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The Euro looks to have found key Fibonacci and channel resistance at (1) as it has created a series of “lower highs.” How it reacts to this resistance will tell us a ton about the future of the risk trade!
Last Friday it appeared that TLT was approaching support after it declined almost 10% over the past month (see post here). Should the Euro break support and push further south, risk will be challenged and bond could see a short-term bounce.
HAPPY HALLOWEEN to all!
Watch carefully for the critical number 76.50 (USDX).
It will be (as in sept-06) the turning point from risk to safety.
Last week I shared the post “Has the Dollar shrank enough?” (see post here) and “Do you see an opportunity in TLT?” (See post here)
One day a trend does not make, yet the Dollar is up over 1.5% today and TLT is up over 2.5%. The Patterns were suggesting the action that is happening today, per a Dollar and TLT rally.
On 10/4, the crowded trade became cash. (see Rydex ratio) What has happened after too many investors fled to cash? Best month for stocks in 37 years. All of this took place after the Dollar hit resistance and created a one of the largest bearish wicks in years, at it Fib 38% level.
The Dollar was important at stock market lows almost a month ago…I suspect the Dollar/Euro situation is very important, again!
Is this drop strictly due to BOJ buying the yen?
I know the dollar will rise if BOJ continues to buy yen, but
what is the relationship between the yen and Euro?