3 stocks to profit from a weak dollar
Given the strong technicals, we can define a good entry and exit strategy for each.
- The next support on the weekly chart is at 74.20, line c, which corresponds to the 2009 lows. If this level is broken, then the next major support is in the 71-71.50 area, which is a level that the dollar reached in 2008
- The weekly on-balance volume (OBV) turned negative last summer when it violated its weighted moving average (WMA) and it is still in a solid downtrend, line d
- The daily OBV (not shown) is trying to bottom, but a rally from current levels should be met with additional selling
- There is first resistance now in the 76.40-77 area with stronger resistance at 78.50-79, which corresponds to the downtrend on the weekly chart, line a
- The daily chart shows that UTX recently made a new high, and its relative performance, or RS analysis, shows that it has been outperforming the S&P 500 since the March lows
- UTX is now testing it rising 20-period exponential moving average (EMA) with further support now at $82.60, which is the 50% support level from the recent rally
- There is additional chart support at $81.50 and $79.40, which should hold on a deeper pullback. The March lows at $77.05 (line f) represent key support
- The resistance on the daily chart at $77.25 (line a) was overcome on Wednesday, but MCD was not able to close above it. There is initial support now at $75.90-$76.50 and the rising 20-day EMA
- More important support is in the $73-$73.60 area, which corresponds to the long-term uptrend, line c, and also the March lows (line b)
- The daily OBV has broken out to the upside having overcome resistance (line d) at the end of March. The OBV and its weighted moving average are both rising nicely, which is a positive sign. The weekly volume (not shown) is also above its WMA
- A close above the resistance at $77.70 should signal a test of the all-time highs at $79.94. There are additional upside targets now at $81.50 and then at $83.40
- The daily chart of DHR shows that it tested the 20-day EMA on Wednesday and closed strong. It is not far below its all-time highs at $53.01
- A move above the resistance at line e would project a move to the $56-$57 area
- The daily OBV made new highs with prices two weeks ago and is close to moving back above its weighted moving average. The weekly OBV (not shown) is acting much stronger than prices and could make new highs this week
- There is short-term support now at $51-$51.65 with stronger support at $49.50-$50.50. The daily chart shows a gap between $48.20 and $48.93 that should not be completely filled on any pullback
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A light news day combined with heavy technicals weighed on the market.
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