http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-05-31.html

Following up my post from a few days ago, the price action has now provided a potential 5th wave up.

Some sort of top will form here. The question now is; if this is a final top and where to next?

The Daily chart of the USD/CAD is at a cossroads of strong support at the end of a sharp move down.

The index does still not appear to have turned in earnest.

http://en.wikipedia.org/wiki/Fractal Fractals are the repeat of patterns at different degrees.

Here is an example on the AUD/USD on a huge scale on the daily chart and then on a smaller scale on an hourly chart from today.

This currency pair tends to move in these 5 wave diagonals regularly and so what might happen when this tops out?

At this point the USD/Index is still pointing down.

In circumstances like this, the words of a colleague of mine run through my mind; “if it’s not going up… It’s still going down”.

It feels as if we are sitting on the edge of a turn with the COT sentiment at extremes and indicators highly oversold.  So I am being extremely cautious on direction either way at this point.

Wave 5 does seem to be missing, but forcasting its size is dificult in a highly leveraged market that is running at extremes.

Most common is for a slight new high with the 5th wave equal to wave 1. That puts the price around $1.41. However .618 of wave 1 places the price just below the high as a double top. I would say this is also a reasonable possibility.

A drop from here below 1.3860 suggests the top is in place.

I am watching the USD index as it seems poised for a double bottom.

The Dollar has been weakening now for an extended time and technical indicators are oversold and the COT (Commitment of traders) sentiment is primed for a re-tracement/reversal.

The EUR/USD price action has recently broken upside channel resistance and a return there would likely reverse in dramatic fashion.

Any re-visits of recent highs/lows should be watched for strong reversals.

Please visit

http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-05-25.html

Yesterday I wrote about where the Index was likely to target and stall.

http://blogs.fxstreet.com/disciplined/2009/05/20/aproaching-important-barrier-on-usdindex/

The target has been hit and the price action is now stalled. It’s important now to consider that the dollar may turn somewhere near the current price.

Cheers