Thursday, October 27, 2011

USD Uptrend Correction


 Following previous posts, I still maintain that the USD uptrend will resume sometime soon. Next wave should, most-likely, begin next week or so.

 I insist that the moves are somewhat easier to predict while timing is more difficult.

 Last week was a consolidation period for the USD against many currencies. Mainly the majors. Both the Euro and the Pound, broke a diamond formation to the upside. Needless to mention that a consolidation is known to be somewhat a market hesitation/indecision on what to do next. More than that, it shows that those who went in short begin to book profits making prices go up to a satisfactory level where a second wave of sellers are willing to jump in.It works exactly like a department store giving out discounts. There are those who only jump in when there is a clear trend. 

Therefore, the minimum targets for the Pound and the Euro respectively are: 1.6085 and 1.4091. Swissey will most likely be the greatest gainer against the USD and could probably reach 0.8445 due to a H&S formation observed on the daily chart. Gold could well reach 1770.00 @ short term.

 Thel USDx has a minimum correction target of 75.70. From this level on it becomes too risky to sell the buck IMHO.

As posted before, DJI has reached the minimum target of 11700 and it should keep going up for a short period of time before it makes another drop. Oil WTI has also surpassed the 90.55 minimum target and will keep going up for a while, but should also take another plunge soon.

The USD should keep going up with world economy risk being off thus generating the end of the carry trade bonanza. Next post I will talk a little bit about the Carry Trade itself.

I had made this post on Oct. 22 in my Facebook page (personal) but only for those who can read in portuguese. I apologize the delay in placing this post here.

All the best to all.

Friday, October 14, 2011

The U.S. Dollar and Commodities


As stated earlier, the U.S. dollar (USD) should gain against all currencies, except the JPY, in the coming years. I predict the USDX, currently at 76.50 + / -, to be about 99.50 + / -  by 2013.

What does this mean for commodities? The U.S. dollar has an inverse correlation with some commodities and stock market indices (equities).

So lets see,

Oil: The oil should keep falling the rising dollar. So we should see oil prices much lower than it currently is. The WTI is currently around 84.00, will rise to 90.50 approx. and then it should begin to fall again. Quite possibly we will see a barrel priced @ USD50.00 in a few years.

Gold: Gold is the current bubble. After reaching 1920 points and being considered the safe harbor, gold presents itself with  a huge MACD divergence on the weekly chart. This divergence should lead to a minimum target of 1043.900 in the upcoming years.  George Soros, not surprinsingly,  bought spot Gold as well as companies that exploit gold a few years ago. Soros sold most of his investments in gold by July / August this year. Needless to mention that Gold is also inversely related to the USD.

Silver: Almost a twin of Gold. We must also see Silver much lower in the coming years.

This will reflect directly in stocks related to commodities in Brazil for example. We should note, for example, significant drop in stocks of Petrobras and Vale in the coming years.  

The recommendation is to go short selling in the commodity spot corrections and also the papers linked to the commodity itself.

That is, when we look at the DOW @ 11,700 and oil above 90.00, the USDX at 76.00, you can indulge yourself short selling (short selling) Oil, Gold, Silver, Petrobras and Vale with good leverage. Conservative stops above the highs of the day, week or month depending on your risk appetite.

As stated before, the USD and other assets are in for a short-term correction. The minimum targets for these corrections are  already within reach. Possibly this could happen Monday. Let's look closely at the market at the beginning of next week.

Once they are reached , these targets should resume the dollar uptrend, the decline in stocks and commodities in the long run.

Cheers to all.

;-)

Wednesday, October 5, 2011

#Equities & #Majors Cross Analysis

By performing some cross analysis, one can almost foresee what will probably happen short-mid-long term in the different assets.

So lets begin:

USDx - As mentioned in earlier posts, there are a couple of gaps to be filled together with MACD must-reach bear targets towards the 76.66 level. 76.00 is also a a MACD bear target and aprox. the 50% retracement level.

GBPUSD - Overdue confirmed MACD bull divergences point to the 1.6088 level aprox.

EURUSD - There is a clear gap to be filled @ the 1.3382 level.  Also a clear divergence on the 8H chart pointing towards the 1.3936 level.

USDCHF - Bear MACD divergence pointing towards the 0.8646 level.

DOW - MACD bull divergence on daily confirmed by RSI pointing towards the 11700 level.

SP - Also a MACD bull divergence confirmed by RSI on Dailies pointing towards the 1228 level.

To sum it all up, we should see a drop/correction in the USD coupled with a short term rally in equities and probably in commodities too.

Lets wait and see what happens.

Cheers to all.


Monday, October 3, 2011

#USDBRL

Como venho dizendo em meu blog, é de minha expectativa de que o dólar siga subindo até pelo menos o ano de 2013 frente a todas outras moedas com exceção do Yen Japonês (JPY).

O target inicial da divergencia MACD, confirmada por RSI é de 2.0334. Porém é MUITO possível que esse target seja ultrapassado em muito pois  análise do USD frente aos majors e frente ao seu próprio índice indicam para um USD muito elevado nos próximos anos.

A boa notícia fica por conta do EURO  que deve inverter a paridade com o USD tornando assim viagens para os países da zona do Euro   assim como importações também a partir desses países, muito mais vantajosos.

No curto prazo, vejo uma correção para baixo do USD. Possivelmente veremos o USD a 1,74 neste ano, porém, retomaremos a tendência de alta pois o movimento principal virou para alta no dia 12 de Setembro.

Segue o gráfico do USDBRL:




Gráfico diário: Uma divergência MACD indica um target inicial de 2.0334. Esse target, no entanto, deve ser superado em muito.

#USDx and #Majors: Short Term Relief

Usdx has left runaway gaps while going up these last couple of weeks. Gaps are known to be covered sometime. In reality, they are 'unpaid debts'. Therefore I expect USDx to make a retrace towards the 78.72 level at first and than continue its descent downwards towards the 76.66 level.

This will bring some relief to other currencies especially the Majors. The Euro, for example,  is expected to gain some ground in the following weeks before it resumes its descent towards lower levels. Again, below parity is a must for EURUSD in the upcoming years.


Here is the chart for USDx:



USDx will most-likely cover the gaps sooner than later. A short-term correction is to be expected before uptrend resumes.