USD influenced by EU-Italy Crisis
The price direction for the Euro today, half-way through the week re-confirms the Price reversal called last Nov 01. Its really not a matter of price but rather the re-affirmation of the overall market sentiment that has gauge investors shifting funds out of the Euro-zone. This has provided a price stability for the time being with the tight consolidation levels of the US dollar, as measured by the USDX Hi/Lo band where the current 77.42 basis point is nearing the high resistance band. The technical breakout may only occur with a strong momentum towards the end of the week's trading which would culminate with the release of the University of Michigan's confidence report on Friday.
When this happens a re-test of the 78.85 would likely be seen with extensions at the higher band and within breaking an inverted H/S formation that is reflected as a mirror imaged from the previous H/S daily chart formation. The high probability that the same would occur on the way higher when it happens. This has been a repeat only that the opposite circumstances would be inversely related to the down swing of the recent movement of the US dollar index when it touched a 74.72 low Oct. 27, 2011.
The location of the projected price direction when such a break higher would be beyond the Ichimoku Senkao Span A(green) breaking a neckline towards the next FIB retracement along the 78.85 basis point. Extensions higher would occur upon a completion of several daily pull backs until fresh volumes and price settlements would be made towards the week ahead. While the overlay STOCH/RSI still breaths positive with a 21/9 measure as compared to the T4-FIB 61.8% extension which would establish an overbought area if it attempts it in one spike upwards. This can only happen if and when a sudden unexpected event happens in both continents. But weigh in from the other is equally important. This can justify the technical outlook thus far.
Meanwhile, the current market situation with the EURUSD at 1.3603 low and 1.5932 low for the GBPUSD respectively has proven the investors prevailing market sentiments for the continuation of the US Dollar to move higher--another flight to quality safer bet versus the crisis in the Euro zone.
The defining analysis is based on the market's price behavior with a true reflection of the Price Page indicator which is indicative of the historical prices and price directional price extensions. As price extensions are derived from the average day & weekly trading range plus /minus the difference of the extended price higher/lower from the previous day/week's prices. And the number of days/weeks where such consolidation has occurred would be the measure of the directional trend higher/ lower.
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