Yellen’s hawkishness is definitely shaking up the world of currencies; the Yen is getting smashed, continuing to fall away from the major horizontal lines I’ve drawn…..
Yesterday was clearly a good day to introduce my new Jack in the Box continuation/flag pattern. The double bottom broke down slightly and has then reversed back into a full test of 2299.40. The full ATH retest at 2300.99 is VERY close and should be tested today if we are going to see that full retest. SPX 60min chart:
Just a quick post before I head to bed – – the USD/JPY is key to watch. Weakness here will continue to be of aid to equity bears. I’ve also got a short on DXJ, which obviously also needs the Yen to play along. This has nothing to do with any of that, but I’ll just say in passing energy is increasingly my favorite sector, with more of my shorts concentrated in that zone. Anyway, here’s the USD/JPY:
The U.S. Dollar Index (DXY) has violated its “Dec 14 FOMC low” at 100.73, and is in route to probe important support at its prior two major 2015 peaks at 100.47 (Dec 3, 2015) and at 100.39 (Mar 13, 2015). If these levels are violated and sustained, this will argue for a deeper correction into the 99.00-98.40 area as a next immediate target zone.
Let’s notice the glaring weekly momentum divergence at the 2017 high compared with the price momentum confirmation that occurred at the March 2015 high.
The juxtaposition of the intermediate-term momentum gauges with the unconfirmed new-high price action is a powerful warning that the USD could be in the early phase of a major correction of its May 2011 to Jan 2017 Bull Market.
Mike Paulenoff is founder of MPTrader.com, where he provides live intraday analysis and trade alerts covering the equity, commodity, and currency markets.
The Euro has been strengthening ever since 2017 began, but it seems to me, based on the ETF shown below, that we’re up against a potential reversal point.