Sunday, November 14, 2010

Importance of MA(50) for the dollar

I have been going on during the last one week or so about the dollar approaching the MA(50) level. It did come close to the level on Friday before turning back.

But how important is the MA(50) to the dollar? From the above chart, we can see that the level provided strong resistance in August-September. Let's go a little further back in time to see how this level has acted in the past.

The dollar went above the MA(50) level in December last year and went comprehensively below the level in June of this year. In between, the MA(50) acted as support at least three times for the dollar. Let's go a little further back in time now to further verify the importance of this level.

The dollar crossing below the MA(50) level in the middle of 2009 is marked by the circle at the far left of the above chart. Between this time and December 2009, when the dollar finally managed to go above the level, MA(50) acted as support for the dollar at least six times.

All the above charts just go on to show the importance of MA(50) when it comes to the dollar. Watch out for this level next week!

Here is a post looking at whether the markets are oversold here.

Take care and good luck!

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