Tuesday, December 6, 2011

The Dollar can't buck, yet

I have drawn a trendline which acts as resistance to the price action seen lately in the dollar. The more important note of this chart is the widening spread between the moving averages. Look at the last time prices were this far streched from their 200 day moving average (reffering to the last minor high). Now look at the 50 day moving average from its 200 day. It seems even more spread out now than before. When prices stretch farther away from their 200 day moving average, shorter term moving averages, such as the 20 and 50 day follow suite with price and create a spread or "length of distance" as well. The relationship between the moving averages and price have a "rubber band" effect in that the farther away price is streched from their moving averages a snap back/violent retracement is expected.

1 comment:

  1. Based on the snap back are you suggesting that the dollar will go violently lower?