The Roman philosopher Seneca wasn’t talking about the stock market when he wrote that “T...
How to Read the Signs of Change—Trend Change, That is… (Part 9)
03/26/2009 12:01 am EST
Let's see how the US dollar is doing so far in 2009 and try to determine where it will go next—again, by looking at the euro.
You can see that the lower base line did not hold (Again, I left it for you to draw in). Once price penetrated this base line just above $1.50¸ the selloff commenced. There was a brief pause at the $1.40 level and a pullback that tested a short-term base line. When that short-term base line successfully acted as resistance, price turned lower again, and this minor base line became the major “line of action.” Price fell sharply, penetrating 1.25 dollars per euro FX, and then rallied to nearly test this major line of action before turning back down hard. There was a smaller base line test on the way down, but it failed to act as support, and the euro fell back to the $1.25 level.
There have now been a series of higher closes in the euro FX against the US dollar. Have we seen a change in direction? My heart tells me the dollar will suffer in the long term because of our current fiscal policies, but the chart in front of me shows no clear sign of a change in behavior. Remember this: We can “want” the market to do something, but the market is always right! Until the market shows me a change in behavior, my hopes and wishes are just that—hopes and wishes. I am a trader, so I trade what I see, not what I want or wish to happen. The market will tell me when a change in behavior has occurred. I just need to be looking at the charts with an open mind and a clear head.
I wish you all good trading! Stay safe and close to those you love in these difficult times.
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