In my previous blog article entitled "Rise of the 30 Year Treasury Bond Yield", I highlighted that the China Government has already started selling Treasury Bonds. The situation is further clouded by the fact that Gross External Debt amounting in the range of US$4.4 Trillion to US$ 6.2 Trillion is already due for repayment.
These are facts, and if the current trend is to persist, which is a key assumption, then in my opinion, the US Dollar will have to weaken.
We look at the US Dollar Index to assess the Probability of such a phenomenon happening.
Chart is reproduced Courtesy of StockCharts.Com.
From the Weekly Chart, we note that the USD Index had formed a Double Top between the period of November 2008 to March 2009, making a Pivot High at 89.62 before falling to a Pivot Low of 78.33 as at early June 2009. In the past few weeks, the Index has been moving sideways.
This Price Pattern seems to be supportive of our Global Macro Analysis that the US Dollar should weaken, especially when the Index has already breached below its Weekly SMA200 (Simple Moving Average for 200 Weeks).
Two Scenarios can arise from the current Price Pattern, i.e. either the Index goes into a WSTR (Wide Sideways Trading Range), where it whipsaws to and fro its SMA200, or it will resume its fall, after the present Sideways Consolidation.
Either way, it would seem that the Probability of the US Dollar Index moving forward in a Primary Uptrend and making new Pivot Highs is low. This is despite the Gross Oversold Position of the Slow Stochastics.
We move on to the Daily Chart for a closer look at the price behavior.
Chart is reproduced Courtesy of StockCharts.Com.
It is clearer here, that the Probability is High that Price is in a Primary Downtrend, but currently experiencing a Sideways Consolidation. We can expect the Downtrend to resume successfully, once Price breaks below both the SMA50 and the Key Horizontal Support Level.
The Primary Downtrend is confirmed once the Index breaks below 77.69.
The current Daily Chart Price Pattern of the USD Index reminds me of the Daily Chart of the Dow Jones Industrial Average (DJIA) afrer it broke below its SMA200.
Can you see how the DJIA Bulls made one last gasp of effort to climb above the SMA200? In this case, it failed, and the Dow eventually fell from 13,000 to the 6,500 level, with a few Bear Market Rallies in between.
History does not always repeat itself, but it is possible for history to repeat itself. What strikes me, is the uncanny resemblance of the 3 Peaks before it went below the SMA200 in both cases.
Please be reminded on the Liability Exclusion Clause, which is at the top of my blog page, i.e. that the final trading decision is yours, and I will not be responsible or liable for any losses you may incur from whatsoever reason. :)
Best wishes,
Ooi
© Copyright 2009 of Praesciens.Blogspot.Com.
These are facts, and if the current trend is to persist, which is a key assumption, then in my opinion, the US Dollar will have to weaken.
We look at the US Dollar Index to assess the Probability of such a phenomenon happening.
Chart is reproduced Courtesy of StockCharts.Com.
From the Weekly Chart, we note that the USD Index had formed a Double Top between the period of November 2008 to March 2009, making a Pivot High at 89.62 before falling to a Pivot Low of 78.33 as at early June 2009. In the past few weeks, the Index has been moving sideways.This Price Pattern seems to be supportive of our Global Macro Analysis that the US Dollar should weaken, especially when the Index has already breached below its Weekly SMA200 (Simple Moving Average for 200 Weeks).
Two Scenarios can arise from the current Price Pattern, i.e. either the Index goes into a WSTR (Wide Sideways Trading Range), where it whipsaws to and fro its SMA200, or it will resume its fall, after the present Sideways Consolidation.
Either way, it would seem that the Probability of the US Dollar Index moving forward in a Primary Uptrend and making new Pivot Highs is low. This is despite the Gross Oversold Position of the Slow Stochastics.
We move on to the Daily Chart for a closer look at the price behavior.
Chart is reproduced Courtesy of StockCharts.Com.
It is clearer here, that the Probability is High that Price is in a Primary Downtrend, but currently experiencing a Sideways Consolidation. We can expect the Downtrend to resume successfully, once Price breaks below both the SMA50 and the Key Horizontal Support Level.The Primary Downtrend is confirmed once the Index breaks below 77.69.
The current Daily Chart Price Pattern of the USD Index reminds me of the Daily Chart of the Dow Jones Industrial Average (DJIA) afrer it broke below its SMA200.
Can you see how the DJIA Bulls made one last gasp of effort to climb above the SMA200? In this case, it failed, and the Dow eventually fell from 13,000 to the 6,500 level, with a few Bear Market Rallies in between.History does not always repeat itself, but it is possible for history to repeat itself. What strikes me, is the uncanny resemblance of the 3 Peaks before it went below the SMA200 in both cases.
Please be reminded on the Liability Exclusion Clause, which is at the top of my blog page, i.e. that the final trading decision is yours, and I will not be responsible or liable for any losses you may incur from whatsoever reason. :)
Best wishes,
Ooi
© Copyright 2009 of Praesciens.Blogspot.Com.
Posts
No comments:
Post a Comment