We Have A Breach!
King Dollar got up early this morning and decided to run a pimped out monster truck through the entire forex market whilst laughing maniacally and crushing various over bloated Euro currencies in the process. I’ve been waiting for this moment a long time, so let’s take a moment to review the beautiful carnage in all its gory details. Hashtag: #comeuppance
Let’s start with the DX futures. I mean, if I really have to explain this chart to you then please pop a modafinil or something as it doesn’t get more textbook than this break out formation.
Here’s my second favorite chart of the day, the long term panel of the EUR/USD. Double breach lower on the 100-week SMA and 25-month SMA. Unless there’s an instant reversal before the end of August this is bound to leave a mark.
I’m not saying the EUR is doomed here but technical damage is accumulating. And to be fair, a reversal at this range could set it up for a massive short squeeze higher. However given what Merkel is facing in the Bavarian elections this October I have an inkling the EUR is going to continue to linger for a while longer.
So it seems like putting a staunch BREXIT opponent and eurocrat in charge of negotiating a democratically stipulated separation from the European Union she voted against does amazingly little to evoke confidence in the once mighty British Pound. Gee, who would have thunk?
Hey, I tell you what, there really isn’t enough economic uncertainty yet across the European Union and in particular Great Britain. Why not just force in a second BREXIT referendum which drags everything out for a few more years, and so that we get cable all the way down to par or below? I mean come on – it’s not that anyone still cares about what actual citizens vote for these days, at least over in Europe.
Alright, not Europe but the AUD/USD is currently falling like a rock and I may actually be able to buy myself one of those nice private islands near the Great Barrier Reef.
Now this is a key chart – the USD/JPY. As you can tell it’s actually dropping and thus the massive ramp we see in the USD is mainly due to European pairs getting manhandled.
Note to myself: If the Dollar hits a correction period this may be the chart for long exposure.
Okay, let’s talk futures:
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Bonus Chart Of The Day
The turkish lira. No matter what you think about politics in Turkey over the past few years, what seems clear is that the financial markets don’t seem to care much for it. So definitely a chart worth watching as huge exponential moves like these (albeit scary looking) usually find at least short term sellers. However right now I’m not stepping in front of this speeding freight train 😉