Why Do So Many Continue To Fight The US$ Bull
Trader Scott’s Market Blog
October 25, 2016
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The US$ is in a bull market. This whole rally from the March 2008 lows, people have been fighting it and endlessly predicting a top in the $. The Dollar had a very large area of ACCUMULATION which is “why” it is now rallying and in an UPTREND. There are plenty of fundamental “reasons” for the $ to be rallying. And when I give them, I hear from many folks who tell me I’m nuts – and the $ is showing a big topping chart pattern. First of all, I don’t even understand “chart patterns”. And secondly, maybe I’m wrong about the $. But I don’t care what people tell me, I just care what my work “tells” me. And as I’ve written numerous times – Jan. 2015. I own a lot of US$ and I’m bullish on the $into next year. Then we’ll take another look, if the rally persists. And I do expect central banks (CBs) to continue to fight the rally in the $. One of their tools will continue to be the selling of US Treasuries, which will continue to add supply to the Government Bond market, even global Government Bonds. And there are some “well-respected”, really smart folks out there (admittedly much smarter than I am) who have no faith in the CBs to achieve the outcomes which they (the CBs) “claim” they desire. I agree. But then these “well-respected” people, a couple of guys in particular, go on to proclaim that the CBs have all of the tools necessary to cause the $ to plummet (and, of course, then gold will soar). In other words, they have no faith in CBs, yet the CBs can easily stop the $ bull market. These “well-respected” guys are in the media all of the time, so why doesn’t anyone point out the absurdity of their claim?
But presently, as I said here,the $ is currently having to deal with an interim RESISTANCE area(red arrow). But I do expect a rally and an eventual retest of the resistance area around 100.50 on the index (at a minimum). This recent area is also an interim SUPPORT level on the Euro (Brexit lows). And we are going to continue to see currency after currency go to new multi-year and even multi-decade lows against the $, like the British Pound and the Chinese Yuan. And lastly, to repeat, for people who don’t believe that gold and the $ can move higher together, wait to see what happens when the European and Japanese banks blow up.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
October 25, 2016 @ 3:29 pm David Parker
You have talked about liquidity flow which I agree can be quite nuanced and tricky. Personally I struggle with interpreting volume in deciding whether the strong hands are accumulating or distributing so I have to mostly rely on price, various indicators to decipher oversold/overbought conditions, and the support/resistance areas for my entries and exits. You have talked at length about all these topics at length in your earlier posts and a lot of what you say does make a lot of sense.
There is something else you talk about frequently but don’t go into a lot of detail. TIME. How do you ‘know’ when a particular stock or commodity is likely to bottom? If Gold topped in 2011 it seems from your earlier missives that you had some idea that it isn’t likely to bottom until late 2015? How could you know that? You have also hinted in your previous blog entries that you expect PMs to bottom sometime next month? Do you also do cycle analysis work on top of using the wcykoff’s method for your entries and exits?
thanks in advance.
October 25, 2016 @ 10:42 pm traderscott
As we discussed David, that approach should help. Let me know.
October 28, 2016 @ 4:25 am wolfy
I have noticed the strength of the Aussie in the midst of this big rally in USD as commodities hold their ground as a whole. I can see this scenario playing out, people know they can’t hold paper forever and it will flow somewhere.