The US$

BarroMetics Views: The US$

The US dollar holds the key to Gold and Crude.  Both have rallied on the back of current dollar weakness. Let’s look at Crude first.

Figure 1 shows the bullish case. We see a possible Failed Upthrust  Change In Trend Pattern. This would suggest a strong upside breakout. Figure 2 shows the bearish case: Crude is in the process of forming a complex Head and Shoulders change in trend. At this stage either or neither may happen.

Figure 3 is the US dollar. We see that it recently broke support at 78.14. Note that this was a breakout from a range that spanned from Nov 1998 to June 2009. I would have been looking for an increase in range on the breakout. Instead we see that the Average True Range dropped to 130 from 230 just before the breakout. Indeed until we accepted below the Maximum Extension I was looking for a possible Negative Development Buy.

But there is another consideration….

….The Nov 1998 to June 2009 represented a period of a high volatility. So it is possible that the current low volatility is a reaction to that.

So at the moment I’d have to say that the DX is not providing any definitive clues. Stay tuned.

2009-09-22-blog-crude-oil-upthrust.jpg

FIGURE 1 Crude Oil Bullish

2009-09-22-blog-crude-oil.jpg

FIGURE 2 Crude Oil Bearish

2009-09-22-blog-dx-probs.jpg

FIGURE 3 DX

4 thoughts on “The US$”

  1. Hi ray,

    Looking at Figure 2 Crude Oil Bearish, will there be a possibility that we will be seeing $47-48 then $36 and below again, if we have a confirmed trend reversal?

    Or are we seeing a short-term correction of Crude Oil and Gold with a US$ rebound?

    For the mid to longer-term, shouldn’t US$ be heading south?

    Thanks,
    Wee Ling

  2. Hi Wee Ling

    I’d prefer to see a break of the neckline before hazarding an assessment about the possible target.

    I am unsure about the mid-term direction of the US$. Long-term I am bearish. Eventually the US deficit will exact its toll.

Leave a Reply

Your email address will not be published. Required fields are marked *