Technical observations of RossClark@shaw.ca
The US Dollar, Euro & Gold
In the past three decades, once the Dollar became oversold (or conversely the Euro became overbought) the chance of a rebound to the twenty or fifty week moving averages increased dramatically. We are there now. The Dollar produced a weekly downside capitulation alert the week of March 28th. The Euro staged weekly upside exhaustion alerts March 28th through April 11th. Couple this with a weekly sequential sell setup in the Euro as of April 11th and we are in a position to undergo a tradable dollar rally.
An offshoot of such a correction in currencies is a related decline in the gold price and related equities.
- The dollar index has successfully completed the "Sequential Buy" pattern.
- The euro has completed the "Sequential Sell" pattern.
- Tradable moves in both, as well as the gold sector seem to have started.
- The following cartoon emphasizes that a firming dollar could exacerbate still over-extended credit markets.