Currencies

DXY has also reached my medium term target of 95 which I gave in my post written on 16^th June 2011. In that post I wrote the following, “DXY:- Looks like it will break out of 26 years of down trend and will move up to 100 levels in next 2 -3 years.” When I gave that call DXY was trading at 74 levels with a target of 100.

DXY recently made a high of 95.5 and had almost hit the target level. If we see the long term chart of DXY we can see that it is trading a 36 years resistance line hence I expect some correction and pull back in DXY. Alternatively if DXY can break the resistance and move towards 100 levels then the target for DXY will be around 120.

My long standing targets for Australian dollars have come true.  In my post on 11^th September 2011, I wrote the following, “Below is the Australian dollar chart. Its very near to its long term support and warrants a sell with a stop loss of 1.08 and target of 0.92 and 0.86. Sell off in AUD will also indicate a sell off in commodities.” 

In further update I wrote a post on 6^th July 2013 in which I wrote the following, “AUD has broken below 38.2% retracement and is not showing any strength. Looking at the strength in DXY it is completely possible that we may see further correction in AUD. The next support for AUD is around 0.85. Ultimately the target for AUD is around 0.74 – 0.75.”

Since then I have been continuously bearish on AUD. Finally AUD is nearing my targets and is currently trading around 0.777 levels which is very near to its long term support. If AUD falls below 0.70 levels on monthly closing basis the next target can be as low as 0.50.

I will also assume that we should also see a good pull back before we witness any further downside in AUD

Similarly CAD has also exceeded the target I first mentioned in my post on 1^st June 2012 and reiterated my call on 3^rd March 2013. In that post I wrote the following, “Next chart is CAD. I have been bearish on CAD since June 2012 and reiterated my call on 19^th December 2012.  I admit that CAD took longer than expected to break out but now it seems that it may breakout in next few months. If CAD beaks above 1.05 we will see a 1.20 levels by the end of the year.”

CAD recently made a high of 1.2676 and have completed 50% retracement of the entire fall. As per my reading CAD should see some strong pull back from the current levels. Alternatively if CAD breaks above 1.30 levels it can move up 1.45 and 1.60 levels in next few years. 

One of my calls which I am most proud of is my call on Euro. I first gave bearish call on Euro on 16^th June 2011 and have continuously maintained my bearish stand on Euro since then. I wrote the following in my post written on 2^nd October 2011, “If we look at the long term chart of Euro we can see that Euro is trading in a downward sliding channel. As expected Euro corrected form 1.43 levels to 1.34 levels in September. I think Euro will continue to correct in coming time and it should fall up to 1.15 levels and it can even go to parity with USD as the long term support line rest there.”

Euro recently made a low of 1.1098 and had achieved the target I have sent almost 3 years back. If we look at the given chart of Euro, it has strong support at 1.10 levels as it completes 50% retracement of the entire rise. Looking at DXY chart and other currencies I think Euro can find strong support at given levels.  Alternatively Euro can fall below 0.85 levels if it goes below 1.10

Summary:-

1.       All of the currencies have achieved long term target I have given in last 3 – 4 years.

2.       DXY is facing strong resistance at current level.

3.       Ideally we should see meaningful pullback in DXY before it moves up any further.

4.       AUD, CAD, Euro and GBP may see some strengthening going forward.

5.       I am assuming that bull market in DXY will continue after pull back and it will break 36 years long pattern and will move towards 120 levels and beyond in next 5 years.

6.       I have continuously maintained that in technical analysis it is possible to get the direction of an asset correctly almost 80% of the times but its very difficult to get timing right even 30% of the time. Hence if one have patience and is ready to endure some volatility technical analysis can be a wonderful tool for long term trading/investments.