Saturday, October 31, 2009

Long Term Dollar Count, VERY BULLISH

Since the stock market has been moving inverse to the dollar I thought I'd post a long term dollar chart so you can see how it will coincide with the stock market collapse illustrated in the previous posts. As you can see in the attached chart of the USD/CHF (which follows the US Dollar Index closely), we are setup nicely for a large wave C rally composed of at least 2300 pips! I've already called a bottom in the dollar, as evidence strongly supports it, so a strong wave C rally coincides nicely with a wave 3 or C down in the stock market. For the USD/CHF, the key level is the low of 0.9610. As long as that remains intact, the dollar is bullish in my view. And the risk/reward right now strongly favors the bulls as one can even go heavily long right now with a stop just beneath the recent 1.0032 low and risk a little over 200 pips to possibly make thousands of pips.

The dollar is bullish, and should take off from a launching pad soon without breaking 1.0032.


Gustavo said...

Hello Todd:

I see the gold firm now in 1056 dollars. But the high probability could be down with the dollar more strong.
One analysys here is of extreme utility too.
Very good your posts!


Todd S said...

Thanks as always for your good input, Gustavo. Gold and silver are looking "toppish" despite their strength today. This dollar weakness and gold/silver strength is probably just Fed announcement hoopla. Once the Fed is out of the way later this week, the dollar should rally big which will send the precious metals down.


Gustavo said...

This are the announcements:

November 4:Federal Open Market Committee Rate Decision

At 14:15 ET, the Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case into early 2010. In fact, the FOMC started saying in January that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” and they’ve gone on to repeat this since then. Furthermore, the last statement highlighted that the Committee's policy focus is to support the functioning of financial markets via quantitative easing (QE) and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level. Generally, signs that the central bank may increase Treasury purchases have been negative for the US dollar, but indications that they will complete the program within the next month or so could send the greenback spiraling higher.

November 6:US Employment Report Day

At 8:30 ET, the US non-farm payroll index (NFP) is forecasted to show job losses for the twenty-second month in October, though the rate of decline is anticipated to slow. At the time of writing, Bloomberg News was calling for NFPs to decline by 175,000, which would be the smallest drop in just over a year. At the same time, the unemployment rate is projected to remain at 26-year highs by rising to 9.9 percent from 9.8 percent, but ultimately, the NFP result will be the event to watch as it is extremely volatile and is one of the sole reports that impacts the US dollar from a pure fundamental point of view. A better-than-anticipated result is likely to provide a boost to the US dollar, but it will be interesting to see the impact of disappointing results as weak US data tends to weigh on risky assets and push the greenback higher amidst flight-to-quality.

People: Take care:-)

Todd S said...

Thanks Gustavo for posting that.