Dollar Index: Risk of Double Top Confirmation – SocGen
Research Team at Societe Generale, suggests that the Dollar Index is now
at the ‘make or break level’ of 92.50/92.10, the lower part of the
broad 1- year consolidation zone which intersects the upward channel
limits in force since 2008 and 2011 lows.
Key Quotes
“More
importantly, 92.50/92.10 corresponds to the neckline of the Double Top
pattern the Index has been tracing after it failed to overcome the stiff
resistance of 100.40. Should the Index confirm the pattern, i.e. breaks
durably below 92.50/92.10 (weekly close) it would imply a potential
down move towards the projected potential which is located near 85
levels. This would also mean re-integration within the aforementioned
channels which would entail considerable risks to the entire up move
since 2008.
Short-term, the Index is clearly witnessing increased
downward pressure of late as highlighted by the bearish engulfing
formed last week. Break below a daily descending channel indicates
snowballing downside risks. Although both weekly and daily indicators
are currently testing multi-year floor they remain on a shaky ground. If
the down move extends further, immediate projections for the Index
would be at 91.30 and 90.95 with key objective being near graphical
levels of 89.60/89.00, also the 38.2% retracement of the uptrend from
2011 and 2008 lows.”
