DXY: Major retracement, or uptrend continuation

2016年4月16日

The dollar index has plotted an interesting pattern after the weekly downtrend signal present in it since the first week of March ran out of time. It's possible to expect a fundamental catalyst that will propel the dollar into a rally from here onwards, in particular against the Euro, Swiss franc and British pound. The Yen remains a viable candidate for strength though, specially with an impending oil correction or downtrend continuation in the cards.

Some interesting cues:

• Large speculators in oil are net long, and at 4 month record low levels of shorts in oil.
  
• Commercials hedgers are increasing their oil shorts.
  
• Commercial hedgers have reduced their Euro longs dramatically and are now net short the Swiss franc (but net long and increasing GBP longs)
  
• Commercial hedgers are net short S&P500 now.
  

That being said, the Australian dollar might just move sideways while the dollar gains some strength, I would avoid shorting it, since it appears to have reversed the long term downtrend from the all time high.
I expect equities to rally this year, after a correction (we remain range bound). This correction in stocks matches a potential oil turn around, which also aligns well with a retracement in silver and gold, before both (as well as copper and palladium) resume the uptrends that emerged from the lows.
I'll monitor the action this week closely and update this chart, we might see some very critical moves from here onwards.
Volatility has been very good this year in Forex, and I expect it to continue this way.

If interested in my trading signals, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year.


Cheers,

Ivan Labrie.