Truly bottomless Dollar Index

Nine months ago i posted this. Was USD finally done? We had to wait a little longer but when the hounds of hell finally came for USD they did so with a vengeance. Here’s Dollar Index futures on the weekly time frame.  The European “QE success story” will probably overshadow the US “QE hangover” story over the next few quarters as capital flows pour out of USD and into commodity currencies, EUR and anything anti-USD.  But really..where does it lead?

DX Futures Weekly – 88 coming?

DX-true

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Equities – had to be patient

15 Days ago i posted that long term resistance coming for the equity market.

We did indeed fail at this resistance level leading to the last 48 hours carnage in world wide equities (Nikkei alone down -8%) but spent about 8 trading sessions riding along resistance area. Sometimes you have to be patient for these things.

USD may be a bit oversold here so if current correlations hold we may see a mitigation in equities selling.

Current version. Emini S&P Futures

ESDDDD

 

 

 

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

EURUSD 1.30

More and more over the past two years I’ve become reliant on the ultra long term charts for bias on most vehicles.

You saw this in my calling the top in USDJPY 4 months ago just before we saw it go from 123 down to it’s current 107. The monthly called that even though most shorter term charts were extreme bullish.

Here we have the EURUSD monthly chart.

Not much to say here..but ~1.30 and beyond sometime in next few months is a possibility..

The extreme USD strength that contributed to decimating the commodities complex and all the repercussions therein is probably over.

USD flows to emerging markets and EU countries like Czech Republic (solid PMI prints that arent getting much media attention yet) might offset even the most dovish EU Central Banking apparatchik machinations.

 

EUR/USD Monthly

 

 

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The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Almost there.. Market overheated

Just the technical picture of where we are on US equities..

Will build shorts around here. More USD strength,being that DX is at the bottom of the long standing downward channel on the weekly could be the catalyst as commods should get renewed pressure. My guess though is that the doves come out to talk down USD as much as possible as no one wants a replay of the global catastrophe this USD rally has wrought on global econ..

To me though, USD is just in a dead cat bounce as the prior attempt at resistance early this year don’t quite make it and that usually means support will not hold other than the initial technical reaction.

Here’s ES (Emini S&P futures) about to tag the resistance  mentioned 2 weeks ago here.

ES-going-to-heck2

 

 

 

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Russell2000 – When support become resistance – sadness ensues

Yesterday while market participants were reveling in an orgy at the bullpen i cast doubt on intermediate term market direction by posting http://signalinea.com/end-of-q1-window-dressing-just-in-time-for-big-resistance/

 

I was adding shorts not on the blue chips, but the high multiple sector. Here’s why..

Here’s the Russell2000 weekly. If this old support does indeed become resistance it’s a long way down. And once again USD weakness may mitigate the fall a bit but either way, it’s not pretty.

russell2000-chart

 

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

End of Q1 window dressing just in time for big resistance

End of 1st quarter window dressing and subsequent Friday (tomorrow) follow-thru could be enough to tag this resistance on the Emini S&P.

Trade setups don’t often come this obvious. But when they do..

Putting on shorts tomorrow. But probably high multiple sector though for added tankage..

But now that the ES/USD correlation seems to be breaking down i would expect the ongoing USD weakness to mitigate the fall to some degree.

ES-daily-heck

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

USDJPY fulfillment

Back on February 9th i posted http://signalinea.com/usd-still-doomed/ showing that USDJPY had probably peaked and that it meant a good and probable case for USD weakness in general for the very long term.

Since then a correction of around -10% has come off USDJPY..

But honestly a technical bounce here wouldnt surprise.

usdjpy

 

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Anatomy of a Trade – Closed

A few weeks ago i posted http://signalinea.com/anatomy-of-the-trade/ responding to requests i occasionally receive asking if i could walk through one of my trades from beginning to end.

Today i took profit on that position with a +28% gain.

But given the long term nature of my bias on EURUSD it was probably too early.  Zooming way out here, take a look at this this EURUSD weekly.

USD doomed in my humble opinion..as Ive been saying for a a few months now. Capital flows to non-USD assets beginning..

EURUSD-Weekly

 

 

 

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan