When Big Charts Go The Other Way

The $USD has been in an intermediate uptrend for most of 2018. Recently, the $USD moved up against the 97.5 level. This is a very important level for the dollar. This forty-year chart illustrates why a trend change on the dollar at this level is big. The 2002-2003 commodity breakout occurred when the dollar topped and moved below for years. The 2011 low in the dollar marked the top for industrial metals and precious metals. If this is the right shoulder of a topping structure, big opportunities are available for investors aware of the change near the top.

In the second panel is a long-term indicator by Martin Pring. If the Special K fails at this trend line, it would also push the Special K indicator into negative territory. Notice how weak the dollar was with a downward trending Special K below zero

The last three years have seen the dollar roll over near the end of the year. The importance of this seasonal timing on the chart is shown below.

The next question is what happens for the Yen? This six year chart of the Yen suggests it is about to turn up. The MACD on the lower panel crossed its signal line this week after inching towards it recently. Precious metals commodities tend to follow a similar chart shape as the Yen.

This could also influence ETF’s like the emerging markets ETF (EEM). While the EEM chart does not look ready to turn up, it wouldn’t take much to break the trend line on this weekly chart. The MACD momentum is already above the signal line. With the global weakness, I am not convinced there is a rally here, but the chart suggests paying attention.

I have been highlighting Gold the last few weeks. This week Gold made a nice pop as the US Dollar rolled over for the third time under the 97.5 level. This looks to be an investable area if the dollar weakness continues. Notice the nice move in Gold last year when the dollar weakened.

Here are links to all of my videos for the week. There are lots of good trade ideas to be found here.

Weekend Review, Canadian Market Review, A study on Momentum trends using the PPO.