"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 9 hours Meet The Hedge Fund Billionaires Club
  • 10 hours The Next Housing Crisis Could Be Right Around The Corner
  • 11 hours Cartel's, Pirates And Corruption Cost Mexico $1.6 Billion Per Year
  • 12 hours Africa’s Fastest Growing Economy
  • 13 hours The Blockchain Boom Hits The Utilities Sector
  • 15 hours Why Smart Money Is Selling Off Right Before The Bell
  • 17 hours Tech Giants Rally Ahead Of Earnings Reports
  • 1 day Global Debt Hits 225% Of GDP
  • 1 day The World’s First Trillionaire Will Be A Space Miner
  • 1 day How Student Debt Could Cause The Next Real Estate Crisis
  • 2 days This $550 Billion Industry Is Betting On Bitcoin
  • 2 days One Commodity Set To Soar On Russian Sanctions
  • 2 days China’s New Car-Market Rules
  • 2 days Oligarch Risk: The New Red Flag For Investors
  • 2 days Five Things To Consider Before Investing In An IPO
  • 2 days Investors Bullish As Earnings Season Kicks Off
  • 2 days Nearly One-Third Of U.S. Lottery Winners Declare Bankruptcy
  • 3 days Is Facebook Still A Buy?
  • 3 days Will Blockchain Stocks Ever Bounce Back?
  • 3 days Geopolitical Tensions Fail To Boost Gold Prices
Could Tesla Be Profitable By The End Of 2018?

Could Tesla Be Profitable By The End Of 2018?

Tesla has struggled to get…

Investors Bullish As Earnings Season Kicks Off

Investors Bullish As Earnings Season Kicks Off

The first round of earnings…

3 Stocks to Watch This Earnings Season

3 Stocks to Watch This Earnings Season

Stocks began Friday with a…

US Dollar Technical Update

In the coming weeks you will hear me discuss the current trade as a "credit event that equity will be forced to acknowledge." It is important to understand what will drive equity prices. The main stream media will make up "excuses" for price action but I believe as always they will be misguided.

The role the currencies will play in this trade is that of the mechanism that connects credit to equity. Many market participants ignore credit but when they see movement in the currencies they will be forced to change their perception. There is simply a shortage of the world's reserve currency combined with investors switching their focus from the return on capital to the return of capital.

The US dollar and US Treasuries will be the "safe haven" trade. This does not mean those two asset classes are sound and secure but in a world of fear and uncertainty the US still remains the place where capital will flow. Simply stated the supply of USD is falling as credit markets freeze up while the demand is rising.


Five Year Weekly Chart

Notice the bear flag that failed to play out in 2008 resulting in an epic move higher in a very short period of time. The same pattern is in play right now. Even the news flow is similar.


20 Day Intraday Chart

Notice the line that price has fought above and below. This decides which way the bear flag pattern plays out. After a pretty lengthy war which included an "air assault" from the central banks last week it looks like the USD is repeating the same pattern of 2008. Once again it appears this bear flag pattern will in fact break in a bullish fashion.

In other words if this is a war and the central banks unleashed a massive air campaign on the USD the fact that it took back a key level speaks volumes. The thirst is unquenchable.


Commitment Of Traders Report

The COT report confirms that probability favors the EUR moving lower and the USD higher based on current positions of non-commercial (large speculators) and previous correlations with such currency pairs.

 

Back to homepage

Leave a comment

Leave a comment