Sheep, Milk and the Kiwi …updated 03/23/2017 and the power of the RSI M’s and W’s

03/23/2017 – note this pattern on the KIWI.

Certainly looks like it ‘wants’ to go down and tag the level shown.  last night I blogged about “cotton” banging into the first portion of the pretty big gap and it appears (please see below) that the “Milk Non-Fat Futures” has completed an upward correction and will plumb the lows again.

also, was taught a few years ago .. to watch the M and W’s on the RSI. This PATTERN when broken “usually” leads to some pretty powerful moves. I’ve highlighted past M’s in yellow below on the KIWI.  See the M pattern setting up right now?

so, the thesis is we have a move lower in cotton, non-fat milk and that will cause the KIWI to move lower into the zone depicted below.

this thesis doesn’t even begin to hold water UNTIL the EEM stops rising – which could make it problematic. as shown, you can see how we are banging right into the ‘biggest’ measured move UP since 2011 (purple dashed arrow) and were also playing the polarity game.  (S becomes R and R becomes S).  Also, note we have overlapping .618/.786 at 42.

((sqrt 27.66)+1)^2 = 39.17 so we are half way around the circle at these levels.

it’s all probability, choose your poison and then choose a stop.

Bart

 

_______________________________________________________

7:1 sheep to people ratio in New Zealand

7:1 sheep to people ratio in New Zealand

In New Zealand, there is roughly 7 sheep to every person.  They have a lot of sheep and sheep = cotton, correct?   The country has the highest density of sheep per capita in the world.  However, this year has seen the sheep numbers fall to their lowest level in 75 years.

Around 1987 farmers to took to dairy farming and that overtook conventional sheep farming which until then had been the backbone of the New Zealand Economy.  Take a look at the chart below … at most inflection points in Cotton Futures the KIWI followed suite.

 

KIWI and Cotton Futures .. they turn together

KIWI and Cotton Futures .. they turn together

 

Mooooo

Mooooo

As discussed above, the dairy industry is the backbone of the economy.  Prices have plunged.

http://www.wsj.com/articles/new-zealand-dairy-farmers-hope-for-relief-in-globaldairytrade-auction-1434442028

Below is a chart showing Class III Milk future w/ the KIWI overlaid on top of it. Note, milk futures have completed a buy pattern so prices “should” start back up and therefore KIWI can potentially find some support.  Emerging Market Currencies are at an extreme low w/ regard to sentiment.

note the brown line (KIWI vs USD) and how it tracks milk ...

note the brown line (KIWI vs USD) and how it tracks milk …

The next chart below is of Non Fat Milk futures (continuous monthly) and note the synchronization of tops and bottoms.  These are the lowest prices in decades ….

Milk Nonfat Dry lowest in decades ...

Milk Nonfat Dry lowest in decades …

 

Here’s the KIWI today … decimated sentiment for EM Currencies, RECORD low dairy prices, cotton hanging in there and a big old thump into very oversold bullish divergence .. it’s going to start up today or soon.

 

KIWI vs USD Monthly

KIWI vs USD Monthly

so this looks so PROMISING but when I put the EEM (Emerging Market ETF) w/ the KIWI overlaid on top of it I see a very nice symmetry BUT I also see a CLIFF OF SUPPORT that the EEM is about to fall off.  OUCH ….

Main20150807175226

EEM:

note EEM and pay attention closely. IF WE ACCELERATE THRU THE 4+ YEAR SUPPORT THEN EM FX SHOULD FOLLOW …playing a bounce for the FX so this is a major area to watch for Risk and Reward …

 

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