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.
We’ve already laid the ground work for dollar reversal here and here.
A reasonable expectation, reversal or not, is for the market to come back and test the support level.
Currently, in the pre-market, UUP is trading at 24.21 – 24.22, basically unchanged.
Since the divergences are taking place on the weekly chart, if there’s a reversal, it’s likely to be a sustained move.
For today, watch for UUP, to come back and test.
After that, a move higher may indicate sustained reversal is underway.
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.
When price action penetrates support or resistance and stalls, reversal may be imminent.
At this juncture, gold and dollar, are mirror images.
Each at their own pivot point.
Gold (GLD) is attempting to push through resistance.
At the same time, it’s at the 50% retrace from the August 6th, 2020 high, and the March 8th, 2021, low.
The dollar is a near mirror image:
The correlation is not exact but has been fairly close for the past three months. Gold at a retracement high; the dollar testing support lows.
This past Friday, the dollar (UUP as proxy), did not move appreciably higher.
That in turn, has set up the ‘spring’ condition (weekly close basis), discussed the day prior in this report.
We can see the set-up.
Both gold and dollar at opposite ends.
Note, the dollar’s bullish divergence is a weekly time-frame set-up; giving it more weight.
If there’s a rally, it could go much higher, last longer or be quicker than anyone would expect.
If the dollar/gold correlation remains intact, as/if the dollar rallies, gold, silver and the miners would retreat … possibly, right along with an overall market reversal.
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.
It’s easy, lazy, does not require much thought to jump on the ‘dollar crash’ bandwagon.
Everybody’s doing it.
But let’s take a look at truth.
What does the market say about itself?
If the dollar manages to close below support (shown above) tomorrow, Friday, it sets up the market in Wyckoff spring position.
Weekends are always tough. The futures markets are closed from late Friday all the way to late Sunday.
A lot can happen (and sometimes does) in that time.
If there is an ‘event’ and you have no futures access, it can be excruciating to wait until 7:30 a.m., EST (pre-market) on the following Monday.
For now, all we need to know is, if the the dollar closes below support tomorrow, it will be in position to rally (significantly) in the coming weeks if there is a reversal.
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.
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.
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?
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.
Bonds could be reversing but have already pushed rates high enough (long enough) to choke-off critical sectors of the economy like here and here.
Now we see the dollar has bottomed as well.
It looks like a strong multi-month (or year?) rally. Correspondingly, gold is weak. The overall markets are stretched to ever-livin’ extremes; never before seen.
Whenever this baby pops, try logging on to chaos, or exit any position (except maybe for the long bond).
Our approach then (not advice, not a recommendation), is continue work on positioning short. So far, the ‘project’ is taking small hits in those attempts. We’ll see how basic materials (SMN) works out today.
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.
IYR’s in a terminating wedge … will it throw-over, or reverse from here?
American Tower (AMT), the largest cap in the ETF, bounced off a 23.6% projection during last Friday’s session.
That keeps a short term bullish possibility alive. Longer term, AMT still remains in a downward trading channel.
Bonds and the dollar continue at extremes. On the dollar side, it looks like a significant bottom is in the works.
Weekly UUP, MACD has posted a bullish divergence along with an MACD lines cross (to the upside) signal.
Bonds (TLT) remains at its near term lows; near support levels formed back in September, 2019.
IYR is right at the upper wedge boundary and volume (upside pressure) has dropped significantly.
It could still levitate higher … however, it seems that getting a significant ‘throw-over’ is going to require more energy than is currently available.
We’ll see what price action has in store for Tuesday’s session.
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.
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.
Then, today’s action is reversal with moderate volume.
On the dollar side, at first glance it looks like a terrible day.
Action was down 0.53%.
The reality is, UUP came down to test an up-trend line formed as part of its own reversal last Thursday.
Both dollar and bonds are in an upside reversal; the dollar looks slightly ahead by a few days.
Real estate (IYR) has rallied (sort-of) which may only be temporary; likely on the (false) belief lower bond yields are good for higher yielding sectors.
Not true when we still have (as Van Metre puts it), the ‘insolvency event’ yet to come; everyone going bankrupt all at the same time.
Anything can happen and the above analysis could fall apart tomorrow.
On the probability side, looks like we’ve seen the extremes in the major sectors; now ready for reversal pivots.
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.
The Danger Point® 