I was asked by a reader to comment on the US dollar in my last blog entry. So this weeks sector analysis will focus on the dollars’ recent rise.
By the way–please keep the ideas coming for my weekly sector analysis presented every Thursday. I really do appreciate your input.
As you will see on the long termed chart, the dollar remains within its rather huge long term triangular formation that’s been in place since 2009.
The smaller triangle noted on the chart (also noted in prior posts) has broken to the upside. This would imply a target that would get us into the 83 area on that chart, which is the top of the larger triangle.
Now take a look at the shorter termed daily chart. Obviously, with such a rapid rise for the dollar, various momentum studies are screaming overbought.
I’d have to assume at this juncture that the greenback may take a breather pretty soon. But I’d also guess that the dollar will reach its 83 target thereafter
Of note, the Canadian loonie has some significant seasonal strength coming up in April. That might imply an opportunity to take profits on the US dollar before April if you are a Canadian trader. However, from a longer termed perspective, the C$ has broken down out of the symmetrical triangle formation noted on my prior blogs.
I presented a long termed view of the US and CDN dollar(s) last September https://www.valuetrend.ca/?p=1419
and last month https://www.valuetrend.ca/?p=1794
Interesting note on the CAD, hadn’t seen that. When drawing trendlines on weekly charts, do we have to include the shadows of the candlestick in the trendlines or do we not have to be so precise? Thanks.
Chris–draw your trendlines and support/ressitance lines with a big, fat crayon–its a trend you are after, and nohing is too precise. Thats why you will always find me saying “ish” after my targets. For example, I have been calling for the S&P500 to hit 1550-ish. Thats my fat crayon at work. It could fall anywhere within 20 points on either side of that. Trendlines and targets based on support resistance are guidelines only.
thanks for the input.
I noticed that on the weekly chart the Dow Jones Transportation average has broken above the neckline of a huge inverse head and shoulders formation. If this is still a leader maybe the crowd expecting a big correction are dead wrong this time.
I see no inverse H&S on the TRAN’s. 2009 was the last base breakout formation that I see.
Weekly DJT has a left shoulder from 07/13/07 to 05/23/08 the head is from 05/23/08 to 07/01/11 and the right shoulder is from 07/01/11 to 01/25/13. It’s now above the neckline.