Dollar Rallies from Oversold - Finally!

Relief Rally - or Short Squeeze?

As many traders were anticipating the Euro to test the 1.60 mark, the US Dollar had other plans. Reasons for the Dollar rally run rampant as analysts needing a story speculated that Citigroup's $5.1 Billion Loss ($16 Billion in Trading Write Downs), and cutting another 9,000 jobs was a relief rally... Go Figure!

Break Out - Fake Out

 

The charts (Click to Enlarge) show how large and violent Friday's European session was. The above Ascending Triangle break proved to be a fake out.

The Euro's Upward Trend Channel (shown below) that begins back on March 12 was marked from top to bottom in one 4 Hour bar. The Euro bounced off support around 1.5700 before the New York session began and closed the day and the week in the middle of the channel near the 38.2 retracement level of 1.5817.

Euro Dives Over 240 Pips

An "orderly decay" of the US Dollar on the long term charts sounds reasonable to assume.

According to the CFTC's COT report - Speculators are moving away from the Euro and into the Yen. Speculators or not. It should be noted that the Dollars rally was not contained to the Euro as all the charts were showing extreme volatility. It should also be noted that the British Pound Sterling bounced up against the Dollar closing at 1.9973 and tapping the 2.00 mark.

 

Gold and Silver Index: Up Channel - Wedge - 50% Retracement 

 

You are Invited to attend "1st on Forex-Week Ahead Webinar" Free

I expect the volatility on the currencies will continue as a battle over some very strong chart patterns need to be played out to the north or south. Tune in to my Weekly Webinar - "1st on Forex - The Week Ahead" every Monday morning at 7am EDT - 11:00 GMT - on FX Street - Click Here to Register - and Attend Free.

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation.