Current Fibonacci Confluence in the Dollar Index

Sep 27, 2009: 2:05 PM CST

I wanted to show a quick ‘advanced’ chart of the US Dollar Index to note different levels of Fibonacci ‘extension’ confluence at the $77 level which we need to watch.  Let’s take a look:

First, realize that Fibonacci extensions are similar to Retracements (which are far more popular) in that projection off different price swings can lead to confluence zones, as we see above.

For example, the 200% “External Retracement Projection” if the $91 to $84 swing in March (red) is $76.90.

The 161.8% Projection of the same downswing projected from the $88 high gives us $76.84 (dark blue).

The 61.8% Projection (dark red) of the $88 to $79 downswing projected from the $82 high is $76.86.

Finally, the 100% Extension/Projection of the smaller $81 to $78 swing, projected from the $80 high (dark green) is $75.27.

The main idea is that these classic Fibonacci levels using classic methods show the $76.85 area to be a level of confluence Fibonacci support, with the final projection dipping down to the $75.20 level.

In addition to this confluence, a lengthy positive momentum divergence has formed, which adds bullish pressure to the structure.

This may be nothing more than “File this under interesting,” but it may be a critical level and structure to watch in the event of any upward price movement – particularly through the 20 day EMA as shown above.

If bulls have any chance of stemming the downward tide, they have a good chance of doing so now, to force a counter-swing up of short-term or even intermediate term degree.

Failure here would be a devastating blow for dollar bulls and could send the index back down to challenge the $71 lows.

This and other charts are discussed in this week’s 20 page PDF “Intermarket Report” for subscribers, but I wanted to highlight this interesting confluence and development to you for further analysis.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

2 Comments

2 Responses to “Current Fibonacci Confluence in the Dollar Index”

  1. Dan de Man Says:

    Hey Corey,

    Looks like the dollar may stall at the 20. And oil has a similar pattern as the beginning of the month. Any thoughts?

    Cheers,
    Dan

  2. Dan de Man Says:

    Hey Corey,

    Looks like the dollar may stall at the 20. And oil has a similar pattern as the beginning of the month. Any thoughts?

    Cheers,
    Dan