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Dollar Nears Resistance Looking at Pullback

 November 14, 2012 11:44 AM

The dollar has been rally mood since it bounce off the 79 level and broke above 80 this rally in the dollar has helped push the market lower.  But this rally in the dollar may be nearing an end as it heads towards resistance at 81.53.

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Dollars Resistance Zone: There has been little resistance from the dollar during this rally between 80 and 81.36 as there has been barely any consolidation zones which would create choke points.   This can be clearly seen by the string of green candles on the left and the string of red candles on the right.   But finally the dollar has hit a level that may act as resistance as it has in the past.  The 81.36 level allowed for a brief pause in the dollars rally in the May.  The real resistance shows up in August when the dollar based at this level only to drop 3.25% to its summer lows.  Now the dollar is testing this level and today failed as it neared it put in a high of 81.31.

Fib Retracement Area:  This area is also about a 50% Fib retracement from the high  of the summer at 84.25 and the low in September at  78.72.

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Pullback Area for the Dollar is Good for the Market:  With the dollar rallying to resistance and to a Fib retracement it makes sense this is a logical pullback level for the dollar to retest its breakout levels.  This falling dollar will help the market rally. Plus coupled with a VIX back below the 70 day ema, there is more evidence to support a rally coming.

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