Tuesday, December 22, 2009

US Dollar Approaches 200-Day Moving Average

Trading is, as you know, an inexact science. So while we *think* it's likely that the dollar has put in a major bottom, a cross above its 200-day moving average would significantly reinforce this hypothesis.


The dollar tests it's 200 day MA. (Source: WSJ.com)

We're not there yet, but we're getting close. A push above 79.5 would indicate that you should, at the least, not be short the dollar.

Being long an asset that's trading above it's 200 day MA, and short one that's trading below, is usually advisable. And ironically, this rule is so simple and reliable that many traders usually ignore it - myself included!

6 comments:

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