The US dollar has rallied significantly during the trading session on Monday, reaching towards the previous uptrend line. By breaking towards the 105.50 level, we are testing significant resistance, so it’ll be interesting to see if we can break above there. I believe that this market is focusing on the potential trade war between the United States and China, and until that gets cleared up, it’s probably going to be a relatively soft market. At this point, it’s likely that the headlines will continue to move the market, and therefore it’s very likely that this market will be very jittery. If we roll over and break back below the 105 handle, I think that we would probably continue to sell off. If we can break above the uptrend line, and more importantly closable there on the daily chart, then I think we have the opportunity to rally. This would coincide with tensions calming down between the US and China.
Ultimately, I think that the market should continue to be very noisy regardless, so keep that in mind. You will need to be able to deal with a lot of volatility, and I think that you need the market to make a permanent decision before you put a lot of money to work. I do think that this could be an excellent buying opportunity if the trade war fears abate completely, because we have tested such a major uptrend line. Otherwise, we are probably going to go to the 100 level.