Dollar Divergence

9:51 a.m., EST

Everyone loves to hate the dollar.

That sentiment extreme is a set-up … for the bulls.

If the UUP dollar index ETF, manages to push below the 24.00 – level, it presents the opportunity for a significant bullish divergence.

As Van Metre has stated many times over the past few months, the market’s not expecting, and not in position for a dollar rally.

How can it be … with the rabid gold bulls thrashing about with each upward blip in GLD, GDX and GDXJ.

From this site’s perspective, we’re staying away from that (gold) market and have focused on biotech … where things are really getting underway; but now, back to the dollar.

The weekly chart of UUP, shows the potential set-up.

If somehow we get a (narrow range) push below the 24-level, it would set up a clear bullish divergence on the MACD.

At this point, anything can happen.

Saying that gold will crash if the dollar launches upward is certainly possible. However, in today’s world, the opposite could happen as well.

Just one more reason to say away and focus on shorting an index that’s decisively moving lower: Biotech (not advice, not a recommendation).

Side Note:

The whole ‘divorce’ thing, you know what I’m talking about, could be a signal in disguise.

The ‘higher ups’ may have decided our cardigan wearing benefactor has reached the end of usefulness.

If so, how many biotech rats are now going to jump ship (before the paddy wagon arrives) knowing the jig is up?

Could that be why SPBIO, posted new lows in five time-frames; Daily, Weekly, Monthly, Quarterly and Yearly, last week?

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Dollar Death, Not Yet

The latest financial fad, the ‘dollar destruction’ narrative, appears to be losing steam … at least for now.

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On the other side of the spectrum are the precious metals markets with their ‘all bets are off’, ‘this is it’, narrative.

Of course, it’s a dog pile of expert opinion on the whys of the dollar destruction.

Why not join nearly everyone else on the #MeToo, fiat currency bandwagon?  A safe bet no doubt; we all know how important it is these days to “stay safe”.

So, what’s really going on?

Since this site follows principles laid down a century ago, by Richard Wyckoff, it’s not important to know the “why”.  That reason changes daily if not minute by minute.  The truth behind the move will eventually come out; long after the trend has reversed.

As trading legend Ed Seykota inferred, if you want to make money, fundamentals are essentially a waste of time.

2020-08-06_17-09-41-UUP-Weekly-Force-Index-notesWhat we see is downward thrust energy on the dollar proxy, UUP is declining.  Downward enthusiasm is waning.

Does that mean go long on the U.S. Dollar?  Well, that’s up to the reader.  What is being presented here, is the latest hysteria is at least slowing down or coming to a pause.

As Jeremia Babe reports at this link, were just one or two innings into the greatest financial collapse of all time.  The dollar may go through wild excursions before potentially coming to its long awaited fiat demise.

 

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.