Monday, November 14, 2011

Swings? May be not … roller coaster more like…

And…. the minor new Dollar highs were the winners… However, they didn’t last for long…

The solid reversal is encouraging for my Dollar bearish preference though clearly we’re still in the early stages of building a foundation for additional losses. During that process there’s still plenty of room for some deep pullbacks and I even fancy a new Dollar high in USDCHF before that finally turns.

The other factors that have contributed to the overall Dollar bearish view are the holding of the key resistance in the Dollar Index and the continued ability for U.S. equities to refuse to yield to the downside. I’d even point out precious metals that have obviously benefited from the recent market insecurity but are towards the end of a bullish correction. That silver has lagged so far behind does imply quite a bearish subsequent reaction.

So what does that bode for us today? Well, the first part of the day should see follow-through on the gap lower in the Dollar. I can’t see it getting too far at this stage and a correction due. Beyond that are some mixed signals – overall Dollar bearish but there appears to be a slight disconnect between the currencies in terms of their position within the Dollar bearish structure. Therefore, don’t be too surprised if there is a period of general consolidation, some pairs extending losses and then correcting while others consolidate. Once this is over we should see losses resume for the rest of the week.

Underlying message: Take care today but don’t get bearish too quickly – unless the Dollar breaks key supports…

Have a profitable week
Ian Copsey


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