A couple of popular Wall Street phrases are….”Don’t fight the Fed and Let the trend be your friend.”
IF the goal is to see the Dollar fall in price and have other assets rally –Success….so far so good! The big test on this “Highway to Higher Asset Prices” is now at hand, a few days after the announced QE2 program.
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The Dollars decline has been very positive for the 500 index and Copper/Commodities. The positive price action reinforces the quotes from above per not fighting this Trend/Fed at this time!
The “Power of the Pattern” reflects that the Dollar is on support RIGHT NOW! If the Powers to be can break the back of the buck, cause the Dollar to break support, this rally should achieve much higher prices.
Keep stops in place that are comfortable to your personal risk levels, since many important assets are at the TOP of their ranges and the Pattern on the Dollar is fighting the potential game plan of the Fed!
To stablize or not to stablize, that ’tis the question.
Whether ’tis nobler in the DXY to suffer
the slings and arrows of Ben Bernanke,
or take arms against a sea of troubles,
and by opposing, end them.
Euro broke out of a congestion area a few days ago and now has fallen right back into it. US dollar might be finding its footing here.
Thanks Chris! Indeed, a stop is always needed…
And yes, I saw the Euro breaking support on your chart 😉
Louis,
I don’t think being long the dollar, at this support level, with roughly 3% bulls is a big risk, yet if going long the dollar, make sure a stop is in place, because support could give way!
It was most likely hard to tell, but the Euro was breaking support. I attempted to highlight it in yellow.
Chris
Chris this is my bet: The Fed getting words from china, wanting a lower dallar, but China put the squeese on the fed.
The Fed will get the squeeze form the new Republicans on the dollar especailly when the dollar falls, oil goes up. People just see the prices at the pump going up, giving the squeese on the home budgets, give a reaction to cangress, thus the new elected republicansnow blame congress..and it goes around.
So all i could see a bounce in the dollar.. and stocks go lower, given the hugh climb since Setp.
should be interesting, thank for the good charting…
Fr: Grasshopper!!!
USD is counter intuitive. It is making higher low despite having implemented QE1 and announced QE2. Is there any reason for higher USD?
Great Post! It’s actually the one I was waiting for… I was worried by the fact that the Euro approaching long-term resistance coincides with the heating up of the european sovereign debt crisis, but thing seem to cool after the chinese visit to portugal and the greek regional election (there’s still Ireland). But it seems as if the euro still has a little head-room, up to about 1.45 Usd on your chart. If there is a reversal, I am contemplating investing in an inverse SP500 tracker, since I’m in Europe I should profit from the dollar rise as well as the market correction.
My question then: do you consider a further drop in the dollar? Or otherwise, a break of the eur/usd correlation with the stock markets? Or even that dollar and euro both drop relative to other currencies? Signals seem to be contradictory: bullish signs on the markets, bearish signs on the euro, could this mean the correlation could break, or is it just noise?
Do you think it is risky to be long on the dollar now, that it is on the support?