Monday 18 October 2010

USDX & Euro$- Outlook & possible reversal date

If you have been following my recent posts on the US $ Index and the Euro (remember that the DX is heavily weighted to the Euro by more than 57 %) you will know that i am getting a bit nervous with the Euro after Fridays important touches on various long term lines. I had all but given up on my USDX chart and the reaction line which price passed straight through but tipped its hat in respect by retouching the RL ( even though price often follows a reaction line on the 'far' side after passing through it). After touching the sea green CL the DX price has rallied. We are seeing a RT in the Euro/$ but will it turn into a full scale rout!? Using the forward reverse count on the DX (as per John Crane) which can often yield surprising results as in the previous 83 bar count i have calculated an expected reversal date of this Friday for this count (in pea green)- However this is no easy or simple count as the BC reaction swing high at 'C' is a bit messy and is part of a period of classic market consolidation (marked on the chart between two lines) This particular trading method/theory is not reliable enough to trade as a system but is another tool in your 'box'. Until then it would not surprise me to see the Euro strengthen but i will wait with baited breath to see if price will attempt to breach 1.4000 again &/or if towards the end of this week we see a reversal.

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