Dollar At A Crossroads

Continued softness in the Dollar has now delivered it at a crossroads near its DX 94 mark. A push higher from here most likely puts it on course for a continued squeeze higher, while a drop through 93.8 has good odds to continue into 93.4 where the 25-day SMA may produce at least a temporary spike low.

Of course a correction at this stage was to be expected after a brutal four week long short squeeze. As you can see corrective forces materialized the first time in early May but were quickly overrun within a single session that put the old greenback back on course higher.

This time I however do not sense the same amount of vehemence and politically speaking there are fewer reasons for the Eurocrats to get their panties into a twist and thus flood MSM outlets with incessant reports of impending doom and gloom. So in my mind the situation is a 50/50 proposition which is difficult to gauge and needs to be negotiated with finesse. And that’s my cue!

As you know I’m already long the USD/JPY which much to my surprise has now advanced near enough to 1R MFE to justify advancing my stop to break/even. Truth be told I should have probably waited a few more pips but as I’m adding additional campaigns I need to manage my risk a bit more conservatively.

The EUR/USD has come back to its 100-day SMA and that’s a long for me with a stop < 1.162, that quick spike low last week which must have cleared out a hell of a lot of long positions.

The long term panel on the USD/CAD is starting to look every interesting and we are now looking at a possible break/out pattern pushing it > the rising diagonal trendline I have painted on the weekly chart.

Given that perspective and the neckline on the daily panel I’m now adding a long position with a stop < 1.289. So as you can see I’m starting to get positioned bi-directionally the USD as it’s difficult to determine which side will win.

More entries and pertinent perspectives below the fold:

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