You know we’ve been tracking the long term Dollar which violated the quarter lines on the channel. We are clearly deeper into the channel a week later. So is it hopeless? Last week sentiment was as one sided as I’ve seen it at all the recent Dollar bottoms in the last 3 years. Pundits stated the Dollar trade was the easiest money they can remember and Bertha Coombs mentioned in one of her morning updates that the Dollar was getting “crushed.” As bad as that sounds, and it’s bad, they don’t talk about the Greenback in those terms very often. So sentiment is where it needs to be. We are also on the back end of a 233 day window in both the Greenback and EUR-USD. We know there is an inverse relationship to equities. If the Dollar doesn’t turn up here I’m not exactly sure what can do it because technical conditions for a high in the stock market were present last week and from the information we have now, it appears it elected to pass.
Finally, China spent a down week but is on the cusp of turning back up at key support and the Nikkei also cleared above month long congestion on the 261 day window off last April’s high. What about the inverse relationship to bonds? We look to median lines as important support and resistance lines. But once those lines are crossed, behavior changes as well. In this case, once the price action cleared above our long term bear channel line, the market got over its allergic reaction to higher bond prices.
This week? Let’s see what the currencies can do, they appear to be the last guard at the gate.
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Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.
Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.