| S1 | 81.17 |
| S2 | 79.80 38.2% |
| S3 | 78.38-78.60 Support |
| S4 | 78.47 50% |
UTL = Up trend line
MACD = Moving average convergence divergence
RL = Resistance line
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Analysis
- The dollar index has rolled over to the downside with the index just finding support above the 38.2% Fibonacci retracement line of the May-2011 to July-2012 rally.
- Having broken the UTL the index is now in search of a support level that holds.
- The stochastics and MACD continue to trend lower, so further weakness seems likely.
- Outside of the technicals this weakness may well be in anticipation of more quantitative easing which, in turn, is seen as debasing the dollar.
- If the dollar continues to correct, then that is likely to support firmer metal prices, especially bullion prices.
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Conclusion
With the US election campaign likely to focus on the US deficit and the fiscal cliff, there may well be room for the dollar to weaken for a while, which, in turn, could be quite bullish for bullion.
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All trades or trading strategies mentioned in the report are hypothetical, for illustration only
and do not constitute trading recommendations.
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