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Ready For Some Usd Buying?

The dollar index has bounced off 76.50 support, an area that was highlighted as pivotal to gauge the potential in what could happen in the last ten weeks of trade in 2010. 
 
Leading up to the FOMC rate statement and likely announcement of further quantitative easing programs on November 3rd, the fundamental outlook seems to be that the Usd valuations have priced in a weaker greenback and stronger equity market.
 
A technical ABC-down wave structure on the dollar index looks to have been completed on the daily chart, after the A leg was formed from 89.50 to 80.50, the B leg reversed higher to top out at 84.50, and the C leg completed with support found at 76.50.  
 
The technical path of least resistance will be a long reversal to test bids at 79.50, before the chance of another leg lower to 72.50 could easily happen. 
Recent dollar index trade, although in a steep decline, has spent eight full sessions in a channel that price action has not been able to break the previous session low and hold. 76.50 really is a roadblock of support. 
 
Global equity trade has held pivotal 4-hour chart support with ease, and moved higher over the course of the last six weeks on very weak momentum reads. Upwards price action with weak participation has created an environment that retail investment has pulled out from, and Mutual Funds go into the last two weeks of their yearly trade with a huge challenge of addressing diminishing assets under management values. 
 
The October 31st year-end may create a scramble to ramp equity values higher.
Earnings season gets into full swing over the next few weeks with 1150 support and 1195 resistance on S/P 500 being important weekly chart areas of note. 
 
A close above or below either number may draw in a technical surge of price action. Asian equity trade is going into a period of consolidation, and will require European bourses to move higher this week if the Japanese Nikkei is to hold 9350 support. 
 
The Usd/Equity-Oil inverse correlation is in play to a 95% degree each day, and is something that will be monitored closely, especially in the commodity trading arena. West Texas Intermediate oil trade tested a 4-hour chart support trend-line at 81.50 and held higher, after a two-week period of trade that added close to 9% in-line with collapsing Usd values. Speculative crude oil trade seems to have a lot more to do with short-term leverage than it does with global growth and demand. 
 
Gold bullion trade has been held in an upwards channel that has solid looking support at 1300, and little in the way as resistance until $1400 is hit. It was stated that in the summer that $1400 an ounce would like be seen long before a test of $1100, and now that is in sight there looks to be little in the way of a test of $1600. 

Forex traders may need to get prepared to get loong some dollars as this week unfolds, and clients will be getting signals via the automated trading program that just mat raise some eyebrows. We are ready to go both ways, (opinions in this enviroments count for little), but the momentum reads are showing that the short side of the dollar index may have overshot its mark.

Same story of bank early and bank often, and do not be ashamed of closing out too early; things could get volatile.

Disclosure: N/A