Folks, it has become very fashionable for a majority to write off USD and to make matters worse, write UP silver (and the commodity trades that have followed the Silver/Gold ratio and TSX-V/TSX ratio).
Indeed, enthusiasm is gaining momentum out there, whether it be for speculative TSX-V juniors or the wider commodity space (esp. critical commodities in a global trade war). Also, I just cannot ignore the raving silver bullishness going on at X, seemingly increasing each day. That is how the silver market rolls, remember.
We know all this. We anticipated it and it is here. The Silver/Gold ratio and TSX-V are halting for a moment, but the play is still on. However…
I am not doing my job if I am not illustrating negative potentials that I see, just as I illustrated positive ones like the above. So let’s take a look at Uncle Buck and take its temperature.
The daily chart shows what could well be just another ill-fated bounce to the 50 day moving average. The trend is down. The administration is hell bent on devaluing the currency and the macro and its increasing debt pile are doing it no favors. In short, USD is bearish both technically and fundamentally.
However… markets are under no obligation to make sense on any given short-term phase. USD’s daily technicals show the price inching out of the top line of a wedge. This comes after a positive divergence by RSI and MACD at the recent low. That’s not nothing. Nor is it necessarily a big something.
A bounce is on and the 99 area is the first objective. I think if USD stops there the “SGR trades” would probably remain intact, though maybe roughed up a little. The next target is clear resistance at 100. That could see more widespread short-term pain in the SGR trades, though not end the play. US stocks, esp. Tech, may outperform on such a bounce.
The other option is a market liquidity crisis, which as you know I am still allowing for. Timing on that? Little clue. I’ve been thinking late Q3 or Q4 with Q3’s earnings season. But that is just speculation at this point. As is the whole idea of a liquidity crisis (per NFTRH 871 and previous reports).
Bottom Line
For right now traders (esp. in the SGR trades) should keep an eye on the linchpin for so many global trades, namely USD. It looks like it wants to test 99, at least.
Longer-term holders should probably not get upset with that target or even a rise to 100. But if USD were to do that and keep on going, then it would be coming time to consider getting the heck out of the pool, because there’d be a you-know-what in there.
Very nice; Large move potential as money from Europe runs scared into the US.