was posted on Wednesday, November 11th, 2009 at 10:44 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.