USD US Dollar Daily Chart Fed Day 8/1/12

The dollar will see lots of drama today in light of the Fed actions in the afternoon. The chart is behaving well technically.  The bull flag in September-October ended with a price at 81-ish to start the year right on target. The blue sideways symmetrical triangle played out as well when price hit 84 (the vertical side is about 4.5 so from the breakout/apex at 79.5; 79.5+4.5 = 84).  Price is then moving higher forming a bull flag during May-June.  From 79 to 83 is about four points for the first leg.  After the June consolidation, price started the second leg upwards which targets 85-ish (81+4 = 85). Also of interest is the pink rising wedge now in progress.  The wedge targets 85-ish as well.

The red lines show the negative divergence that spanked price downwards off the top over the last few days.  The indicators, especially the RSI and ROC, are developing a sideways vibe moving forward.  The 50-day MA at 82.60 is one of the most important items to watch in the entire markets today.  Price closed at 82.64, a smidge above, so watch this closely today. If the dollar is above 82.60, market bears will be happy, if the dollar is under 82.60, the bulls will be happy. If the dollar starts to move up, with the equity markets weakening, watch the 20-day MA at 83.14. A price move above 83 will show that the dollar wants to move much higher and price will also be back inside the rising wedge pattern overtaking the lower pink trend line.  If Chairman Bernanke delivers a nice shiny pony (easing measures), as he and Draghi have been promising, the dollar will stumble lower so watch if failure at the 50-day occurs which will be bullish for equity markets (weak dollar = stronger commodities = stronger copper = stronger equities).

At 2:15 PM EST today, the dollar will react violently, and the price move in relation to the 50-day MA will tell the story as described above.  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.