[Multiple Timeframes] Dollar Index
It's always great to take a walk down memory lane to check our perceptions against reality. Remember the catalyst that triggered the Crash of 1987? After a bunch of shocking trade deficit figures early in the year, James Baker made a fateful comment regarding the Dollar the week before Black Monday. According to History News Network:
Another important trigger in the market crash was the announcement of a large U.S. trade deficit on October 14, which led Treasury Secretary James Baker to suggest the need for a fall in the dollar on foreign exchange markets. Fears of a lower dollar led foreigners to pull out of dollar-denominated assets, causing a sharp rise in interest rates.
MONTHLY CHART: Funny when we go back to the chart, it's almost bizarre to find that the so-called 1987 Dollar Crash actually began in 1985. And by the time the world "puked" on Baker's comments, it was much closer to a bottom than a top.
MONTHLY CHART: As we zoom in on more recent price action following a nearly two year bear market on the Dollar, we can mark out potential support levels. Nearby, 88.15 is where the Dollar broke out on the upside before, a point of support where buyers showed up in the past. This number is nearest downside target.
DAILY CHART: With new lows being made daily on headlines around the globe, it's a no-brainer to figure out that there is extremely negative sentiment all around. With gold is blowing off on Dollar weakness, and the Euro going to new highs, you know it's starting to get a little carried away. Yes, it's a downtrend, and we can trade it, but we know that the sounds are starting to get familiar as it forms a harami pattern here, which might set up a tiny bounce on the daily chart. Resistance is the November 19 swing low overhead.
03.12.03 12:37 #