Last Friday I did a duo chart on the U.S. Dollar, looking at daily and weekly action. It appeared that the Dollar was breaking short-term support and creating a bearish upside wick at its 38% Fibonacci resistance level. (see post here) Below is an update to the Dollar and Euro, looking to see if last weeks patterns are moving in the same direction this morning. (just like last Friday morning, this chart was done early in the morning!)
CLICK ON CHART TO ENLARGE
Dollar looks to have created a fairly large upside last week and early this morning is pushing below support. Failure at Fib 38%?
Last week I shared that the bond complex looked to be sending some bearish signals as TLT looked to be creating a “Double Top” (see TLT Twin Peaks) and some bonds were turning from “Hot to Cold” (see post here) . If history is a guide, a Dollar breakdown and Euro breakout, should put downside pressure on the bond complex.
So far today the key “Monday Morning Movers” are the currencies!!! Let them help you look down the road per helping you build portfolios as this currency move is a positive for the risk assets!
I had the $DYX breaking a support channel after it had a bounce down from the LT .382 retracement Friday but with the 50 week ma and the 200dma closely below I think it is feasible to have this rally stall at or before the 1205 range (LT .236 retracement) or at least pause to consolidate until it climbs up to that 1222 fibo level.
Aaron….great move on your part! The reversal at the 38% level in the Dollar (big wick) is a positive for the risk trade. The breakdown in TLT is price action that is a positive for the risk trade. JNK/HYG are breaking steep falling resistance lines…good for the risk trade too. This sideways channel has to come to an end and some of these pieces falling into place suggest its about time to put the pattern to bed and move on.
Is this scenario likely to lead stocks out of the trading range (~1220) to (~1100)that has been in place for months?
I have been long stocks since ~1085 mark on the S & P. I was ready to sell near the 1200 mark, but you have me thinking that 1220 may be eclipsed.