Dollar Index Update

The Dollar and the Currency Market is, again, the Gorilla in the corner juggling dynamite.  Per our last post (http://bartscharts.com/2014/02/19/dollar-index-positive-reversal-forming-on-daily/) we mentioned a potential positive reversal (which has been defeated) and one more target lower in/around 79.53-79.60.  This is EXTREMELY important for the thesis of the Dollar moving up …

Main20140228080756

 

Halloween Pound Update …

continuing the saga of the Great British Pound
continuing the saga of the Great British Pound

as I debrief the action in the Pound vs the USD over the past couple days, I can say that, perhaps, I might have done one thing different … a couple days ago we called for a pattern complete in the US Dollar and that coincided w/ the top shown in the GBP.  The GBP is not as prominent in the index as the EURO so I didn’t put that much weight into it.  I had my entry order ready to pounce at the top red line (w/ a stop) and, simply, it never went up there …so far, this count has been working nicely.  would really like the level shown right now on the Pound to hold to go up and attack the area labeled 4 … at that point, after watching price action, we’ll know where we are -1) at the start of a major leg down in the POUND or 2) a corrective move complete w/ one more rally up into our target area.  I don’t know …

Pound Negative Reversal Potential – Long Term Chart

i had the wonderful pleasure to teach, for a little over a year, the Capstone CMT III course…the positive and negative reversal arena usually made both me and the candidates head explode.  so, if you want to read about it and catch some understanding, Google: RSI negative and positive reversal by Connie Brown.

in this case we have a negative reversal, potential, on the POUND vs the USD on  a monthly chart … negative reversal is when the PRICE does NOT make a new high relative to a former peak and the RSI DOES make a new peak.  Basically, price isn’t keeping up so a change in trend might be on the way ….here’s the chart:

Long Term Negative Reversal on the POUND vs the USD (potential)
Long Term Negative Reversal on the POUND vs the USD (potential)

when we move to the weekly I’ve added the “bearish zones” for the RSI and “THINK” this entire range has held the bearish range as shown and is characteristic of a very large 4th wave triangle that lasted 4 years.  recent price action labeled (1) and (2) are the beginnings of a 5th wave that will ultimately take out 1.350 which forecasts a 2500+ pip move in the POUND vs the USD.

bearish RSI zones on the POUND showing how this could POTENTIALLY fit into the context of a 4 year triangle
bearish RSI zones on the POUND showing how this could POTENTIALLY fit into the context of a 4 year triangle

 

where are we now? well, if you have been following, my target zone of 1.6320 ish never got hit and it was missed by 60 pips which is just too many pips to swallow right now.  so, below is the count I’m watching that could rise us to that area … I have not included the bearish count because it gets too darn confusing (imagine that in Elliott Wave) but the key here is that the “was this the high” could have done it and therefore we are in a wave 3 of something ( :)) so using stops if trying to get long is highly recommended. If we can successfully defend the 1.6020 area and get some THRUST and MOMENTUM going up then perhaps the target will be realized.  If we LOSE 1.5969 then I think the top could be in place and I’m going to have to work like heck to get into a move .. sounds easy on this blog, but in the real world w/ massive moves and swings and a 24 hour market it’s simply hard to do …

where we might be ...
where we might be …

we’ll see and let me know if you have any questions ….

B

 

US Dollar as of 10/27/2013 9:00 PM EST

in our last post we discussed the importance of current levels on the dollar or the 78.73 level a little lower.  in “counting terms” believe the dollar is carving out a major bottom in what can be coined an expanded flat corrective move.  if this analysis is correct, I am expecting a major move on the dollar…

http://bartscharts.com/2013/10/01/dollar-index-done-or-correcting-or-a-little-lower/

the EURO has completed a major retracement, the POUND needs a little higher or right in here, the YEN finished a sell pattern, the SWISS hit a weekly pattern (or perhaps a little lower to the .382) and mulitple other pairs via the USD are showing the potential for a major dollar low in place.  what else?

Commitment of Traders (COT): Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, cut their overall US dollar long positions to a total of $692.8 million as of Tuesday October 1st.

