USDX: Subtle Changes, Remarkable Outcomes

Even the smallest moves can be of utmost importance to a number of investors. This time, the USDX was the one to give a subtle nod to the upcoming changes.

In yesterday’s analysis, I wrote about the subtle, yet very important short-term detail that likely indicated a major turnaround in the USD Index. This is huge news for the precious metals investors, as a major turnaround in the USDX (and the subsequent rallies) would be very likely to translate into a severe price slide.

The important change was that the situation regarded the USD’s 61.8% Fibonacci retracement.

Last week, I wrote the following:

I wouldn’t be surprised to see this weekend without any major reversal, but we could see one on Monday. Some traders won’t be able to adjust their stop-loss levels at that time, so if anyone “big” wants to squeeze the profits out of individual traders shorting the USDX before the latter rallies, it would be a perfect time. The idea could be to trigger a small sell-off early on Monday, which would then trigger stop-loss selling, and it would allow the “big” market participant to re-enter the long positions at lower prices.

The fact that the USD Index moved slightly below its very important short-term support (the 61.8% Fibonacci retracement) on Monday (Apr. 26) and then it invalidated this breakdown yesterday (Apr. 27) perfectly fits the above quote.

The invalidation of the breakdown is a bullish phenomenon, and even though the price moves are still small, they already suggest that a bigger rally is likely just around the corner. In today’s pre-market trading, the USD Index moved higher once again, which means the invalidation was not accidental.

If we zoom in, we’ll see the full importance of what just happened on a short-term basis.

We just saw a short-term breakout! Finally, after many days of declines, the USD Index showed enough strength to rally above its short-term declining resistance line.

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Disclaimer: All essays, research and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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