Saturday, 17 October 2015

US dollar is driving ALL global markets. Bottoming against all "other stuff"? eg. stocks, EUR, and Gold?

The US dollar is driving global markets. ALL global markets. It's an important point to understand, especially right now. This post shows charts for three markets to briefly illustrate the point, but more broadly, my view is that USD is bottoming against pretty much all "other stuff". Yes Virginia, a period of USD strength against all other stuff would likely coincide with a period of global debt deflation. Don't be blind to the possibility.

Stocks first. I believe the S&P 500 is nearing a big secondary peak. In other words, it is topping against the US dollar. Which would of course mean that the US dollar is bottoming against stocks. Not many people look at it that way, but it's useful to do so.



Currencies next. EUR/USD is by far the biggest component used in calculating the US dollar index. The big picture trend is down, and EUR/USD has turned lower from trend line resistance. I believe this decline will extend. In other words, USD will rally against EUR.



Finally Gold. It's at a point now where I believe at least a near term decline is likely. I've had a target of 1250+ for Gold for some time. If it beats last week's high that target will still be achievable, but I think that is a huge IF. For now, against last week's high, look for USD to rally against Gold.




ASX 200 testing cluster of trend line resistance

All sessions daily chart.


S&P 500 near cluster of trend line resistance

All sessions daily chart. The blue channel is important I believe, as it runs parallel to channels that followed the first thrusts lower following the 2000 and 2007 peaks.


Gold's rally halted by trend line resistances

Maybe testing would be a better choice of words than "halted by", but I'll go with my interpretation, as I can see many other markets turning lower against USD. Either beginning last week or looking likely in coming days and weeks.

Weekly



Daily



Silver's rally halted by long term down trend line

Weekly chart shows that Silver recent rally has halted at trend line resistance. Or perhaps better to say, is testing resistance. I am biased toward my interpretation as I see USD now turning higher against many things, not just Silver. Let's see.



Daily chart





AUD/USD lower from trend line resistance

Daily chart shows the AUD/USD turning lower from around dual trend line resistance. Sorry for lack of clarity but I wanted to zoom out and show where the down trend line begins. That line might look questionable to many as it doesn't touch extremes. Instead touches opens and closes in GMT. Line chart might work better. Have a play.



Next chart zooms in. Below 0.72 should confirm a bearish false break higher from the blue channel.





EUR/USD lower from resistance, swift and extended decline beginning?

I haven't labelled the Elliott Waves, but EUR/USD looks to be beginning a third wave lower, could even be a third of a third. If either scenario ensues so we'll see a swift and extended decline. Happy to take that stance against last week's high. Big picture charts would also support the case but I'm feeling lazy with the posts today...