$ Index, Have to Take What the Market Gives....

Longer term view in the $ index remains in place as trade from the March low at 70.70 is seen as a large correction, with eventual new lows below 7070 after. Note that the rangy type trade/potential bearish flag also suggest an eventual resumption of the longer term declines to new lows (see weekly chart below). However, there are still no signs “pattern-wise” that this multi-month correction is complete, leaving open scope for more ranging and possibly temporary gains above the Jun high at 74.30 first. For now, would maintain the long held strategy of trading shorter term ranges (see below)…have to take what the market gives you.

Nearer term, the market is chopping just above support at the base of the multi-month channel (currently at 71.90/05, also a 62% retracement from the March low at 70.70, see daily chart/2nd chart below). Though an eventual downside break is favored, further declines may be limited (at least for the near term), while there is also some chance of more ranging before the new lows are seen. Currently not seen as a good time to just hit bids from a risk/reward standpoint, and instead would wait for a nearby bounce toward 72.50/60 to sell (higher entry, lower risk). Stop on a close above the multi-week bearish trendline (currently at 73.00). Note, if the market does indeed break lower before reaching the short area, would cancel that sell (countertrend bounce likely to be deeper). Only temporary support on the late Jun buy at 73.30 before stopping in a close below the bullish trendline from early Jun just a few days later (then at 73.20, closed at 72.95).

David Solin
Foreign Exchange Analytics
http://www.fxa.com

Disclaimer: The opinions expressed herein are those of the author and not a recommendation to buy or sell specific securities.