Dollar Continues its Decline

Oct 11, 2007: 11:28 AM CST

The US Dollar Index ($USD) looks ready to continue its decline, as signs of a bottom are yet to be found.

Let’s view the chart briefly:

Price has made a new momentum low, which has set up the “Impulse Sell” signal after price returned to the falling 20 period moving average.

New momentum lows often forecast the actual price low has yet to come. If we were setting up a trade in this, we would target the most recent price low for an exit, yet price often continues to decline further than the recent low in the “Impulse Sell” condition. One may ask “How much lower can the Dollar go?”

The structure of the Weekly Chart offers no clues of a ‘bottom’ either:

The weekly chart indicates that we may test up to the $80 index level, but if price fails to reach that point, we could be in more serious trouble.

The momentum oscillator recently recorded the lowest level of 2007, again forecasting lower prices are yet to come (but not instantly).

The Dow Jones may be making new highs, but the US Dollar is making new lows.

It’s not a picture of strength that allows American to celebrate as jubilantly as the Newscasters would have us believe.

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