Bullish Dollar Price Action Suggests Correction Underway
The outlook has been pretty bad for the dollar recently. The forex markets, however, have a habit of turning just when everybody decides on a certain direction.
The US Dollar has been under the hammer for a while now but this week gave the dollar bulls something to cheer about. Commodities were extremely volatile and were sold of with massive volume which suggests the smart money was dumping inventory.
If commodities are sold then the dollar benefits and it certainly has this week. Aside from the commodities element there was the ECB and Trichet giving the markets a reason to be less focused on buying the euro; this has obviously benefited its main trading partner – the greenback.
The main reason for my attention being drawn to further dollar upside potential is the weekly bullish engulfing candle on the dollar index (see below). This combined with an equally pro-dollar candle on the EUR/USD gives me reason to believe there is a reasonable probability of more dollar upside over the coming sessions – if some initial follow through can break last weeks ranges.
Further Dollar Gold Silver analysis available at www.forex-fx-4x.com
