The Buck That Could

Actually put up a fight that is. Yes, I’m talking about the Dollar and how it has thus far resisted all efforts to smack it down:

Sorry for going all EWT on you again but I call that a nice looking third wave. Could it be that there’s a bit of a short squeeze going on as carry traders are heading for the hills with their hair on fire? Oh, this are just the humble beginnings of a long and drawn out rally in the Dollar that will most likely last months. Yes, that’s right – just when everyone was ready to put the last nail in the coffin of our greenback it decided to snap back with vengeance. And that’s how it usually happens – what everyone ‘knows’ is usually not worth knowing. I don’t just love trading setups like that (and admittedly this one was a long time coming) – on a more visceral level I enjoy the lemmings being pushed off the edge of the cliff. Yes, I’m evil after all – just can’t help it – it’s in my DNA plus I’m German and we invented the word ‘Schadenfreude’.

So, it’s time to consult our DXY oracle once more – courtesy of 2sweeties over at retracementlevels.com. Obviously we’re pushing close to the 100% mark I set at 77.64 and to which I’m sticking so far. The odds at 77.15 – not that far away – are 83% and if you are planning to go long the EUR/USD for a quick scalp then it might be worth taking a small position there. However, be warned – the fourth wave consolidation could be fairly quick and dirty, so don’t sit on your laurels if it goes your way. Frankly – having watched this short squeeze I would not go short the Dollar until 77.64 – this thing is on a roll and currency have a tendency to run when they get going.

In respect to reversal frequency both RLs are about even – but 77.64 is ahead by a few percentage points. Yet another reason to wait for that one – again, if you insist on shorting the buck here. I personally do not feel tempted.

Please remember that the DXY odds calculator has been exclusively donated to Evil Speculator by 2sweeties – he is offering a whole suite of odds calculators for currencies, indexes, futures, etc. – so go pay him a visit and check it out. I use most of what he’s offering and it has improved my entries by quite a bit. Worth every cent IMNSHO.

Alright – I’ll get this posted and then return with more material as I dig it up.

2:30pm EDT: Grabbing FE puts here:

I like TOL long but only on a retest:

This entry was posted on Tuesday, December 15th, 2009 at 2:47 pm and is filed under Currencies, Retracement Levels. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.