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DXY Update
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DXY Update

by The MoleOctober 13, 2010

I’m my previous update I mistakenly posted the prior POMO calendar. Sorry about that – I was a bit out of it after having popped some melatonin last night. Anyway, let’s look at a related chart, which is the DXY. After all – the injection of POMO cash leads to a further weakening of the Dollar and I continue to dislike what I see.

Basically, the bears are being smothered with Dollars – and not in a good way.

We are painting somewhat of a floor right now but that could be a curse in disguise. Because what we are also looking at is a green candle without any follow up. Yes, the last few candles seem to observe the fib line and it seems there’s a buyer there. However, all the green candle did was to reset the ‘odds’ for more downside.

In case that doesn’t make sense to you, let me explain: The underlying idea derives from 2sweeties’ retracement levels. Back in the days before he introduced automated odds adjustments I realized that as long as the tape continued down the long odds remained the same. And as soon as there was a bounce the long odds slipped down through a further extension of his secret Fibonacci extensions formula.

So, what I took away from this was a key observation. Which is also something I discussed in person with Yelnick yesterday afternoon: As the market moves downstream and takes twists and turns the odds change constantly. It’s a bit like being a boat on a river – as soon as you navigate into a new side arm of the stream there’s no turning back and new branches appear that were not part of your equation before. This all ties into chaos and fractal theory and it’s something that I think 2sweetie attempted to combine with statistical measures to produce a short/medium term predictive model.

Anyway, theories aside – the Dollar still looks very weak here and a quick green candle without follow up may actually have harmed the bullish case (for the Dollar) instead of helping it. What we want to see is a follow up that holds up – maybe a little retracement afterward that remains above the lows – not right at them. My spidey senses are warning me that a final squeeze could be in the works. You know – with POMO and all.

Cheers,

Mole


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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