Here’s the data in chart form …

27-Cots

here’s the dollar index using red arrows to show the BEARISH and the blue arrows to show the BULLISH positions.  NOTE, at the extremes the opposite happened w/ regard to price.

October 27 2013 COT

now, when we take a look at the the EURO we’ll see a pretty amazing picture w/ the net positions shown but this time w/ a price of the EURO vs USD overlaid on top of the positions.  here take a look …

27-EuroFx

note the price of the EURO vs the USD .. at extreme levels of BEARISH and BULLISH points, the price did the opposite.  When the level of bearishness by the large speculators was extreme the EURO went up and when the level was bullish it went down.  take note of our dollar index we have been following since the end of August …w/ everything being presented here and in the past, certainly looks like being a dollar bull in/around here is the side of the market to be on …

dollar index updated as of 9 PM EST 10/27/2013:

US Dollar Index Weekly
US Dollar Index Weekly

 

US Dollar Index Daily
US Dollar Index Daily

here is the picture for the UUP w/ potential support points noted … also, believe if the low that we carved out on this chart is taken out by a daily close then all of this analysis is completely incorrect.

UUP Dollar ETF (BULL)
UUP Dollar ETF (BULL)

 

Part 2 of Part 1-V on the S&P

Part 1 was a look around the world at different equity indices based on ETF’s:

http://bartscharts.com/2013/09/14/part-1-the-sp-500-but-first-we-need-to-go-around-the-world/

of note is the Global Equity ETF (ACWI) and the SELL pattern that is appearing as we showed in our last “around the world” update shown below. Overall, nothing to crazy but the analysis appears to have been correct.  Summary: NONE of the “around the world” indices have come even close to making new highs from the 2007-2008 time frame.

ACWI Butterfly Sell Pattern
ACWI Butterfly Sell Pattern

Part 2 was the banks and too big to fail:

http://bartscharts.com/2013/09/14/part-ii-the-sp-500-and-too-big-to-fail/

The targets w/in the 21-22 area are approaching … the XLF is close to being a sell if not already one.

XLF update
XLF update

Part 3 took a look at technology:

http://bartscharts.com/2013/09/14/part-iii-the-sp-500-and-the-influence-of-technology/

Palladium has an extremely nice sell pattern and multiple patterns were hit or are about to hit …NASDAQ futures have an extremely strong target and sell pattern coming in right here, right now

NAZZIE Futures Continuous Contract
NAZZIE Futures Continuous Contract

Part IV was energy

http://bartscharts.com/2013/09/15/part-iv-sp-and-energy/

this is the one sector that isn’t showing a clear SELL signal – yet.  As you can see below w/ the XLE a case can be made for another 10% higher or it needs to start down now…energy could be the one sector that holds this puppy up for now.

Energy, a case could be made for continued strength thereby delaying the move down in the S&P
Energy, a case could be made for continued strength thereby delaying the move down in the S&P

and finally, part V was the look at ratio’s and sector rotation:

http://bartscharts.com/2013/09/16/part-v-sp-and-sector-rotation/

the pattern has completed perfectly and even w/ the S&P making new highs, this pattern has held …. this is bearish for the overall equity market.

a turn in this ratio has been present at EVERY major inflection point since 2000.  a BUY in the ratio is a SELL in equities
a turn in this ratio has been present at EVERY major inflection point since 2000. a BUY in the ratio is a SELL in equities

 

CONCLUSION:

ACWI, XLF, NAZZIE, SELL pattern complete/completing.

XLP/SPX ratio showing a beautiful BUY (SELL equities) pattern …

US DOLLAR low in here or perhaps a little lower

ENERGY needs to be watched like a hawk….

Do you really want to be long this market?  The only way I would stay LONG is if all the above fails and, quite frankly, that could happen.  So, watch ENERGY and DOLLAR strength for first clues.

WEEKLY S&P CASH SELL TARGETS
WEEKLY S&P CASH SELL TARGETS

 

DAILY S&P CASH sell patterns appearing
DAILY S&P CASH sell patterns appearing