CHARTING MONEY: Snowing On The Dollar
28 Jan 12:00
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--We learned Tuesday morning that U.S. Treasury secretary
nominee Snow wants a strong dollar. And no doubt he will be pleased if the
dollar now rallies into late February, which is a reasonable expectation
according to the charts.
And it's just as likely that he'll be chagrined when the dollar turns down
next month and falls sharply into the spring - an even more reasonable
expectation, in my opinion.
The nearby U.S. Dollar Index, now around 99.50, could easily rally to 101.18
by late February. That would be the set-up for a downturn towards 94.61 - 91.34
support, to be tested by late April. Within that wide support band, 93.87 may
be an important number.
For the time being, it's notable that the charts were set up for a dollar pop
as of late-day trading on Monday.
The euro was backing away from $1.0923 target resistance late Monday. Its
Monday low was $1.0783 and Tuesday's intraday low now is $1.0786. Both numbers
are practically target support at $1.0789. If that support holds, the euro will
soon be on its way again to $1.0923, or to $1.1029.
Late on Monday the dollar was trading very near the important Y118.54
technical level, which turned out to be support early Tuesday. If the support
holds, the dollar will be on its way up to Y120.63 or to Y121.76.
Treasury Futures Near A Rally Point
The CBOT nearby 10-year note is slowly sinking towards 113-16 support, which
is strong support on the charts. If the long-term rally of the contract is
going to be resumed then it will probably be when 113-16 is tested. In that
case, a move up to 114-25 will be very likely.
The question is whether the nearby 10-year can take out 114-25 by the end of
the trading month, on Friday. That development would confirm ongoing technical
price strength, even if it won't necessarily mean that the current
consolidation market has ended.
But The Stock Rally May Be Over
That stock market bounce called for in Monday's column may have ended shortly
after it began on Tuesday's opening.
The column said that the bounce could take the Nasdaq Composite up to
1380-area resistance on the outside. A failed test of 1335.09 could foil that
projection, however, and that's why the present Tuesday intraday high of
1339.73 is now strong resistance.
In any case, the development to watch will be a Nasdaq test of 1317.78 -
1312.38 support. That's a breakdown area on the weekly charts. It's strong
support, and it won't give way easily - even if the long-term charts are
weakening.
The Dow Jones Industrial Average may not make my outside bounce target at
8462.23. At this point, a rally to 8242.91 may be the end of the line for the
short-term bulls. The average would then turn down towards the 7835.92 -
7579.70 support band.
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4073; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets."
-By Stephen Cox; 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 Newswires
01-28-03 1200ET |
