chartwatchers

DXY - Possible megaphone topping pattern

TVC:DXY   US Dollar Currency Index
1371 21 49
The US Dollar Index             broke out of its range last week.
At the first look it is a great buying opportunity as we run to new highs.
Normally this kind of breakout would be a buying opportunity. My problem here that we are too late in this intermediate cycle to have a follow through after this breakout.
There is a decent chance that banks used this breakout last week to get out of dollar long positions and next week the smaller players will be left alone with their dollar longs...

The megaphone pattern is always showing uncertainity and chaos. In these patterns every new high and breakout usually a false signal.
If I'm right and this is a topping pattern next week instead of running higher price will drop back into the megaphone and we will have a steep decline to the lower trendline in the following few weeks.

MACD and TSI is signaling divergencies.
If price is reversing early next week I will immediately enter with shorts here.
If you nail this megaphone, you will be a legend!!
Reply
@traderzaius, press play.
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Look Guys… I certainly believe that the author of this idea is a very learned and gutsy fellow ... who sticks out his neck and presents his views, the way he analyses them ..... so I sincerely apologize for my above mentioned contrarian views, as they seem to have stirred a few good Samaritans here.

Further, to explain on my view ( which I would not be doing anymore ) ... I believe that the market is expecting a huge fiscal stimulus from the new US administration in the form of infrastructure spending and tax cuts that will itself spur growth and spark inflation, which will put pressure on the Feds to tighten the monetary policy and increase the US interest rates at a faster pace than earlier.

I am also of the opinion that the new US admin might also look into all kinds of trade imbalances which are there today and might re-negotiate the same in order to create more jobs and spur the economic activity at home.

This all will keep the dxy on the upward trajectory!!
Reply
Cuco67 chinoo
@chinoo,Have a look at the US debt structure. http://www.justfacts.com/nationaldebt.asp#ownership. Would you say that it is in the interest of the US to have a strong USD? Stimulus means more debt, tax cut means less income.
Reply
@chinoo, You are getting way ahead of yourself just like the market. equities move ahead of actual data. You wont be saying this after first and second quarter GDP numbers. Growth wont come until 2-3 years after spending. So, first lets take care of the recession we are about to hit next year before popping the Champaign bottle.
+1 Reply
chinoo shawn.ctech
@shawn.ctech,

Buddy ... Mkts move and anticipate events much faster than Bolt !!
Yr reading of the Mkts displays that u r much far behind the curve ...
now, pls do not react frantically to my this statement :-)
Let time show what is correct ........... !!
Probably best to keep the BP in check !
Reply
@chinoo, Sounds good to me. It seems like you are also behind the macro curve. I'll say the equity market will decline toward the end of Jan. or mid Feb. due to the stronger Dollar, lack of liquidity, and lower GDP data Lets bet on it in public :) Hey, I love whisky. How about a nice bottle on whoever is right? BTW, when you get a chance before you go too forward read up on the backward federal reserve calculation on growth and you will realize no matter how much spending, first you have to deal with what is baked in.
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@chinoo, LOL. A year later things have changed a lot. It was a megaphone.
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I like you analysis and passion for the trade. Keep it up man !
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shorting thin air isn't on my bucket list
+1 Reply
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