Dollar Delivers to Downside …

May 1, 2013

The dollar provided more follow through to the downside after confirming a failed daily cycle yesterday.

Wednesday as day 11 for the daily cycle. Again we see the dollar closing below the Bollinger band. I think that we are likely to see an oversold bounce on the dollar. Since the dollar is not in the timing band for a low, any bounce should be contained by the declining cycle trend line.

Bonds broke through a resistance level today

Wednesday was day 14 for the daily bond cycle. By setting a new high on day 14, bonds have just about locked in a right translated nature to this daily cycle.

In the back of my mind I am thinking that there is usually a pretty good correlation between bonds and the dollar. With the dollar in an intermediate cycle decline, that could also start to drag bonds down.

So, while bonds broke above resistance, they closed off the highs of the day. A break below 123.43 forms a daily swing high. A break below the daily cycle trend line signals a decline into the daily cycle low.

If bonds break lower here, that should give a lift to equities.

Wednesday saw equities print a big ugly candle forming a swing high. With the dollar dropping down into a daily cycle low, I am not ready to call a top to the current daily equity cycle. Also, should a top form here, that would signal a left translated daily equity cycle which would indicate an intermediate decline. Before stocks embark on an intermediate cycle decline we should see several large selling on strength days, which has not happened yet.

So while stocks were down 0.93% the Miners were down 2.13%.

Wednesday was day 10 for the daily Miner cycle. So while the Miners closed lower today, they managed to close above the developing daily cycle trend line.
The current cycle sports a day 6 peak. A break below today’s low will signal at least a bottom test.

In order for the Miners to avoid forming another left translated daily cycle, they will need to provide an upside surprise soon.

And a good upside surprise now would be worth flipping over …

6 responses to “Dollar Delivers to Downside …”

Mark

May 1, 2013

I’m a forex, equity and derivatives technical analyst, and I think that using elliot wave on S&P 500 we are on the 5th wave, so we are next a correction. Now the S&P 500 will make an ABC correction or a bullish extension to the first fibonacci extension target of 1.619. But I think that also looking EUR/USD and US Bonds, the market is preparing for a correction of the S&P 500 and a bullish outlook for US. Dollar or the next index Us. Dollar Index, as safeheaven of the market correction. If you look EUR/USD you can expect a downside correction, the US Dollar index to climb for safeheaven I disagree with you on that the Dollar will move downside in further future.

Greets

Mark

Reply
1. likesmoneystudies
  
  May 2, 2013
  
  Mark,
  
  Thanks for your detailed comment.
  
  I do not expect a dollar rally until an intermediate cycle low forms for the dollar
  
  Reply
ALEX

May 2, 2013

L.M.

The dollar is above that trendline that you pointed out near 82.2 ish.
what does that imply to you ,anything that changes the outlook?

Thanks!

Alex

Reply
1. likesmoneystudies
  
  May 2, 2013
  
  Alex,
  
  I may have drawn that trend line on the dollar prematurely.
  
  But I think we need to be open to the possibility of an early daily cycle low
  
  Reply
chris

May 2, 2013

Don’t know if it matters to you or not, but on 3/24 DX(June Contract) printed 81.00 on an hourly chart in the 6pm window. Yesterday’s low of 81.37 occurred 26 ays later.

Reply
1. likesmoneystudies
  
  May 2, 2013
  
  Chris,
  
  I do not follow the June contract.
  
  Reply