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Saturday, February 16, 2013

IS THE DOLLAR REALLY WEAK?



Here is a weekly chart of the Dollar Index. In spite of all the talk in the media about how the dollar is being devalued every day, you can see that in the index that is not true. We are at the same price level as we were in September of 2010.

If you look at what I have marked on the chart they are two sideways congestions in down trends with a sharply declining ADX. The first one showed a very nice rally we don't know yet what will happen with the current one. The next chart is another prior example I thought was similar to what we are looking at above.




Like many things I show in here this is a setup and not an entry commentary. There needs to be some type of break out from this area to confirm this potential move. We are still in a down trend so I might very well play sell signals on a daily chart from here. We were long in the DX in the trading service this past week and made a little bit of money based on a shorter term pattern that triggered. I do also see some potential sell signals for next week in this. However, in the bigger picture I am leaning more to the long side.

We are seeing a decoupling of most markets with the ES now which is exciting. If the FED just wants to make sure the ES keeps rising that is fine by me as long as they leave the rest of the markets to fend for themselves. Perhaps this means the overall the economy is getting better underneath, I am not sure. What the overall state of the economy is doing is not part of how I make trading decisions so it does not matter.

The reason Gold and Silver declined this week is because they are in down trends and have been. Why people feel they have to make an excuse or find a reason as to why they went down do not understand how markets work, that could not be more obvious. It is also why stock prices are rising, the market is in an up trend. You do not need to know more than that.

Bonds are holding the critical level they need to hold so far and appear to be headed for a potential break out back upward this coming week. This is good for everything if it happens. Low interest rates are good not bad.

Enjoy your weekend




4 comments:

Vikas said...

Bonds are holding that level, but 144 appears to be a wall for now, Im guessing a break out above will hit some buy stops.

https://pbs.twimg.com/media/BDO-Ln6CYAEPMTq.png

Robert said...

How long do you see this downtrend in gold lasting ?
The latest COT report in gold, the Commercial net short position declined by 13,954 contracts ,and that as you know does not include yesterday's big drop .
We could see a nice up move in the coming weeks .

Chris Johnston said...

Looks like we go down to 1550 to test that crucial area once again. If it breaks I think we go way way down, under $500 before it is done. For the bulls buying into that support zone would be the play and exiting if it does not hold. I am not sure if it will hold or not.

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