Compromised? (by Jeff Patterson)

By -

I hear from a lot of people how the dollar's decline is over. Therefore I thought I would post a chart of FXE. From my perspective the up trend has not been compromised. Does it look like the up trend is broke? The purple line which is the 90d s.m.a just needs to be tested to cleanse out all the complacent and weak longs. Look back to 06-08 for some perspective. Also does it look like gold's long term trend has been compromised?

So we see FXE about test the 90 day. Numerous gold stocks are at the 90 day or approaching them, which also happens to be their long term upward trend lines. Add to that concoction that UUP is about to test its 90 day, which is down sloping and what you have is a nice chance to get long some gold and FXE and be part of the continuing up trend once it resumes from this current shake out.

Furthermore the dollar index or UUP has done nothing to confirm a break of its primary trend. Is a counter trend rally possible, sure, but I think its just about run its course, it can move a little higher from here. If you think about the dollar from a fundamental perspective there is no reason for it to change direction yet. There are so many reasons why it will stay weak. 

One final note December, January and February are historically very strong for gold.