We pointed out in the March 10th edition that the Dollar had strengthened to the point of making a couple of extension signals. Since then it has indeed fallen, as shown in this $Index chart:
This drop has brought the $ index back down toward the bottom of its recent tight trading range and so we must consider if it will find some support hereabouts.
There is some evidence from the Cable (£/$) rate, as the £ has now risen to the level of an old compression where we expect to find some resistance:
Resistance in the £ means support in the $, so there is a decent chance that the $ will indeed find support near here. There are circumstances unique to this pair of course so we do not call for a general rally in the $ from here - the range is probably too narrow for this 'return-to-compression' to have much significance beyond the obvious: Sell the £ here, risking a move through the compressed area, the top of which is at 1.2570.
All signals generated by software supplied by our friends at Parallax Financial Research www.pfr.com