Last week the U.S. Dollar Index June futures contract opened at 79.790 and closed at 80.404.
Helping the U.S. dollar last week was the anti-austerity election results in France and Greece, with Greece once again taking center stage. I had to laugh when I read the German finance minister dared Greece to leave the Euro. It wasn’t a double or triple dare, just a dare. Many analysts believe Greece can’t stay in the Euro. And there are questions about both Spain and Italy as well. Today we are reading German Chancellor Angela Merkel is not doing well in local elections.
And what about China? China’s hot growing economy has cooled down as 2012 growth could be the weakest in 13-years. China is now looking at stimulus of 400 billion yuan.
Proceed to Page 2 for the latest COT Data...
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
On the daily June U.S. dollar chart below, we see a strong trend with ADX at 43. MACD is bullish and Stochastics are overbought. You can see this trend started at the beginning of May with the market breaking above 79.00 (bottom of range), DI differential at zero, Stocahstics correcting from oversold territory, and MACD was dropping divergence from below the signal line and was looking to cross up over the signal line. The green technical trade signal line is telling you it is time to seriously consider an entry to the long side. Remember the market is correcting from the bottom of a range. A swing to 80.00 was very possible. And we all knew the Europe elections were coming. Market uncertainty helps the U.S. dollar.
On the weekly chart you can see how the greenback has been in a tight range of 79-80. Why the range? Look at the commitment of traders report (COT). In the legacy report we see commercials at -14,000 contracts net short as they have been liquidating since Oct. 14, 2011 when their net short position was -53,158 contracts. For a far more transparent view of the “biggest” money you can see how all the parties in the COT Traders in Financial Futures have been liquidating their net positions. You can see how this money moved just before some really nice trends started in the dollar. Seeing what you see now, you have a very good idea of what to watch for before the next leg-up or down. And as far as this trader is concerned I still believe the Fed has a weak dollar policy, it helps U.S. exports. So until next week have a prosperous trading week. And remember even if you day-trade you can still follow the trends.
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