Tag Archives: US Dollar

Flavours for 2015

Evening traders/investors,

Apologies for the inactivity during the last few months. It seems to me that I trade less, and have less to say as a blogger too – probably all due to the more patient and relaxed trend-following approach I have been making a transition to over the last year or so. Belated Christmas and New Year greetings to all of you. As market participants, it is best to wish one another a better year ahead! Every year the word “volatile” is used to sum up the markets but it is inevitable that markets will fluctuate and throw up some surprises somewhere inside a whole calendar year. 2014, however, was not so exciting as compared to other years. The local bourse certainly did not give me that many trend opportunities; so much so that I had to look at some other equity markets for the first time. The USD’s languid state in the first two-thirds of the year did not present any concrete trend set-ups too. There were a few set-ups in certain markets, and those set-ups are still valid over the turn of the year.

The first flavour I have for the new year is the possible divergence between Europe and US. I first discussed this view in this post https://technicalanalysistalk.wordpress.com/2014/11/05/end-of-europes-uptrend-while-america-advances/ . It seemed difficult to envision an inversely proportional divergence between those two markets; so I concluded that it probably means general sideways movement in Europe while American equities continued the charge north. For now, the picture is the same to me: nothing has changed in the broad sense for those two markets.

The local bourse- the STI, still does not look that bullish to me even with a decent 6% showing last year. I think this is because I do not see that many bullish set-ups in the constituent counters. The banks did well for the STI last year, and they look set to hold the gains this year, though this will require analysis in the months ahead. SIA also surged suddenly late last year so I will see what is up with the national carrier. The “Jardines” jumped a little in the second half of last year but do not look to improve much from here on. The “agris” are tanking quite badly, and as a trend-follower, I will look for further downside. (Exclude Olam from this list; Olam is an example of what happens when some people interfere. Of course, I do not know what goes on behind their curtains and that of other places, but the way I see it, Olam was saved from utter embarrassment “unnaturally”.)

Funnily, most if not all of the counters in the STI with the word Singapore in the company name have bearish-looking charts. The general stance I am taking on the local equity market is a bearish one for the blue-chips. However, I think there may be better rish-reward opportunities outside the STI, therefore, I will look at the second- and third-tiers more closely. Judging from the last few months of last year, I do not have many interesting charts to share, hence what I mentioned in the first paragraph, “The local bourse certainly did not give me that many trend opportunities; so much so that I had to look at some other equity markets…”. Oil and gas and shipping sectors are looking quite horrible, and property counters do not look promising too (I would have said outright bearish if not for the performance of one or two big players).

I will continue to watch Gold quite closely. The glittery metal seems to be on the verge of a continuation of a major downtrend. Somewhere last year, I was alerted to a break of major support. Gold managed to hold on after the slight violation of support but time will tell if gold can find favour or if investors will ditch gold for other asset classes.

gold1

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Dollar Index forming the third region

Evening all,

First, I want to wish all of you a belated blessed christmas. I hope your festive season went well.

Today, I have a chart of the US Dollar index. In general, the greenback should have an inverse relationship with equities. In November and December, while equities made a somewhat surprising climb, the US Dollar fell (EURUSD at levels not seen for at least half a year). This rally happened despite whatever cliff talks/scares made headlines. Sidetrack: I read an article online and saw the word “cliff-mas”! Anyways, I was long and happy since I played certain stock CFDs on the long side. Ever since my last post on forex, I have not been active in that market.

The Dollar index was in a straightforward uptrend from 2011 to the middle of 2012. After that, the greenback got hammered and fell below 80. In the chart below, you will see 3 boxes. I box up 3 regions of price to show the popular chart formation of a head and shoulders. I like to describe such a pattern as consisting of 3 regions of price – contrast against the popular notion of 3 price peaks. Right now, the US Dollar is forming the right shoulder.

Naturally, I will be looking at this pattern as a topping one. The long-term uptrend in equities looks even better now compared with 2 months ago because of a rally out of a healthy correction. And, take note that the Dollar index is clearly below the 200-day MA. I will continue looking for long set-ups in EURUSD and see if this pattern does end up being a top.

usdd

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Dollar and equities

Evening all,

I must apologise to regular readers starved of technical analysis here for the draught of posts in the last few weeks. I have been suddenly more active in a time-consuming hobby – golf – so time for the markets and charts have been shortened. Anyways, I should be back to churning out at least 2 posts every week soon.

Ever since the drop in equities because of the US Debt downgrade last year, the market – as it should be doing so in a multi-year bull-run – defied bears by going on a good-sized 25%+ rally. At the same time, the US Dollar has been strengthening as well. On the fundamental side, with all the dire predictions aimed at the Fed for setting off the printing machines, the US Dollar has still strengthened. There are reasons out there, but I shall not discuss here.

