I mentioned in my previous comments about the dollar that I think it is the key to commodity, stock, bond and foreign market direction. The index broke down below the trendline of the wedge and in just two weeks has already fallen back to support around the 78.70-78.50 area. As I wrote about yesterday, the news out of the Fed this week and the policy direction laid out by the great wordsmith Ben Bernanke is decidedly dollar negative.
Notice the negative divergence setting up in the MACD histogram. Slow, long-term stochastics have had a bearish crossover, but still remain above 80 in overbought territory. I find it interesting that the index bounced right off the 377 week moving average and headed lower. In my opinion, the only question is whether the dollar bounces here for a week or two, or if it just crashes through support and heads lower. I think we'll see a bit of a bounce in the index as the stock and commodity markets have had quite a run in the past month and may need to consolidate. Perhaps we shall see a re-test of the broken down-trend line. This would be a logical place to add to Gold/Silver/GDXJ companies and/or get out of long dollar positions.
No comments:
Post a Comment