Copper Update - Plus Everything Else

Copper, which broke down through key support yesterday has closed below $2.90 per pound and is behaving as I hoped.

I also thought I'd update some of the calls and observations I've posted here over the last few weeks.

The dollar index, the set up which I was most excited on Tuesday about has stalled over the last few days. But the setup is still valid and yet to be disproved.

Silver sold off hard last Friday and continued down on Monday. Has since been a small consolidation zone, but looks like it could continue down.

Gold is still not showing any clear trend at the moment, but if the other metals continue down, it could follow suit. This is counter intuitive to the dollar downage... so we'll see.

Cotton which broke out of a rough basing pattern last Friday on very low IV, is continuing to look bullish. Not a parabolic trend, but very workmanlike.

Orange Juice - Rumours of OJ's demise have been greatly exaggerated. I was a tad enthusiastic in calling a top there... buuuuttt at least it hasn't bolted higher and humiliated me.

Cocoa is still looking bullish, but some profit taking eveident.

Crude. You knew I meant NEXT Christmas, right?

Coffee. Made enough to pay off my tab at the local Cafe'.

This will be my last post before Christmas I think, so HAVE A GOOD ONE!

The Dollar - Sometimes Technicals Just Work

What keeps us technicians faithful to the craft, despite bad calls, satire, ridicule, derision (OK it's not that bad, but the fundies do like to dish it up to us) is that at times, all the planets line up just right and the confluence of factors is so stunning that you just have to trade it. This setup on the Dollar Index has it all.

We have:
* old support becoming resistance
* reaction off the downward sloping trendline
* confluence of fib levels
* evening star candle pattern
* all occurring at pretty well spot on the 83.80 level on the March contract

...and it's taken a whopping off that level today.

To say that I like this setup is an understatement. They don't come any better than this, but that's only half the story. The next bit is the art of the exit... not to mention the small matter of it continuing in the right direction.

The bad news is that it doesn't look good for the dollar... or is that good news? I'm never sure any more in this increasingly Orwellian, bad news is good news world we live in.

When They Sell Silver...

...they really don't mess around. As it stands at this moment, silver is down >7%.

That is a big move in one day and represents a few dollars under $5,000 PER CONTRACT. Longs will nevertheless be happy with their gains since the October low, but it's still a lot of money to give back. (presuming not liquidating)

Gold has also put in a bearish day, being down a point and three quarters.

It could have a lot to do with the US dollar which has been staging a rather impressive recovery over the last few days. No sign of the dollar doom the bona-fide gold bugs have been getting excited about.

My view on the dollar; if I'm bearish, I'm bearish on all the western currencies, so nil effect in reality. Just the normal turns and round-abouts common in any instrument over time.

Death of the Dollar?

Former wall street broker, Max Keiser, files this report on the English version of Al Jazeera.

I post it here for interest only, and do not necessarily endorse his comments. However it is topical in light of the recent dollar dumpage.

Dollar Dazzler

Not too long ago, I saw a video of a presentation by Larry Kudlow that was floating around the web. Basically he was a lone Dollar bull in a hostile room full of bears. He put on a great show, and was even quite convincing. But nobody believed him anyway. lol

I'm not formally educated in economics so I rely on articles and opinions that are sufficiently dumbed down enough for me to understand. So what I'm saying here is I'm no expert, not even well versed in the principles of economic managent.

But I must say I am most impressed by the case presented by the bears... both on the dollar and on the economy (that includes us in the rest of the English speaking world as well).

So I guess I'm saying that I'm not shocked that the DX is testing some important support levels on the chart. My only lament is not taking the trade.

Where my bemusement lies is in the the stock indice's, where apparently any news is good news, so long as rates stay paused... a slowing economy is apparently bullish... but I won't put the kibosh on that one.

Real Money?

I don't know how many arguments I've sat through between the antagonists and protagonists of the "Gold is the only true currency" dogma. In such instances I feign some sage-like loftiness as to being above such materialistic concepts (when in reality the discussion is well over my head, I don't have a clue. lol)

I can only default to my observations; sometimes it acts like a currency, sometimes like a commodity. In the last few months at least, the reverse correlation to the USD index is quite striking, as per the chart on the left.

Without drawing all those tiresome lines all over the chart, technicians will recognize the short-term trading signals (all depending on time frame and style of course), long gold, short the dollar index.

So the question today is, whether to take both trades, or is it really the same trade? Is long gold really short the dollar by default?

For now, my thoughts are kill two birds with one stone, and gold is sexier than USD's, so I'm with gold, and hoping for a breakout of the recent highs.

Dollar Update - Bullish?

Well at least not bearish. It looks at this stage to be supported @ 84.50 and has edged sideways out of the channel I have drawn in.

I'm a bit questioning of the Bull case here because of the technical picture of the basket of currencies the USD Index trades against. They either look bullish or look to have support in most cases.

I'm not really convinced, so no position in the USD.

The Aussie however, looks like a nice long setup. (Dynamically updating chart)

Dollar - Which Way?

Last Friday, I mused that the US Dollar Index was at a pivotal juncture with regards to the technical picture.

Pivotal was the correct term, because thats exactly what it did at the support I had drawn in - pivot. This isn't necessarily bullish... yet. There is a month old downward channel to contend with as drawn in on the left. That horizontal support at 84.50ish is still key and a move out of this channel will validate that support and essentially set a bullish path in the medium term.

On the other hand, most of the currencies the USD trades against look technically bullish as well. A move down today continues the channel.

Which way?

US Dollar Index

There has been much discussion about the future of the dollar in recent years, mostly based on the fundamentals of the US economy, inflation, interest rates, money supply, whatever.

My simplistic view is bearish. However the maladies afflicting the dollar are also endemic in the other western currencies... particularly the anglosphere.

In cases where I haven't really got a clue, which pretty much includes everything, I'll just resort to charts. lol

Technical analysis can be an extremely subjective study at the best of times, as is this look at the US dollar. Depending where a traders draws support/resistance, trendlines etc can give completely different pictures. The dollar has either broken support or is sitting at support, depending on which line you want to believe.

Either way, I think we are a pivotal juncture in the dollar, and the next few days could reveal the medium term future of such.

I'll be keeping an eye on it. Stay tuned.