In the chart below, the pattern reflected that the Dollar broke above resistance and is now testing the old resistance as support.(see post here) Odds are high this Dollar decline since last Friday, has had much to do with the 4 day rally in stocks.
CLICK ON CHART TO ENLARGE
On the flip side, the chart below reflects the opposite…The Euro is kissing resistance! (See Euro/FXE quote)
CLICK ON CHART TO ENLARGE
I’m sorry to bore you with several currency posts, yet I remain of the belief, that if we can get the currencies correct, how we structure our portfolios becomes much easier! In my humble opinion the situation in the Dollar/Euro right now and its outcome in the next few weeks will be one of the most important outcomes we have seen in months and months!
The decline from late July to early August, where the 500 index fell almost 20% in two weeks was a rare event. Carter Worth of Oppenhiemer this morning shared on CNBC this type of decline has only happened 3 times in history.
What the currencies do from here will determine if we see more of these type of declines in the immediate future!
FXE looks like a rolling complex Head & Shoulders top
Chris,
As always thanks for the explanation–with so much intervention in the markets its hard to know what is really going on
Robert…you are correct on all fronts, Dollar up and stocks up. I shared in the currency post, it will take days for this to resolve itself. For me a few hours hasn’t resolved the key currency support test, as a success or failure.
Despite the 500 index falling 20% in a couple of weeks, the 500 index DID NOT BREAK key rising Fibonacci support levels
Despite the news out of Europe, unemployment issues in the states and grocery list of issues the media pounds us with each day, the link cited above reflects that the 500 index on a weekly basis has made a series of higher lows a very important Fibonacci support levels. The H&S pattern suggested lower prices on a big picture basis and the pattern was correct. Remaining on a big picture basis, key support did not get taken out.
Will see a week from now how the Dollar/Euro situation plays out. Thanks for the great comment…hope this helps a little bit.
Chris
Chris,
the dollar is up today and is trading over 77–support on your chart is at 76.31..yet the markets are still going up..if you are correct and the dollar continues to rally then the markets should decline .
Just trying to make sense of this currency stuff–just surprised to see the markets going up with the dollar also going up
Glyn….Thanks for the kind words. Per your wish of posting a chart on Europe/China….any guess what the quiz was two days ago? I might have met your wishes 😉 I will post the answer to the quiz later today, yet I just gave a big hint to what it was!
Keep on posting Chris, your charts are not a bore, more charts the better. You said in on of your replies that you were going to post some charts on the UK FTSE & CHINA are the still in the pipe line?