Knockin’ On Heaven’s Door

It’s been a pretty wild ride on the Dollar side in recent weeks and we have probably all been a bit surprised by its ability to spite the Bernank’s unsterilized POMO adventures. Finally after a relentless short squeeze it seemed that a correction was now firmly on the Forex roster. Of course that was before that weekend Cyprus scare which managed to shake things up quite a bit across the currency side.

Just last Friday everything was pointing toward a speed date with that 25-day SMA hovering near 82. We’re still seeing red today but the Dollar bulls are suddenly back in the game as the NLSL at 82.685 has been holding up quite nicely today.

The chart that’s however much more interesting is the long term view – here again is my monthly panel which shows us a pretty solid resistance line which has been leading the greenback down over the past few years and which incidentally was touched last week (leading to a quick reversal and breach of the daily NLSL).

Obviously any resistance/support lines should be drawn with a crayon – thus a push above 84 would probably be needed to really stir things up a bit. I’m encouraged to see us near heaven’s door but let’s be realistic – the easy part of the journey is now in our rear mirror. I expect increased resistance if the Dollar somehow manages to push higher. Mark my words – there will be blood. Plus depending on how you draw this chart we’re not out of the woods until passing the 86 mark. I’m crossing my fingers and my toes but technically can’t be long the Dollar right now until I see us above 84.

As I’m typing this the spoos seem to have been successful in retesting that 100-hour SMA. On the daily panel it filled the early morning gap down and managed to recover two Net-Lines which is quite a feat. At this point I’m bullish the ES as long as it remains above its 1542.25 NLSL.

However there is still this – NYSE DVOL is leading UVOL as I’m writing this and that is making be a bit cautious. A few cages have been rattled and it’s possible we’re looking at distribution here. So don’t get too comfortable and stick with small positions for now. Perhaps we’ll get a nice green spike into the close which may take this one off the map.

Unfortunately I didn’t see anything tasty on the setup front today – apologies but as I always say: I don’t make the tape, I just report it. The USD/CAD however may be worth a look – interestingly it’s holding its 25-day SMA thus far but seems to have trouble with its 25-hour. Since I took this it’s been falling a bit more but I’m sure there will be a bit more back/forth before the dust settles here. I would only be long if that 25-hour starts offering support and carries prices higher. If the 25-hour starts dropping/pointing down then I may be dipping into some short positions – right now it’s a bit too premature.