USD US Dollar Weekly and Daily Charts Falling Wedge Oversold Bollinger Band Targets

When Draghi announced on 7/26/12 that he would support the euro by whatever means necessary, the euro catapulted higher, and, since the euro and dollar move inversely, the dollar plummeted lower. The commodities, copper, gold, silver, and equities all move with the euro, and inversely to the dollar. The weekly chart shows how the Draghi news occurs with price at the upper BB. Price has now moved to the lower BB in less than two months. The indicators are all weak and bleak which project further lows in the dollar after a bounce occurs. Since the lower BB was tagged, a trip up to the center BB at 81.88 would be in order for the days and weeks ahead. Then the lower lows and a basing pattern can form, perhaps at 79 support, in the weeks, and month or three ahead. Note how the tight BB's force a strong move one way or the other and the two moves above were upwards (blue ovals). This behavior holds true for all Bollinger Bands across all time frames.

On the daily chart, the downward-sloping channel shows the power of Draghi's words. The euro catapults upward and the dollar crumbles. The beating is past severe and representative of the uber market bullishness in place now. The stochastics is the only indicator that is positively diverged, which should help bounce the dollar now, but the other indicators want to see a lower low in price again after a bounce occurs.  The collapse is so drastic, especially over the last week when Draghi delivered his bazooka bond-buying plan, that price simply has to take a dead cat bounce.  The logical upside target is the 200-day resistance at 80.68. Remember that the euro is currently testing and moving around its 200-day MA as well, so watch these important moving averages.  Since the lower BB was violated, a move up to the middle BB at 81.38 would also be anticipated.

Chairman Bernanke dictates the dollar move today. If he delivers a bazooka of quantitative easing, then the severe beating would escalate into near death for the dollar, it will surely end up in intensive care today with the markets soaring higher.  If Bernanke disappoints, the dollar will receive its stochastics and dead-cat bounce today targeting the 200-day MA for starters. It's all in the Fed's hands. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.