Front
and center on the index page of the website,
we have a running chart of the US dollar updating daily and
showing its progress after breaking down from a rising wedge in
the first week of '06. In an article entitled Dollar
Daze, we showed why the dollar may be bullish beyond the short
term. However, we again note top callers coming out of the
woodwork, calling for an end to the current gold/silver miner
rally, the broad market rallies and the general commodities
rallies. And they may be correct, as the dollar could break
through resistance at any moment and continue its rise to the
minimum 38.2% bear market retracement that we, and many a currency
trader, are looking for. But thus far, the dollar's recent
strength is merely a rise to test the short term break down until
it proves otherwise. On the bullish side, RSI & MACD
have broken their downtrends. On the bearish side, AROON
still shows a negative trend and STO's may be in a topping range.
Stay tuned.
In
trying to determine the dollar's coming moves, it will of course
be helpful to watch competing currencies, first and foremost the
Euro. Here we see an inverted picture of the walking
contradiction that is the USD. The Euro chart pattern still
looks like a short term bottom to these eyes although recent
action looks a bit heavy.
The
Canadian dollar's bullish stance remains intact. In fact,
that little hammer-like candle may have been a successful test of
an ascending triangle breakout. This "commodity &
resource" based currency, if it remains bullish, argues for
at least another leg up in gold, silver and commodities of many
different stripes. The inflation trade has been on such a
torrid pace for so long that it seems everyone is trying to guess
the top. The charts will tell us all we need to know.
For
a little comic relief, we toss in the Japanese Yen. The USD
has little on this basket case when it comes to currency
debasement for the sake of economic growth. Still, the Yen
could be approaching at least a short term bottom.
