The US dollar, as measured against a basket of world currencies, has been forming a gigantic triangle since 2008, with a ceiling at 83 and a base around 75. Within the larger triangle, there seems to be a smaller one forming over recent months that could break out below 79 or above 81. Either way, the USD seems fairly range-bound (non-trending) at this time.
The Canadian dollar has also been forming a triangle –in this case since 2011. Its bumping up against the top of that triangle at around 101.50 right now. Again, a breakout will be needed on one side of this triangle before we can become too bullish or bearish on the loonie.
The Euro (FXE) is forming a “Head & Shoulders” bottom. This is a phase-1 bullish basing pattern (see my book sideways). If, and only if, the formation breaks the neckline at around $133 on FXE, and can stay there for a few days without retreating, it would be a buy signal. Euro-denominated securities unhedged to the CDN$ would be better off on a relative basis to their hedged equivalents. But wait for a neckline breakout.
Do it yourself vs. do it to yourself
I’ve made no secret about my belief of a bullish near-termed outlook for the markets, followed by a bearish outlook after the first or second quarter of this year. Many investors tend to do well in bull market conditions such as those we’ve experienced over the past 4 years. It is my belief that the current bull market may be long in the tooth. Individual investors may find the coming year or two a more difficult environment than they’ve experienced in recent times.
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