USD: Ready for Take Off?

I am really not a FX person but in THIS market, we're All FX people.
Sunday my waitress was telling me how the USD was toast, and that I should buy gold, so let's take another look.




The Euro topped out July08 at 1.6038 and moved down in 5 waves to 1.2329 in October of 08 .  That .3709 long term move down , call it A,  has been retraced  .68 at the highs of 1.4840 . Within the abc structure comprisng the B wave correction back up, the c from 1.2457,  is structured in 5 waves , an -a-,-b-, -c-,-d-,-e-, and the last -e- beginning from 1.40 is equal to .61 of -c- at the high of 1.485 . While it is possible for that "e" structure to eke out some minor new high like 14855,  further significant gains above there are very unlikely.
The implication for the Euro is dire, for instance a C=A down from 1.4850 targets 1.11.


The Japanese Yen is also at a significant juncture. After correcting up vs. USD in an ABC structure lasting TEN  years, the Yen topped out Jan09 and came off in a clean 5 waves to April 09. Since then it's gained against the USD in a series of abc's that has taken it nearly back to last Dec.'s highs.  Call that waves 1 down  and 2 back up (or a and b). Last week Crudewire called attention to Yen vulnerability. See  USD EURO YEN ETC  and
Yen Leads the Way Down 





If the Yen is beginning a 3 wave down after finishing a TEN yr. move up , the downside  potential gets really intresting; for instance the move down in the mid 90's was from 125 to 68 , so IF this leg is a 3 or C down AND it equals A you're talking about it losing half it's value vs USD. 

Hard to imagine right now.  But then the unimaginable seems to be happening more frequently.

Comments

Post a Comment

Popular posts from this blog

WTI Update- a 4 Handle Future?

Image
From my last post Dec 28, " Before we get into next year, short term the WTI has a good deal of upside risk to between $48 and $54, with $51.50 being my favorite cluster of resistance/ and a measured target for a 4th wave." Hourly click to enlarge As can be seen, WTI is in the high side of that range and evidencing some recent weakness. It does have a "look" that could produce a higher high at the top end of the range there, or even somewhat higher.  However the greater risk, short and medium term is to the downside from here.  It may turn out that a "b" wave chop down is in the cards with a subsequent "c" wave up,  but that kind of move can be deep and retest the lows . See above Fib retracements, particularly the .618 and .78  Longer Term Risk For Bulls AND Bears The Decline click to enlarge While the labeling of the subwaves above can be argued,  including whether the wave down is completed yet or not,   the $
Read more

Biden Climate Plan and Global GDP

Image
 KUDOS, and I mean it, to Biden. Real implementation will be incredibly difficult and failure will mean doom (don t think your grandchildren are going to survive in a world without plankton).  By next election cycle the path the world is on will be visible to all and most likely we will see spiking carbon emissions, devastating weather catastrophes, the need for even more investment, carbon taxes, and even more weaponizing of painful choices.  The pandemic definitely decreased global emissions. To stay under the limit on future emissions needed to keep climate temps under the 1.5 centigrade increase, that same decrease in emissions Y on Y has to be achieved every year until 2030. Reality No.1)  Co2 and other greenhouse gas emissions have a very high correlation w Global GDP, .87 to .93 Climate change is unfortunately global so don t bother with arguments based on regional data. In the United States some progress growing GDP while cutting emissions has been achieved in some locales. Mos
Read more

Crude Oil Update

Image
WTI has  a long history of affinity for Fibonacci retracement levels. It just touched the .618 retrace of this years move down. 1 yr. chart click to enlarge There is also the little issue of seasonality. click to enlarge And Hedge Funds have been piling in over the last 3 weeks. John Kemp of Reuters reports they are net long an additional 112 mml bbl wti= Brent on both Nymex and ICE. So on the downside taking out the Fib .618 retrace of the move up and break out to the upside around 51.15 will help sharpen things up.  The risk of trading futures and options can be substantial. Trading foreign exchange and energy derivatives carry a high degree of risk, and may not be suitable for all investors.  The above is merely an abstract theoretical discussion mostly for my own entertainment, not trading advice or a recommendation.
Read more