On October 19th, the Dollar had a large rally, breaking above a bullish falling wedge and I produced the chart below (see post here). The point of the top chart…Dollar had a big single day move, yet “one day a trend does NOT MAKE!”
CLICK ON CHART TO ENLARGE
As the photo in the chart suggested, the Dollar move at the time, seemed like a “Fakeout” to me at the time. See updated chart on the Dollar below.
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Today the news will be “Driven” by the QE2 story. In my opinion, the key to asset performance will be driven by what the Dollar does at (2)! The Dollar is testing key support for the SECOND TIME and the 500 Index is testing key resistance for the SECOND TIME (see post here).
Currencies are in the driver’s seat, fasten your seat belts! As I have shared before….The “Second test” is where the real action starts! If the Dollar fails at support, investors will want to own the breakout in equities.