Wednesday, January 5, 2011

US Dollar Index on a Rally?


I was looking at different charts this morning and the one chart which stands out of the pack was the US dollar index. Why so? Because it revealed signs of very strong buying and higher prices to come. The USD Index measures the performance of the US Dollar against a basket of currencies: EUR, JPY, GBP, CAD, CHF and SEK. With this in mind, is it time for the stock market to take a breather and allow the dollar to continue its rally? From the chart, it looks like that's the direction it's heading.

See the first small oval circle that i drew? That's a very powerful strong buying signal where big operators are buying agressively. Observe this chart to the previous BAC chart that i drew, they are almost 99% identical. I will not go on and write what the big operators were trying to do because that's already explained in the BAC chart. When you see this signal, just buy and close an eye, trust me your risk/reward will be astonishing.

The bigger oval circle constitutes of more accumlation in the bigger context in my opinion. The dollar had risen to a point where huge selling had manifest itself where it would require constant absorbtion of the selling for higher prices to continue. Over years, the dollar had been beaten quite heavily so now it's the time for it to take charge again. With BAC price rising agressively in the past two weeks or so, expect a similar chart paradigm to appear where it showed signs of fatigue for a period of time before it continues its uptrend.

Ronald K