The US dollar has been falling during the session on Monday, but has found a bit of support near the 112.50 level again. This is an area that has been both support and resistance as of late, and I believe that the hourly chart is starting to show that the buyers are returning. If we get more of a “risk on” move in the markets, especially the treasury markets, this market should continue to go higher. It tends to have a positive correlation with the S&P 500, so keep that in mind. I believe in buying the dip, and think that we will eventually go looking towards the top of the recent consolidation area which is the 114.50 area that extends towards the 115 level.
I believe that there is a massive “floor” near the 108 level below, which has been the bottom of recent consolidation. I think that the markets although choppy, should offer plenty of value for those willing to pick up the dip. I think that the pair will eventually break above the 115 level and go looking towards the 120 level, but that’s a longer-term call, obviously. I don’t have any interest in shorting, this market seems to be far too resilient, and the recent balance that we have seen from the 108 level has shown a real strength. Because of this, I remain bullish but also cautious. I think that adding slowly to your long positions will be the best way to play this market, giving you the ability to ride out the volatility, and take advantage of profit at higher levels. Eventually, this market will break out to the upside and continue much higher. If we were to break down below the 108 level somehow, that would be extraordinarily negative.
Written by FX Empire