Wednesday, December 17, 2008
Dollar Getting Hammered; Dec. 17, 2008
Above is a 4 hour chart of the EUR/USD. It moves the opposite of the dollar. You can see that the euro has spiked straight up over the past few days and according to Jamie Saettele at www.fxcm.com, the EUR/USD has undergone it's largest move in one week over it's entire history in existence! This is why gold has rallied so strongly as well. But this rally has moved too much too fast so a correction is due, and it should be a large correction to the downside. If you look at the chart above you'll see I circled the severely overbought stochastics and RSI that show the extreme level this pair is currently trading at. But I tried shorting this rally twice and got stopped out immediately. I'm not getting in the way of this trade again. I do have a short gold position which has been extremely painful to have, but I'm waiting for the EUR/USD to correct and gold to fall so I can close my gold positions.
As for the stock market, breadth continues to get stronger and is almost break even. I'm unsure of the immediate near term direction, but the direction over the next few days/weeks is up.