30 November 2007 - 16:43special update

After carefully reviewing the longer term monthly and weekly charts it has become apparent that a reverse wedge formation is evident on the EUR/USD chart.  If you go back to the synthetic Euro in 1994 this pattern has been completed, also reading the candlesticks, it looks like the dollar’s rally will be more sustained than I originally thought.  It will be interesting to see where those long term candlesticks close.  I had heard scuttlebutt from numerous bank traders that the Euro would hit the mid $1.47 area and back off, it appears to be confirmed at the moment.  Perhaps they were also looking at that monthly chart with the synthetic high.  Gold has made a double top formation which is a good indicator that this rally is for real as well.  It appears I have been guilty of chasing the market.  I don’t expect to see Yen break 1.1375 which is the 50% retracement on the move from the low of 79.75 in 1995 during the Asian currency crisis and the high of 147.71 in 1998 during the last stock market boom and high interest rate dollar strength cycle.  Also let me say I don’t expect the Euro to reach parity again anytime soon.  But a return to the mid $1.20s seems likely at this point.  From a fundamental standpoint (which I have been basing my recommendations on so far) not much has changed so I don’t see the dollar reaching $1.00 on the DX anytime soon, but it certainly seems intent on holding on holding 74.50.