Something I noticed about a week ago

[solarbird]

So, yes yes, technical trading is voodoo and only works because people believe in it. And currency traders are smarter than that - but a lot of stock people have been moving into currencies.

About a week ago, I noticed what looked very much like a bear flag in the six-month chart of the dollar index. The dollar has broken decisively out of the channel of that flag today, downwards. Technicals theory, as I understand it, says that we'll get another drop about the same scale of the previous drop that formed this flag, from the entry point into the channel. To wit:


What's wrong with this chart?

So. See all the above. But also: what's wrong with this chart? Do I have this wrong from even a chart-theory perspective? (It is a little sloppy but I insisted upon parallel lines, which is a little more stringent than usual. I think.) Places I read have a lot of technical traders so I've picked up some of these notes, but I could have heard them wrong.

Comments

[firni.livejournal.com]

PAGING wrog!

[meesto.livejournal.com]

I think your charting is certainly on the right track with regards to the direction things are likely to be headed from a technical analysis POV. I usually like to go back a bit further to look for other confirming formations, but the use of parallel lines is spot on. The downside breakout looks right too.

I've put together a long-view chart of the USDX using as much data as StockCharts.com would give me: http://lizardlounge.com/cmills/USDX_23Y-HNS.gif

My view is that the near-term target is around 50 and the long-term goal is negative 5 (-5).

[solarbird]

Negative five. As in, you'd have to pay people in another currency to trade other basket currencies vs. US dollars? Is that what you actually mean - short the currency to zero?

[silussa.livejournal.com]

Not sure about the target, as I never gave a lot of attention to technical analysis. But definitely a bear market indicator.

This might qualify as a pretty darn negative economic indicator, as well. I think our governmental debt is finally catching up.