There Goes The Dollar

With all the chaos that’s unfolding in the U.S. right now (La Tuna blaze in L.A. and a second massive hurricane now threatening the South East) I felt a bit guilty for grumbling about a comparatively inane topic like the falling Dollar. But thankfully my momentary bout of decorum quickly passed and I’m back to my old self again. So let’s do this!

I won’t beat around the bush and put this to you as succinctly as I can: This is going to get ugly and unfortunately that breach of our long term support level at DX 91.1 is only half of the story.

Just look at that weekly EUR/USD chart and tell me what you see. That’s right – a floor pattern followed by a break out and massive rally which does not seem to slow down. Oh and bloody Draghi isn’t exactly helping. How he possibly assumes that Europe is out of the woodwork and an exchange rate of 1.27 by the end of this year (calling it) is not going to cut EU exports in half is beyond me. But perhaps he’s playing some kind of 4d chess against the jaded Germans who hate inflation and want to see the Euro at $2.

Here’s the long term view on the AUD/USD with the weekly panel getting warmed up for its own breach and run higher. Once again there’s nothing but air above and we could be seeing the Ozzi Dollar at 0.89 early next year.

The USD/CAD is basically free falling now after missing its last chance of plotting a medium term floor pattern near 1.25. I’m seeing 1.14 here and if it keeps this up it could be happening before the year is over.

Clearly precious metals have been benefiting substantially from the tumbling greenback. Shown above is gold plotted against the Yen to which it has been closely correlated over the past few years.

That of course has been helping our silver campaign which continues to go strong. I’m not advancing my trailing stop to about 2.8R in profits in hope that the upper 100-day Bollinger won’t be putting up too much resistance.

The long term picture is looking pretty solid

Before I forget it, here’s a friendly reminder that the CME equity futures are rolling over and if you’re holding positions then now is the time to either cash them out or roll them into December. I can’t believe we’re soon heading into the final quarter of the year. I still distinctly remember posting last year’s Christmas post. Where does the time go??

Anyway I looked at the recent medium term price action and clearly the most recent correction is the only one that a) has not yet technically completed (i.e. prior highs have not been breached yet) and b) may have more downside potential. Theoretically speaking – yes – as my momo charts are ambivalent and current weakness is most likely caused by all the political and environmental chaos.

And I’m not about to take a position on a Friday, with a category 5 hurricane threatening to level Miami and who knows what else. Plus let’s not forget about Kim Jong Un who I’m sure is caressing his missile launch buttons as I’m typing this.

Public Service Announcement

I put the finishing touches on the alpha version of the most excellent Evil Speculator statistics parser yesterday afternoon. It lets you extract pretty exhaustive weekly and monthly statistics on any Yahoo Finance symbol. So if you have nothing better to do then head on over there and kick the tires a little. Careful though, at least to me it’s incredibly addictive.

Alright, that’s it for me – see you guys on Monday! Unless of course you live in Miami, in that case best of luck and I hope Irma heads to Cuba instead where I’m sure I don’t have any paying subscribers