Posted by: stockscooter | March 12, 2012

US Dollar on a Roll?

Is the US Dollar rolling along or rolling down the hill?  The chart below shows overhead resistance on the pitchfork trend line, shown with a yellow circle.  The indicator below it is a relative strength indicator.  The orange circle shows overhead resistance of a trend line, also. Since the RSI line is currently turned downward, this needs to be monitored for more possible downward follow through.

Simultaneously, you will note on the purple chart of the commodity market, strength is being seen here.  All major trending indicators are turned upward (including the trend line break), and the bottom” quick” oscillator is approaching oversold (light blue circle), readying itself for the next oscillation upward.  The commodity market seems to be leading the U.S. Dollar in price frequency movement (inverse relationship).  And if commodities are truly that strong, higher interest rates are sure to follow, even if the magnitude of such a move may be only 50-75 bps of yield on the long bond.  That’s a lot of return in a short time frame, if you have a good short position on the respective bonds!

OK, OK…I know what you want to see next.  Let’s turn to the interest rate chart.  30 year  treasury yields are shown on the grey chart.  All trend indicators are positive and the trend line is supporting the price action.  I would suspect that after the FOMC meeting this week, there will be some movement, supporting these proprietary indicators.   Stops should be set to execute with a trend line break, since FOMC statements cause great volatility.  Don’t forget, without volatility there is no return.

Now go make some money!

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