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The U.S. Dollar took months, per creating a series of higher lows back in 2008 at (1) in the chart above. On a very micro basis, the Dollar could be attempting to put in a series of higher lows again at (2) as it is making an attempt to break to the upside from a bullish falling wedge. This is an update to this dollar post (see post here)
A few days does not make a trend NOR PROVE A THING……..yet this pattern should be respected for what it could mean for the Dollar and many other assets around the world, if a breakout actually does happen as it backs and fills…. a breakout should be watched a little closer especially with Dollar bulls around the 7% level!
Craig…from mid 2007 to mid 2008, the Dollar and the 500 index correlated to a very high degree. Dollar fell and the 500 index declined about 25% at the same time….then when the Dollar made a series of higher lows a base, it took off to the upside and the 500 index turned into a waterfall… see link below.
https://www.kimblechartingsolutions.com/2011/06/u-s-dollar-and-the-500-index-going-to-correlate-for-a-while-again/
For what is is worth at this stage of the game, I wouldn’t think a Dollar rally would be too good for stocks nor commodities. I shared with Premium members this morning that the CRB index is on the verge of a 2008 repeat, based upon Fibonacci expansion levels and repeating patterns!
cjk – I’ve been thinking about this too the last few days, wondering what would make the US$ and US markets be positively correlated. If people start moving international money into the US markets they’d have to buy US$ to buy US markets. It seems to me that this would be bullish for both. And maybe even a sign of an international flight to safety.
Aaron…..The link below discusses the great debate of tastes great vs less filling or inflation vs- deflation. I am not into labels, yet in the link below, the CRB finds its self at fib resistance at the top of a monster bearish rising wedge. If that pattern breaks, for whatever reason/cause, the majority of commodities will be put under pressure. I suspect gold will be less challenged than most commodities, yet I doubt it will be able to avoid a decline on a crb breakdown!
https://www.kimblechartingsolutions.com/2011/05/the-great-debate-continues-inflation-or-deflation-around-the-corner/
Aaron…would harvest FXA. As you can see from the Dollar chart, the Power of the Pattern is suggesting a higher dollar.
Chris,
Will commodities and emerging markets be hurt by a strong dollar?
What about gold and silver?
Thanks,
Aaron
Hi Chris,
I currently own FXA and it has been a good ride. With this ETF falling below its 50 MA and with the apparent dollar strength, should I sell?
I also own FXF. Time to sell as well?
Thanks
Aaron
I just read per Schwab that most of the time in fact the dollar and US Stocks are positively correlated, recent behavior being an exception due to the carry trade. If this is the case it is unclear how the stock market will react in the future to a rising dollar, if that is the course it takes.
very scary chart for asset prices moving forward, but I keep trying to remember that tops are processes and bottems are events. If a top is being formed, with exception to 1987 they take a while and we can play the moves in them