Is The Perfect Setup In The Dollar About To Happen?
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FX:Â Our dollar forecast remains on
target with the third consecutive up-day carrying it to the 88 handle this
morning. Below is our forecast from last Friday and the following three days of
action. Recall that we moved stops in USD/CHF up to 1.2485 and are looking to
take profits in the coming days around the 1.2700/50 area. For this to occur it
will take a move past the cluster of resistance at 88.30 to get a larger
correction towards the 89 handle by the end of this month. This would then be
the perfect setup to sell the USDXÂ for a break below the channel support in
September.
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Stocks:Â Â Â Yesterday’s selloff was
no surprise to us. The
August-October months are historically the worst and considering that the S&P500
reached our key Fibonacci target of 1245 this month suggests to us a downturn
lies dead ahead. Meanwhile, the VIX continues to climb since we added to our
position over two weeks ago – making for a nice 20% gain so far.
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Bonds: Last week we said, “The
impulsive looking decline in yields from key resistance in the 10 and 30 year
contracts suggests a move back to 4.2% for the 10 year. This level needs to hold
to stave off further decline in yields (rally in bonds).” We reached the 4.2%
level on Tuesday and bounced off of this level. If this area holds there is a
good chance for a renewed advance to the key 4.6% level. But if stocks decline
over the coming months (as we expect) then yields may decline.
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Regards,
Â
Jes Black
Â
FX Money
Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
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Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
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Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.