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U.S. Dollar Needs to Form Support Base

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Nov 4, 2010.

  1. forextrends24

    forextrends24 New Member

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    Today’s sample of Forex Analysis from ForexHound.com

    Sure there was volatility, but everyone expected that but for the most part, the Fed’s policy statement announcement in my opinion was a non-event. Technically, shortly after the news was released, the Dollar Index plunged to a new low, but the quick rebound to almost unchanged for the day indicates to me that the move was most likely triggered by thin trading conditions.

    Although the rebound did not produce a closing price reversal bottom, it did come close, indicating that perhaps the shorts have run out of gas or there are buyers out there. Spike moves are usually not good indicators or major bottoms unless there is follow-through to the upside. This makes Thursday an important day.

    The U.S. Dollar may have hit support on Wednesday, but a spike bottom is not a good sign of a major bottom. The Greenback needs to form a support base because my technical works says that the height of the rally is determined by the length of the base. Without good structure rallies are likely to fail. This being said, continue to look for weakness in the Dollar until it can establish a support base.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.
     
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