Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

U.S. Dollar, AUD, CAD, Euro Forecast Update

Currencies / Forex Trading Jan 19, 2011 - 04:12 AM GMT

By: David_Petch


Diamond Rated - Best Financial Markets Analysis ArticleRight now, markets are extremely choppy, with the correction in gold stocks, particularly the HUI correcting back to the 490-500 area. From a quick glance of charts, the S&P 500 index and XOI remain in definitive uptrends, while the HUI has pulled back. There is really no change in the technical picture at present...the bubble the FED blew is still growing and will continue to expand until the surface tension of the bubble exceeds the capacity to remain intact and then it will burst. Energy prices are still set to rise, which in turn will raise the cost of every item transported and drive up precious metals. We are in the last two years of the current government term in the US and historically, they have been favourable to the stock markets. Beyond the last half of 2012 and into 2014, things are going to get really ugly. Another deflationary scare will likely occur during this period which will bring down most commodities and markets. After 2014, interest rates are likely to soar as bond holders are going to demand a higher rate of return when it becomes obvious that inflation is well above the stated levels.

Climbing the "Wall of Worry" is in effect at present and as the Captain has stated the past few months, speculative positions should be groomed back, with core positions held across a number of different economic sectors. Those trading stocks, ETF's or funds equivalent to the Horizon Beta funds...keep stops in place to preserve profits or reduce risk.

Analysis today will highlight how other currencies are doing relative to the USD and the direction the USD faces in the short term...nothing has really changed since the prior update.


The daily chart of the Canadian dollar index is shown below, with all three upper Bollinger bands in close proximity to each other at present. Lower Bollinger bands are still tracking sideways, indicating that no sharp downturn in the Canadian dollar should be expected anytime soon. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. The trend in the Canadian dollar is likely to remain sideways to up for the next 7-10 trading days.

Figure 1

The weekly chart of the Australian dollar index is shown below, with all three upper Bollinger bands above the index, indicating a top was put in place. The lower 21 MA Bollinger bands is in close proximity to the index, suggestive that further downside potential exists. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 2 and 3. The %K in stochastic 2 curled down, so expect sideways to downward price action with the Aussie dollar over the course of the next 7-10 trading days.

Figure 2

The daily chart of the Euro index is shown below, with the lower 21 and 34 MA Bollinger bands in close proximity to each other and below the index, suggestive that a potential bottom was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3.The Euro corrected for two months and appears set to rally. With the %K in stochastics 1 and 2 curling up, strength in the Euro is likely to persist for the next 3-4 weeks. Of course a major piece of news could reverse the technical setup, but for now, the trend appears to be sideways to up.

Figure 3

US Dollar Index

The daily chart of the US dollar index is shown below, with the upper 21 and 34 MA Bollinger bands in close proximity to each other. Lower 21 and 34 MA Bollinger bands are in close proximity to each other and the closing price, suggestive that further downside potential exists. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 3 and beneath the %D in 2. The %K in stochastic 1 appears to be rolling over and when it falls beneath the %D, expect downside potential to last for at least 2-3 weeks before basing.

Figure 4

The weekly chart of the USD index is shown below, with upper 34 and 55 M A Bollinger bands above the index, suggestive that the correction from last year's top is not yet complete. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and beneath the %D in 2 and 3. The %K beneath the %D in stochastic 3 generally completes an oscillation from top to bottom before basing; so with this observation in mind, the appearance of strength at present should be viewed with caution until 81.5 is taken out. The daily chart indicates weakness over the next 2-3 weeks, while the weekly chart suggests strength (that should be viewed with caution).

Figure 5

The monthly chart of the USD index is shown below, with Bollinger bands no indicating any particular trend at the moment. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in stochastic 1 and above the %D in 2 and 3. The %K in stochastic 1 falling beneath the D and the %K hugging the %D in stochastic 2 indicates longer-term weakness in the USD. Refer to Figures 7 and 8 for the Elliott Wave counts, as they provide clues for how the pattern "should" behave, given the recent wave structures.

Figure 6

The short-term Elliott Wave count of the USD index is shown below, with wave B shown to be underway at present. It is possible that wave C has begun an impulsive sequence down to the 72-74 area but before this can be confirmed, two closes beneath 78.5 is required and as of this AM, the USD is at 78.771. If we do get a break below this, those wishing for a quick trade might consider purchases in the precious metals sector for a 10-20% return over the next 3-4 weeks. Once the USD bottoms around 72-74, it stands to rally for at least 4-6 months, which should send markets and commodities into a decline until Septemberish. At this point, a very sharp move in commodities is expected, with gold likely being catapulted to over $2000/ounce. Gold still will have at least a triple beyond this point, but the top of 2012 will represent at that point in time the first year of gold being lower than a previous year. Watch the USD carefully this week because the trade is on with a break below 78.5...this represents the line in the sand and based upon the Elliott Wave count, it is baked in the cake. Wave A was clearly impulsive, so it requires another impulsive segment to satisfy the count.

Figure 7

The mid-term Elliott Wave count of the USD index is shown below, with wave [D].b thought to be forming still. Once wave C.[D] completes, wave [E] is required (upward trend) to complete this large structure that has been forming since 2008. After wave [E] completes, the USD stands to have a sharp move down to the 63-65 level at a minimum. Companies here in Canada had better make sure appropriate currency hedges are in place for later this fall/early 2012 because there could be severe financial losses and business failures.

Figure 8

In short, expect the USD to remain weak and if the 78.5 level is taken out, then the move to 72-74 is baked in the cake. During this time, precious metals, energy and the broad stock market indices should rise higher due to currency depreciation and increased demand as people play the inflation trade. This is expected to last until mid to late February as the Captain has described (referring this to a similar pattern as to the year 2000). Positions SHOULD be parred back after this time frame, as the correction is likely to be somewhere between 15-20%. This is minor compared to what lies ahead after the expected huge rally later in 2011/early 2012 (another 40-50% correction).

That is all for today. I will be back tomorrow AM with an update of the S&P 500 index.

By David Petch

I generally try to write at least one editorial per week, although typically not as long as this one. At , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2009 Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

David Petch Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules