The US Dollar Index broke out of its range last week. At the first look it is a great buying opportunity as we run to new highs. Normally this kind of breakout would be a buying opportunity. My problem here that we are too late in this intermediate cycle to have a follow through after this breakout. There is a decent chance that banks used this breakout last week to get out of dollar long positions and next week the smaller players will be left alone with their dollar longs...
The megaphone pattern is always showing uncertainity and chaos. In these patterns every new high and breakout usually a false signal. If I'm right and this is a topping pattern next week instead of running higher price will drop back into the megaphone and we will have a steep decline to the lower trendline in the following few weeks.
MACD and TSI is signaling divergencies. If price is reversing early next week I will immediately enter with shorts here.
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Ngonidzashe_1990
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I like you analysis and passion for the trade. Keep it up man !
TheBanker
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shorting thin air isn't on my bucket list
paletz
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Agreed, it looks like it will bounce down. The major crosses like EURUSD, AUDUSD, GBPUSD also seem to be about to reverse.
happyluckydog
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thanks.
zaius3333
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If you nail this megaphone, you will be a legend!!
chartwatchers
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@traderzaius, press play.
chinoo
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Look Guys… I certainly believe that the author of this idea is a very learned and gutsy fellow ... who sticks out his neck and presents his views, the way he analyses them ..... so I sincerely apologize for my above mentioned contrarian views, as they seem to have stirred a few good Samaritans here.
Further, to explain on my view ( which I would not be doing anymore ) ... I believe that the market is expecting a huge fiscal stimulus from the new US administration in the form of infrastructure spending and tax cuts that will itself spur growth and spark inflation, which will put pressure on the Feds to tighten the monetary policy and increase the US interest rates at a faster pace than earlier.
I am also of the opinion that the new US admin might also look into all kinds of trade imbalances which are there today and might re-negotiate the same in order to create more jobs and spur the economic activity at home.
This all will keep the dxy on the upward trajectory!!
Cuco67
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@chinoo,Have a look at the US debt structure. justfacts.com/nationaldebt.asp Would you say that it is in the interest of the US to have a strong USD? Stimulus means more debt, tax cut means less income.
shawn.ctech
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@chinoo, You are getting way ahead of yourself just like the market. equities move ahead of actual data. You wont be saying this after first and second quarter GDP numbers. Growth wont come until 2-3 years after spending. So, first lets take care of the recession we are about to hit next year before popping the Champaign bottle.
Buddy ... Mkts move and anticipate events much faster than Bolt !!
Yr reading of the Mkts displays that u r much far behind the curve ...
now, pls do not react frantically to my this statement :-)
Let time show what is correct ........... !!
Probably best to keep the BP in check !