As of now, while equities are still trudging higher, the Dollar has lost some strength in the last few months. Chart-wise, the Dollar has already started to look bearish. The death cross a few weeks ago plus the breaking of a mid-term uptrend channel are obvious bearish takeaways. Equities may turn down in the weeks ahead. With growth forecasts cut around the world, mundane-to-disappointing earnings from corporations, and a subdued-to-gloomy outlook for major economies (including China), the case for falling equities has been making some headlines in financial media. Chart-wise, I still have to keep my head up as mid-term and long-term trends are still strong. Bearing in mind that the Dollar and equities share a negative correlation in general, is it time the Dollar depreciates against other currencies and equities fly off to even greater heights? When comparing two instruments that supposedly share some kind of correlation, the basic theory is that when there is  a contrary movement, what should happen after a while is that the two instruments will go back to the correlation that they are supposed to share. In this case, I will watch and see if the greenback continues to fall while equities hold up strong.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Forex – USD

Evening all,

Once again, I have not seen much on equity charts that warrant a post here. I have been monitoring the forex market more over the last few weeks since there has not been much movement in stocks – the STI has been stuck between 3100 and 3180 for quite some time already. I have some charts that pertain to the US Dollar for today.

First up, I have a weekly chart of the US Dollar index. This chart should best represent the strength of the US Dollar.

In the chart below, you will see two head and shoulders patterns – the one in red is a pat one, and this one worked out very well (thumbs up for technical analysis!); the other one is a current, confirmed pattern. What this basically means is that I am looking for further selling pressure on the US Dollar for the short-term.

 

Now, for a chart of the USD/EUR currency pair.

Take a look at this link for my last post on the EURUSD: https://technicalanalysistalk.wordpress.com/2011/03/27/eurusd-still-looking-bullish/

At that time, I found a large head and shoulders pattern with an upward breakout. I cannot remember if I gave a projection based on the huge pattern. Now, taking the height of the head and shoulders pattern, I project the height above the “head” of the pattern, and I get approximately 1.5550. In other words, using technical analysis, I have to expect EURUSD to hit the 1.55 region.

 

I have an interesting chart for you all below. This chart view spans more than a year. You can see the large head and shoulders pattern I am talking about; and of more importance for the chart below, you will see an even bigger upward parallel channel. This ties in with how the US Dollar has been in a general, long depreciating trend.

 

Now for a closer look at the EUR/USD currency pair’s chart.

I have identified another head and shoulders pattern; this time around, it is much smaller in size. Strictly speaking, there was a downward breakout. It was not too forceful though, and a quick reversal ensued. I will now consider this an upward breakout from a head and shoulders pattern. Based on this pattern, I will first look for the rate to test the “head region”. In this case, the head region comes in at 1.4800. Breaking through that region will be yet another very bullish sign. When that happens, I will look for EURUSD to hit the abovementioned 1.5500 longer-term target.

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

EUR/USD still looking bullish

Hello all,

I hope everyone is having a great weekend. At this time, I urge everyone (if you have not) to participate in the poll above.

I have charts on the popular currency pair – the EUR/USD pair. Thankfully, my last post on the EURUSD proved to be a good one, as the confirmed bull flag ran its course. Now, I have looked at the EURUSD chart again, and I am still seeing bullish signs – this time, slightly longer – term ones.

On the weekly chart, you will see that I have highlighted a confirmed head and shoulders pattern. This one spans about half a year, and comes with an upward breakout. If you are new here, and do not know what I do expect from this popular pattern, please click on this link to read more: https://technicalanalysistalk.wordpress.com/2011/02/20/eurusd/

The head and shoulders pattern was confirmed – with price breaking out northward. What I will be looking for in such a situation is for price/rate to rally to the level of the head. In the EURUSD chart, the head would be the 1.4000 region. A bull flag (in orange trendlines) fuelled the rally coming out of the right shoulder. On the weekly chart below, you will see that the EURUSD pair has just gotten above the 200-week MA – albeit just above only, but it still should be taken as a bullish signal for now. Also, the strong red resistance trendline has just been broken. So from these points, I am getting an indication from the chart of further upside in the EURUSD, or in other words, continued selling pressure on the US Dollar. I would be looking for the EUR/USD pair to get to the 78.6% retracement level of about 1.4400.

On the daily chart, you will see an upward parallel channel that I have drawn, showing the recent uptrend in the EURUSD. The chart of the EURUSD tells me that the US Dollar does not seem like it should be reversing its recent weakness. I would be adopting a “buy the dips” mentality.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Interesting look at the Dollar versus indices

Hello all

I have been really busy in the past few days and have not been able to update this blog. Now I am back and raring to start posting again! Hope you all have had a good time in the market; looks like we had a short rally in the past few days.

Anyway, I took a look at some charts and found the US Dollar chart to be quite interesting. In general, the Dollar should trade inversely with the stock market. Simply put it, when the dollar goes down, funds get channeled into the States, and flow into the stock market. Of course there are times when both markets go hand in hand. I have charts of the US Dollar and major indices to show you all the interesting relationship between the greenback and the stock market. Enjoy.

Here is the US Dollar versus the local index. Not the best comparison, but still you can see a general relationship.

 

Next, the dollar against the S&P 500.

