Friday, June 5, 2009

US Dollar: Start of a strong uptrend -vrs- Just a stabilization?

(a follow up from my last post, UUP did break upward though the backtest, so the "dollar crash" short term is suggested technically to be of VERY low probability here.)

So is this the start of a dollar RALLY? or Just a stabilization to trend sideways??

Watch 24.50 and the RSI resistance line for a pivot.

Today did not mean its time for the dollar to go parabolic. (don't get too exited yet fellow deflation bears)

It does however suggest that there has likely been a support floor put underneath it for the time being. (IE: uup chart is now neutral.....from prior bearish)

For the dollar to have a bullish trend BREAKOUT signal, it needs to break above the rsi wedge, , which also coincides with the 50 rsi level, which also coincides with taking out 24.50 which appears to be an old support.

Why is it so helpful to chart the $USD or UUP?
- b/c on a day like today, instead of going shorting ISIL (a tech play - 1.22%) one goes short SLW or AEM (commodity plays, -5.30% & -5.11%).
-b/c even though some times the "broad market" might not follow inversely to the dollar, if
you look at the individual SECTORS, they almost always do.

Some sectors have MUCH more dollar correlation to others.
Here is a good post, for decent average of the correlation (link)

**Write these kinda of percentages down if you don't already.... If you are BEARISH uup, but also BEARISH the market for let's say a given day, or any of the 4 potential combinations, etc. This makes a HUGE differance for criteria of what sector to play, etc**
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