CHARTING MONEY: Dollar's May Day Isn't What You Think
01 May 12:00
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Lower trading in the U.S. dollar isn't a necessarily a
sign of weakness today. In fact the decline has brought the dollar down to a
potential major bottom at key technical support. Major dollar-related markets
confirm the possibility.
As of late morning, the nearby U.S. Dollar Index is testing target support at
114.53. The time target for a hit on that support was ideally May 3. An error
of two days is an acceptable tolerance.
At the same time, USD/JPY is testing target support in a band from 127.51 -
126.97. Finally, EUR/USD is very near a test of target resistance at 0.9076.
If those levels hold, the nearby Dollar Index stands to gain, in a move up to
116.95. In that case, USD/JPY will have bottomed and EUR/USD will have recorded
a major top.
All the above targets will have to be confirmed on a late-day trading basis,
as usual.
How Deep Is The Ocean For U.S. Stocks?
Observers of the U.S. stock market may find out soon just how deep the
current sell-off is likely to be.
The Dow Jones Industrial Average isn't far from a test of 9782.06 target
support. This column has pointed out that a truly bullish long-term market will
tend to bottom at relatively shallow level. A bottom close to 9782.06 ideal
support and a rally back above 10043 would hold out such a promise.
The risk is that 9782.06 will be taken out. And in that case, DJIA is pointed
down to 9248.47. Such a sell-off could easily be extended in a move into the
8700 handle.
The S&P 500's sell-off Monday may have completed a bearish double top that
had been forming on the daily chart since early January. Confirmation of that
pattern requires a daily close below 1074.36. In that case, the S&P 500 will be
pointed down to 1045.75 and then to 1014.18 at least. The double top in the
meantime means that the index will be onits way to 973.35.
To try out the new Charting Markets weekly technical newsletter go to
djnewswires.com
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4073; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets." CQG
key word search "Charting".
-By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
(Data by CSI, Commodity Research Bureau)
(END) DOW JONES NEWS 05-01-02
12:00 PM |
