The USD has been under accumulation since May of this year when it bounced around 3-year major support from late October 2013, as shown on the following Daily chart.
With daily whip-saw action that began in November, we’ve seen the RSI come off its highs, but remains above the 50.00 level. The MACD and Stochastics indicators have also been sliding. These are suggesting that we may see either a slowing in buying of USD, or a rotation into other world currencies.
$93.00 is the next major resistance level (Fibonacci confluence) for the U.S. $, as shown on the Weekly chart below.
The RSI is showing a negative divergence on this latest advance, and other indicators are overbought; however, Chaikin Money Flow is on the rise again, so the buying may not be over just yet.
$89.00 is the near-term resistance level that will need to be overcome and held to support a potential advance to the next level.
What a fine morning, eh, Slopers? Just a quick chart illustrating succinctly how the carry trade that’s been supporting our grotesquely-overpriced equity markets is getting blown straight to Hades.
The next two days are important on the 5 DMA stats that I’ve been watching over the last few days. The previous two examples that retested the high before the break below the 5 DMA then retraced on the sixth and seventh days after the break. The break was six days ago so we shall see whether that repeats here.
By the end of Friday it was clear that the pattern from last last Monday’s low at 2049 is a rising wedge. That leans 70% bearish as and when it breaks of course, and could take SPX back to what would now be double-top support at 2049, targeting 2019 on a sustained break below that. That would be a retracement near the lower end of what we would expect to see after the end of a 20+ day 5 DMA run. A clear break below (wedge support and then) the 50 hour MA, now at 2068, should signal that a retracement has started. SPX 60min chart: (more…)
Well, although there are mixed opinions about our friends in Gainesville, one thing they’ve gotten absolutely right is US dollar strength. Prechter’s contention for a bull market in the dollar has been well-documented. It’s remarkable to me that a country over $18 trillion in debt can be seen as the Hercules of the fiscal world, but I guess the reality is that Japan and Europe are so much worse off, we look good by comparison. Up, up, and away!