It looks like someone linked you here to our printer friendly page. Please make sure you go Back to Safehaven.com for more great articles just like this one!

Forex Fiat DX - Charting Imagination

By: Michael Noonan | Sunday, February 10, 2013

Federal Reserves Notes, [FRNs], are not "dollars," despite the purposefully deceptive mislabeling of them, [mis]using that noun. FRNs are commercial debt instruments, issued by the privately owned Federal Reserve Bank whose owners are responsible for the largest Ponzi scheme [un]known to man. Some get it, the vast majority do not.

[For those incapable of dealing with facts that shake their reality, you can skip to the charts, below, or just skip this commentary in its entirety. The Rothschild Formula, what we call the Great Ponzi Scheme, is unraveling.]

For those who cannot accept the fact that a lawful dollar is NOT a FRN, those fiat Bernanke Bux, write to him, and/or your CONgressman/woman and ask if a Federal Reserve Note is a lawful dollar. Of course, FRNs, are not Federal, they are issued as commercial debt instruments by a privately owned corporation; there are no reserves, FRNs are not backed by anything; nor are FRNs even a Note, for a Note is a promise to pay a certain amount in a certain time, and FRNs make no such promise. Other than that, people accept them for what they are not. Go figure.

What is so sad is that 99% of Americans do not even know what a lawful dollar is, not that they exist in circulation anymore. What exists in circulation now is the dollar's mirror replacement. When you look in a mirror and raise your right hand to tell the truth, which hand is the mirror holding up? That is how your federal government works.

Remember two things: FRNs are debt, and debt can never be money, by law. Draw your own conclusions.

As fiat, there is nothing backing FRNs, just as there is nothing backing Monopoly money. Both are intrinsically at par with each other, yet one "enjoys" what the forces of imagination give them: a power unjustified. It is ONLY one's imagination that gives the fiat "value," and that defies the imagination of those not susceptible to the cognitive dissonance-spell FRNs hold for its holders.

It is ironic that something which exists due to the imagination has reached volume proportions that have literally become unimaginable. Consider this, if you had been alive since the birth of Christ and spent $1 million PER DAY from then to the present, over 2000 years later, you would not have even spent $1 trillion dollars, yet. This is why we find it so hard to chart figments of imagination, which is what fiats are, but much of the Western world uses them as a benchmark for accomplishment, [something that is quickly changing as China and Russia are creating world trade that EXCLUDES the fiat].

It has taken quite some time, but there are those who have begun to recognize that the Emperor [NWO and their central banks] is wearing no clothes. In another bit of irony, even the fiat is being replaced by computer digits, another form of imagination removed from the faux "original." It gets curiouser and curiouser in the land of fiction.

The above had to be stated lest anyone falsely presume we endorse the existence of fiat in any form. The American Dream to accumulates them, and now their digitized version, as well, will one day turn into a nightmare for those in their hot pursuit. The adjective, dollar, has been [deceptively by design] turned into a noun, and a fiat one at that. This fictional existence in one's mind is what we see in the charts, and the fact that they are fictional is why we choose not to trade them and participate in the fraud.

As Chartists, this is what we see, or what central bankers allow people to see.

Since its peak, over a decade ago, and despite its use to "solve" the economic problems that have arisen from its misuse, the fiat remains entrenched in a down trend. From its last evidence of support in 2008, five years later, price has gained very little.

Sideways activity can be accumulation, in preparation to go higher, or distribution, a pause following a move lower. A bias puts us on the side that what is on the chart is a form of distribution. That assessment can be wrong, but we know the burden of proof is on buyers to say otherwise.

US Dollar Index Monthly
Larger Image

The smaller time frame portion on this chart shows a trading range. The section from August 2011 to July 2012 was in an up trend, but that has evolved into a trading range, and a weak one at that, failing to rally above a 50% retracement between the high at C and the low at D. As a general guide, an inability to rally above a half-way area is the market telling us the move is relatively weak.

The two higher time frames suggest this fiat can yet go lower. We next look to see if there is synergy on the lower daily time frame.

US Dollar Index Weekly
Larger Image

The daily is in a trading range. The upper area is where the rally failed at the 50% area. There have been three "touches" of the lower support, the most recent being a potential failed probe lower/and double bottom. One problem is the fact that we see lower highs since the November high, and that is the market saying rallies are weak.

The low was marked by an increase in volume and a close about mid-range the bar, an indication that buyers were meeting, and stopping every effort of sellers to push price lower. A rally followed, confirming the effort of buyers was successful, at that point. The next focal area is Thursday's sharply higher volume rally.

Volume is the energy behind any move. Ostensibly, high volume accompanying a wide range rally is positive. A look at the intra day composition will confirm that potential, or not. If the rally should fail and lead to another retest of potential support at the 70 level, a fourth touch could break through and continue lower.

US Dollar Index Daily
Larger Image

We know the monthly and weekly charts are showing weakness. The daily is struggling. This 60 minute intra day chart does not bode well for the current rally. As stated, the burden of proof is on buyers. Are they meeting that burden? We see developing market activity as negative.

With volume the energy behind a move, an inspection of the three highest volume bars on the 7th shows the "energy" level increased on each successive bar, but each corresponding price bar narrowed. The market is telling us that the increased effort of the buyers was being met, and over-taken by efforts from sellers. We know that because it was selling that prevented the rally bars from increasing to higher levels. Confirmation follows on Friday, the 8th, when volume decreased and any attempt to rally went nowhere. Note the smaller ranges, a sign that demand was just not there.

Given this assessment, a look back at the daily shows obvious resistance at the 81 level, a place to sell on weak rallies, but should any rally attempt reach that level, it has to show small ranges and decreased volume.

There is also a wide range bar down with a high at 80.70, the 7th trading day in January, and that can also create a resistance area, prior to 81. If the character of any subsequent rally proves to be weak, it would be a sale for the short side, as would a confirmed break under the 70 support level.

US Dollar Index 60-Minute
Larger Image

 

Author: Michael Noonan

Michael Noonan
http://edgetraderplus.com

Michael Noonan is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

Copyright © 2013-2014 Michael Noonan