 It’s time again for a U.S. Dollar trade update as of 12-02-2009. The last update I wrote was here: U.S. Dollar Trade Update 08-23-009. Prior to the last update I had written about a potential bullish move the dollar, with trading possibilities such as in DZZ and UUP. This was short lived. Afterward, I posted the 08-23-2009 update with new levels to watch for a potential move either way. I’ll post the updated charts in the same order in this post, along with the previous support and resistance lines I had drawn on them to watch for potential breakouts. The first chart below is of the U.S. Dollar Index itself. The previous support level I had drawn was near $77.50. I mentioned to watch this level for any significant breach for a move lower. 
You can see that the $77.50 level was in fact breached and also became resistance later in early October. Also notice how the price action has been contained by the 50 Day Moving Average (or at least it appears that way on the chart. In reality, the moving average itself cannot contain prices as it is a calculation based on past prices). The 50 Day Moving Average line can be a psychological level though. Causing reversals or breakthroughs to occur more violently in many cases. The current level is a major support level going back to late 2007/early 2008. If this level is breached, the next lower support level is around $71.50. A contrarian view would be to be on alert NOW, not waiting to see if lower prices are ahead. The next chart shows GLD. In the previous chart from 08-23-2009 I had a Symmetrical Triangle drawn on the chart and mentioned to watch for a potential breakout, either to the upside, or downside out of this pattern. I’ve drawn the same Symmetrical Triangle on the current chart below to show what happened. 
You’ll notice at point 1), that prices broke out up out of the Symmetrical Triangle for a good momentum trade entry signal, at the beginning of September, 2009. Also, in early October, 2009 at point 2), you can see that prices broke out up thru previous highs, another momentum trade entry signal.
Now. For any contrarian traders out there: The next chart is of DZZ- a double short Gold ETN. I’m not advocating the use of ETN’s of ETF’s, or any of these trades for that matter, only providing some idea’s. Leveraged ETF’s and ETN’s have been in the news over the last several months, in a negative way, so be sure to do your own research and keep an eye on them if you decide to use any of them. Previously I had drawn a similar Symmetrical triangle pattern on the chart and I have included the same pattern drawn on this chart to show what has happened here also. 
You can see once again, only the inverse of the GLD chart, that prices broke out of the Symmetrical Triangle pattern. This time to the downside as this is an inverse fund. This breakout point, along with the breakout point below previous support (the dotted line) both allowed for potential tradeable short entries. With prices at new lows, corresponding with new highs in Gold, any reversal would provide an excellent entry point. Possibly for a long term contrarian trade. Moving on, the next chart is of UUP, a Double U.S. Dollar Bullish Fund. 
You can see that I added the support level at $23.00 my previous chart. Prices gapped down through this level in early September and it has pretty much been a significant resistance level so far. You can see that prices broke up through the 50 Day Moving Average briefly in early November, but have since reversed and are near new lows. The next lower major support level is $21.50-$21.75 so we are very close to this at the current price level.
Using previous support and resistance levels for potential area’s for stop loss positions, the Risk:Reward ratio for some contrarian trades here, look pretty compelling. Copyright © 2008-2009 Online Stock Trading Guide, LLC  | 
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