24 January 2012

DOLLAR INDEX HEADING TO 87 WHILE EUR/USD TO DROP TO 1.15

Hi Friends,


As a Technical Analyst it is always better to do some Inter-Market Technical Analysis.


It helps to understand the correlation between different Asset classes and gives deeper understanding of market trend in general.


Lets look at some charts:-


DOLLAR INDEX
DOLLAR INDEX MONTHLY
So while studying the Dollar Index chart I see a clear Inverted Head & Shoulder Breakout which can take it all the way to 87.. So while Dollar will move upward it is negative for commodities & equities all over the Globe. Well looking at the monthly chart I can see much larger Inverted HnS which will break above 87. If this larger Inv. HnS Break Dollar Index may move to 107.


EUR/USD
EUR/USD MONTHLY


While Dollar Index has given breakout from it Inverted HnS the Currency pair EUR/USD has clear breakdown below Head & Shoulder pattern. This would take pair to 1.15 in next 2 months.. But I'm worried about the Larger HnS on Monthly chart. A move to 1.15 would imply Break below larger HnS on Monthly Chart. This Larger HnS can take EUR/USD to 0.90.. This is the real risk lying in Eurozone.
USD/INR


Finally looking at USD/INR chart the currency pair is in its final leg of up-move. While the Dollar index to move upwards it will impact negatively on other currencies. The USD/INR can move to achieve the flag/pennant pole target to Rs.56-57/$




Now the Dollar's up move is Negative for other Currencies, Commodities & Equities. Us & other Global Equity Markets & Commodities will fall.  Further EUR/USD downward move will be negative for Euro-zone hence European Markets to Collapse. 


USD/INR would impact negatively for Indian Equity Market & Nifty can move to min 4300 to 3600 in worst case.


Happy Minting.




Thanks & Regards,


Harsh Dixit..