See the beautiful correlation between the dollar and stock markets? It is impressive to see how the two markets “find tops/bottoms together”. I will now take a quick look at the chart of the dollar to see what my analysis tells me.

The dollar had been trading in a neat downward parallel channel for quite a while. Recently it has broken out of the channel after making a low of 75. Now, I can draw an upward parallel channel. Now, what should be expected looking at the chart of the dollar? With the bullish pattern in place, I have to continue looking for strength in the dollar in the days ahead. I have a resistance level of 82 on the chart. I am going to respect this level based on what the greenback does whenever it hits this level in the past. Also, the 200-day MA is just about there too. I have to choose between being a bull or bear in the dollar. If the US dollar index gets above 82, I will be a bull straightaway. However, in the mid-term, I will look for the US dollar to continue in the general, larger downtrend.

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Interesting video

Hello all,

I have a video to share with you guys. This is not a video by me. It is quite long, but I am sure you will find it quite interesting. These are some points I would like you guys to pay attention to:

1. At the start of the video, the speaker talks about the mentality and beliefs of some traders, and how when it comes to trading, if you call yourself a chartst, you have to drop all your personal opinions and follow the charts.

2. In the chart segment, the speaker talks about the relationship of the dollar index and the stock market.

Here’s the link if you cannot view the video above : http://www.youtube.com/watch?v=rvNmTl49OyY

The US Dollar

Hello all,

Recently, we have been noting the strengthening of the US dollar. On the chart, we may see what might be a true reversal of the downward spiral the US dollar was in. I have uploaded a weekly chart of the dollar, and would discuss on it now.

First, we have to note that the US dollar has broken out of its respectable downward channel. That is a bullish sign. In previous posts, i talked about the $75 mark being our support, and where i expected a reversal. This was also fuelled by the morning star pattern ( highlighted in a black box), which is a reversal pattern. Of course, the dollar did not turn up right after the pattern, but did so after a few weeks, with a low of $74.40 (Our downside projection based on the double top, which you can read about in “big picture analysis”). Indicators are all bullish on the dollar for now. So with that, i would look for the US dollar to continue rising up until the charts tell me of a correction.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Big picture analysis.

Good evening everyone.

The past few weeks have been rather rocky for me. Bad calls, conflicting analysis, etc. I decided to take a broad step out and look at things with a long-term horizon, and to tell myself what kind of mindset i should have trading/investing in the next few weeks. After working on some charts, i have things to present to you.

Lets take a look at the correlation between the Dow Jones Transportation and the dollar index. The charts are weekly ones.

We can see how both of them move in opposite directions in general. And very recently, the sliding dollar together with the equity market rally.

EquityDollar

With that, i would like to talk about the US dollar. Remember, i try to talk only about the “technicals” here, so i would not be commenting on whatever the Fed may do..etc… . From the chart it seems like we have found support at $75. That is possible. Based on the downward projection from the double top, we should expect price to hit $74 dollars, $1.00 off! Indicators are telling me that the dollar is just coming out of oversold territory- a slightly bullish signal. Basically, i am expecting, based on my analysis, the dollar to strengthen in the long-run. We have already realised our break down from the massive double top, found support, and indicators tell us we are just popping up out of oversold areas. I would prefer to wait for the dollar to brea up out of its downward parallel channel, for me to be a bull on the dollar.

USDollar

Now, on to the Dow Jones Transportation.

First, i have done some fibonacci studies on the weekly chart of the DJT.

DJT Fib studies

Next, support and resistance studies. We have formed a double top, showing us how the Transportation average failed to break above 4000, into the zone where price was “free-falling” last year. I will show you the double top on the daily scale. But for now, based on fibonacci retracements, we have support coming up at 3300s, which is price formed a small consolidating base. I think that is a very important level, also because of the double top pattern. Finally, look at the MACD indicator, which i like to use in long-term analysis. Though a divergence/convergence would act as a better signal, what we have now is “bearish-looking enough”.

Weekly DJT

Next, using the daily chart, lets see what we can come up with.

Okay, the double top that is clear on the chart has already been materialised. The last candle does not look too good either. A rally, then a close near the open/low. Very importantly, we have broken down from a support trendline. I do not know about you, but that is vital to me. A connection between March lows to the end of the consolidation(between 3000 to 3400). Thats is bearish looking. Technical analysis 101: going under a support trendline! Lastly, i like the look of the set-up because a downward projection would put us to where the support of 3300s is. Coincidence? Lastly, it is interesting to note that the 200 day MA lurks right below the support. Look for the Dow Jones Transportation to hold at the heavy 200 day MA.

Daily DJT

Alright, thats all i have to say for tonight. Please tell me what your analysis leads you to think. I believe we should see selling off in the next weeks. I like the fact that the dollar should rise, after finding good support. This would agree with the assumption of a downward movement in equities.

All in all, if i am wrong, the markets change directions, and new events pop up on the charts, i will simply follow what the charts tell me and turn bullish. As for now, i do not think our long rally would continue.

Goodnight.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.