Today’s surprise decline in the reported US GDP was the catalyst that finally broke the US Dollar Index under support, triggering a sell signal for the Dollar and a buy signal for the Euro.
Let’s update our Dollar and Euro charts and note what’s happened and where price may be heading now.
First, reference last week’s post “Trend Trading and Triangles for the Dollar and Euro”.
We’re seeing the Dollar Index futures contract (@DX) on the Daily Chart above.
After a strong, extremely powerful uptrend for the currency, we saw a pullback and consolidation (even a small triangle) between the 96.00 and 100.00 level.
Note the support-bounces (rallies) off the $96.00 level and the pivot from this level.
Today, we’re seeing the breakdown and short-term reversal into a sell-signal as the index trades down away from this level.
The first target has already (almost) been achieved into the $94.00 price target.
With $96.00 failed and broken, pay extremely close attention to the current $94.00 target level here.
Also note the clear bearish distribution volume in March and April.
The chart pattern is the opposite – a buy signal – in the Euro (seen with the EUR/USD FOREX pair):
Again, as highlighted last week, the Euro faced a critical resistance challenge – and possible breakout – into the 1.1000 level.
Today’s session triggers a breakout event which opens a bullish pathway toward the 1.14000 level.
It’s worth noting that Oil – boosted by the slide of the Dollar – is also rallying strongly this morning.
Use 1.1000 as a key “make or break” bull/bear pivot level and monitor additional upside action toward – or perhaps even above – the 1.14000 Daily Chart target.
For more daily updates from Corey, visit his blog at Afraid to Trade.com.