Last week I highlighted the flag/head & shoulders potential pattern in the Dollar ETF (UUP), first chart (see post). As I mentioned in the chart below, a “Break of line (1) would benefit commodities and international investments.”
The dollar did break support, (chart below), commodities/international markets have benefited. Now what? Support line has been broken and now the CRITICAL NECKLINE is breaking to the downside!
A break of the neckline should usher in even lower prices for the Dollar ETF (UUP), continuing to benefit Gold/Silver and other commodities.
One thing that MUST be respected is the 80 level, in the dollar (not shown). 80 has been support many times over the past 20 years. Will post that chart in the next couple of days.
Not doing anything fancy in harvesting at the top of the range and creating more “pocket change” for investors.
As I shared in the post, if resistance is taken out, we will follow.
Pocket change posts on dshort and this blog are now up over 70% YTD, all based upon patterns that put the odds in our favor.
Emerging markets and high yields remain acting very healthy pattern wise…not impressed with Transportations or some real estate today.
I’m not gutsy…just a guy that like low risk pattern trades that can “inflate portfolios regardless of market direction.”
Nice post no. 3 here CK, this is a gutsy call. I was also very confused with the S and P harvest with the dollar tanking. Time will tell.
mike – a few thoughts based on my understanding. A falling dollar could lead to highejr stock prices all else being equal but the reason the dollar is probably falling is due to potentially more quantitative easing from the fed. But the reason for more QE would be because the economy is slipping back into recession which could have a devastating effect on stock prices given that the market is richly valued and overbought. So it is unclear if an inverse correlation will continue. Also if there is a flight to safety from equities to the dollar the dollar may rally considerably. In any case the charts will tell the story as things develop.
So the next major support for uup would be at about 22.10 or so with the neckline?
Dollar is at 80.02 as of about 8:30pm, MST. What would happen to the S $ P if the dollar goes below that? Would that flog another wild rally?