Pedal To The Metal

Looks like my warnings to bears this weekend were not wasted as the rally in equities has now gone ‘pedal to the metal’. We are now at hourly resistance on the spoos plus we are heading into weekly and monthly resistance – for more details on that please consult my weekend update.

Here’s my hourly map on the spoos – I do expect a bit of resistance here but given the overall strength in equities and the levitating Zero Lite signal I would not want to play hero here.

Be advised that there is no real resistance on the daily chart as prices are slowly and steadily rising at the inclination of both of my Bollinger bands.

What’s happening on the Dollar side of course is no solace to any bear being squeezed into smithereens. Instead of just looking at the DXY let me present a more in depth picture of what’s happening on the currency side:

Well, let’s however start with the DX futures which are right now sitting on hourly and daily support. A breach here could really accelerate things to the downside – and incredibly on the upside on equities.

As you can see we are already plotting below my P&F’s support line – so we are basically back to scratch. I think this would be a great place for Dollar bulls to launch a counter offensive. If we remain here it will most likely lead to further weakness.

USD/CHF – as you can see this pair has been very consistent about failing any major test to the upside.

USD/CAD – same story and those hourly candles are looking scary. We are now painting a new sell signal at 0.9883.

Let’s flip our charts around – EUR/USD looking pretty bullish here. The daily is painting a buy signal and we are above the 25-day SMA. Admittedly the hourly looks a bit overshot.

Finally the old lady plotted a NLBL last Friday (sorry for not seeing and reporting that earlier) and it seems we’re off to T1 near 1.6. Also note all that established support near 1.56 – that’ll be touch to breach going forward.

Bottom Line: If you follow the currency side and put it into context with equities then it’s clear that we may continue higher without much compunction.

Let’s also not forget where we are in terms of seasonality. The bears completely blew the February doldrums and at least historically we are now back in bull territory until the end of May. There are many reasons to not being short here and only a few arguing for it. In the end the possible pain is not worth the pay off (no vale la pena) and I strongly suggest you leave it to others to continue to step in front of a speeding bus. IF the Dollar holds here and IF equities finally show weakness then we’ll still have plenty of time to get positioned. Let the market come to you and don’t rush things. For now – it’s best to just watch and collect evidence.

Cheers,