Above is the monthly graph of EUR/USD. As we can see, is very close to long-term support line from 2005. The both times that EUR/USD reach these levels we got a very nice impact. However, looking Dollar Index is not so bearish at all. Bellow is the monthly Dollar Index graph which shows where we closed on Friday night.
89.92 is the 0.382% fib of 2001 high and 2008 low. This level I expect to be reacted at least before anything can happen. BUT the question is; are we going to get rejected at this level or even 90.96(100% fib extension)? I believe that we were inside of a long-term trade but we broke and jumped very hard but do we have a chance to get rejected and traders get panic believe that US Dollar made a high?
A great example that we need to be ready if this rejection really happens is at GBP/USD:
We can see above the GBP/USD monthly chart which shows us that we were inside of a triangle, we broke to the upside but we got rejected at a very important level which was at 1.7100 level.
So, can we see the same thing on dollar index? a rejection at 89.92 or even 90.96(100% fib extension)??
Well I don't have magic ball but I will look for reaction and CONFIRMATION before I do everything, until then.... I will keep looking and get relaxed at this end of year.
Have a nice weekend everyone!!!
Take care.
Thiago
thiago@duarteinvestmentgroup.com
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