Dollar Index Trades are pushing the markets from Currencies to Commodities, the strength of the dollar is unseating majors across the board, Who is ready for 96 on the Dollar Index?
Dollar index trade could carry to extreme highs we haven’t seen in years. At present rate we could see a test of 92. at years end. This is the previous article in August with this price action projection. Click here.
The dollar index is showing continuation pattern after continuation pattern. The consolidation zones are outlined in aqua boxes showing areas for indecision as the dollar moves up. This is a daily chart with first price projection to 88.40 with a second move to 89.78 and a continuation to 91.47.
The key to understanding the Dollar Index market is the weakening of the European Economy, the Quantitative Easing in Japan (which is just the Fed transferring the burden to Japan) and the punishment that is being handed out to Russia in the form of Cheap Oil. This could lead to the next super cycle in commodity price declines and weakened currencies. Joel Wissing
The dollar Index trade directly effect major currencies.
The key markets on daily charts I will look at are:
Japanese Yen -because of the new rounds of quantitative easing the Yen has been lifting the dollar index. We are looking for the Yen to move to .80 on the futures. Euro – more and more pressure on debt, taxation and for some countries to move away from the Euro keep downward pressure on the Euro. British Pound – Continued weakness and more financials showing underlying weakness in the economy could have the pound cycling further down. Canadian Dollar – the double whammy of debt and decreasing oil revenues as the dollar index strengthens has the CAD reaching new lows. If we get a break of the support here we could see another 4 penny move.
The Charts where we can see a longer term continuation of this move is the weekly chart comparing the Dollar Index trade and commodities.
Dollar Index price projection, next level of resistance if we get buyers in control to break resistance at 88.55 next move to 91.47. We could see a test to the supporting trendline, but the major price action in keeping with the trend could have us there before the years close.
Brent Oil and Texas Crude futures are showing this weakness also with a break of support and further price action as follows:
Brent crude support at 69.65 and CL Texas Sweet Oil at 69.
Last we are looking at Gold trading and there are some areas which we can look at either a reversal showing that the bear market has ended, or to continue with this price action as the dollar index strengthens, a move to 1078. If there is a major sell of watch for the test under $1,000 an ounce which will then give down side targets of $980, $910, and $780
Gold does have one side which could give it buoyancy and that is as a Crisis commodity. As a crisis commodity, any “doom” like scenario will cause gold to skyrocket. For instance Conflicts between Israel and any Middle Eastern Country – Especially Iran, we can also look for unwinding of some large futures positions and margin calls causing a temporary run on the markets.
Russia and Saudia Arabia are looking for ways to support the oil market, although combined they could slow the price plummet in the long run, neither economy could afford to support it. It seems these are punitive measures against Russia, which is unfortunately playing out against Canada also. With this in mind it will be a black swan event that probably sends this the other direction as the FED would probably stand aside to let the dollar index trade play out to new highs and not interfere with more direct QE or rate hikes.
The post Dollar Index trading pushes markets. appeared first on Day trading course S&P 500 Managed Trading Accounts.