Thursday, July 28, 2011

$DXY Update

Inverted H+S has developed. Distance is about a full point. I am not sure what else can be done but to trail a stop if you are long. The 74.50 resistance is proving to be tough at the moment, and trendline from y/day low is being tested as I type. Some index components are not cooperating right now, and the long trade is starting to look a bit heavy. No reason to panic, if you have your stop in you are safe. Should our leaders decide to screw up the American dream, dollar index will dive and perhaps not only challenge the head of aforementioned H+S, but the low of the year as well. This said, I will be looking to buy that reactionary low, because the equities and all risk will get sold off as well, and before too long the traders will remember that there is no safe liquidity greater than dollar. Swiss franc and the yen can not compete on that, and the central banks there are waiting to intervene on any severe overreaction. Should that happen, dollar index will go parabolic, as it has done during major risk-off times before.

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