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Another Great Reversal Print
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Wednesday, 03 June 2020 12:50

Could this become a Great Reversal?

The US$ interbank liquidity crisis and then the effects of Coronavirus, forced the Fed to inject massive reserves into the international banking system to stop its dollar from moving ever higher. The DXY chart suggests it might be working.

It show two classic reversal patterns that have been used by traders ever since technical analysis began.

In March the dollar crashed lower, then shot higher which could be the start of a Broadening pattern, occasionally found at major reversals.

Price action oscillates widely and eventually breaks out moving the same distance from the extreme as the depth of the pattern. That gives a target around the 2018 lows.

The bigger pattern is a potential double top, the first high at the end of 2016. Double tops are very common and again have a target based on the depth of pattern.

If the DXY were to break below those 2018 lows it could run on down to at least 80 where it spent the first five months of 2014 before breaking out of it's last major, triangle, reversal pattern.

 

From the blog

The NASDAQ keeps running

 Way back, on the run up to the millenium, we had the tech boom. Add the word 'Internet' to any start up and away it went stock price rising into the stratosphere. Earnings, who needs earnings? You just needed the magic words, 'Internet start up' and the money cascaded in.

'It's different this time' was the cliche of the times, and it was - until it wasn't.

Where are we now? In another tech boom, 1800+ points above the last peak in 2000.

The soon to be available, Nasdaq Trading course indicators with the FibFinder add on are suggesting the time might just be ripe for a top. Notice how the Colour Charts do a great job of defing the momentum trend runs, and changing colour when it's prudent to take profits. It'll be time to take cover when the next candles turn red.

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