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CHART ANALYSIS


US Dollar Leads The Way Higher

11/15/02 01:01:09 PM
by Gary Grosschadl

Again the USD shows a turn in market direction. Clues as to how far the Dow and Nasdaq run may be revealed in this chart.

Security:   $USD
Position:   N/A

The USD launched itself off its bottom with a doji type candlestick pattern, and ironically a similar doji warned of the imminent downturn from its previous high. Doji candles at tops and bottoms are often good reversal signals.

The chart shows a sideways channel that, when violated to the downside, is an unsustainable deviation. This results in a move to the top of the channel. In the middle area, a "spring move" occurred when the downside violation resulted in an equal and opposite move to the topside violation.

Graphic provided by: stockcharts.com.
 
I am suggesting two upside target possibilities to watch for. Either a stall/consolidation at bottom of channel or a much bigger and bolder move to challenge the top of channel. The displayed indicators below the chart show a bullish turn from oversold territory. These same indicators should be monitored for a similar turn from overbought levels. The directional movement indicator ADX/DI above the chart should be monitored for signs of a bullish DI cross. Watch for either a stall at the cross area or a strong move resulting in ADX moving between the DIs, with +DI over -DI.

A bullish move in USD fosters confidence in overall indices. Sometimes the USD will lead market direction by a small margin and other times it moves in sync and acts to verify a possible move. Either way it bears watching.



Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

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