Monday, October 26, 2009

Dollar Close to Confirming Bottom - EUR/USD Needs Break of 1.4828

The US dollar is showing the type of strength needed to confirm a bottom as I mentioned on Friday, and that the british pound exhibited earlier which evidently signaled what the dollar was about to do this week as I projected. The above 2 hour EUR/USD chart shows the bullish euro move against the dollar wave count as complete, and the straight line down signifying the dollar's strength against the euro today. A break of the previous wave 4 low at 1.4828 would be a strong indicator that the EUR/USD had formed a top, and therefore the US dollar had formed a bottom.

The dollar is important to watch because a dollar bottom means a stock market top most likely.


GoodVibe said...

Todd, I believe it's a forgone conclusion now. Any upside in the Euro should be sold and any downside in the US dollar should be bought. To see both sides, stops could be put at new high (Euro) and new low (dollar) unless it is a wash out move. I don't favor calling anything "forgone conclusion" but this one really deserve it. Many people overstayed their welcome in he camp of selling dollar and buying bubble. Don't you think? :) Thanks for your blogs. Always nice to check them out.

Todd S said...

You're braver than me, calling a dollar bottom right now, however I do feel it's highly likely the bottom is upon us and today's action was a solid indicator of that. However it's not confirmed qutie yet in my view. Lots of traders in currency forums I visit are selling the dollar rally. This of course is good because as long as people try to fade the dollar rally, the rally will continue.

Thanks for the comments!