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What is the USD doing?

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It seems to be all about the mighty dollar these days, well in truth when it is never?  Previously I though the USD may have topped out (DX) and be heading into a bear phase but recently, chiefly because the price action did not fit with a bear, I have switched to another leg up scenario.  I think we could see DX up at around 100, which would be another hit on the very solid upper channel line and the Fib 76/68 resistance zone.  After that, if USD turns down again, I see that bear phase coming into play for the medium term (6-9 months).  This scenario may do all sorts of weird and wonderful things for commodities, precious metals and indeed the wider economy, especially for emerging markets swamped in US denominated debt.  The so-called reflation trade could be back on for commodities once the USD bear hits in force but for now that seems to be suspended across all commodities.  A large USD Bear could also be a catalyst for PMs to get bullish again, with or without a wider global crisis scenario, but prior to that a bearish PM scenario persist in my analysis and macro fundamentals assessment; I just don't see where the catalyst for a large bull move on PMs is going to come from unless this virus thing gets out of hand and/or stock collapse, the latter of which seems unlikely short term but perhaps more likely medium term.  Therefore I am minded as follows:

  1. USD up for the short term (couple of months time frame, maybe shorter)
  2. Commodities down (definitely softs and things like copper may rally initially in relief fashion before falling to key support) - more on this later.
  3. Oil however may buck the trend and rally because generally we need to see higher oil prices for a recession to kick in, based on past performance but again more on this later.
  4. Stocks may get a bit whipsaw like for a while but generally will complete a melt up before an actual recession kicks in to drive the collapse that is surely inevitable.

So looking at DX charts I see the following:

On the Monthly chart USD was in a strong bear market since shortly after 9/11 and then turned on a long time frame Head & Shoulders, with the Head around 2009 when the Fed threw the kitchen sink at the Credit Crunch and kept on going with this policy, until around 2017 that is and the USD promptly dropped.  The rally was not a clear motive 1-5 though, more like a retrace in A-B-C form, which was stopped around the Fib 62% off ATHs in 2017.  The bear drop was in 1-5 and the current rally has been a staggered affair with lots of whip saw from about mid 2018.  The move since the 2017 turn down looks more like an A-B to me than anything else, which suggests that when the wave B completes we will see a fast bearish wave C.  However I think the bigger picture is a wave A up to 2017 and the current move is a large wave B, that could retest the H&S neckline, around he Fib 76/78 before the wheels come off the global wagon and there is a massive flight to the safety of the USD.

So short term Shorts on USD pairs but them go Long on appropriate turns for the medium term (6-9 months maybe) before it Long, Long, Long USD but by then I see Stocks collapsing and Gold/silver in that massive Bull market everyone is talking about.

Thoughts anyone?


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On ‎03‎/‎11‎/‎2019 at 17:53, elle said:

going Trump's way now

Capture dxy.PNG

seems there is a trend line here

Capture dxy.PNG

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