Our first target for the dollar was hit — here are the next 2 targets
FX:
Last week we showed in our dollar index chart an
arrow pointing back to the channel support that was recently broken. We said to
expect a bounce back to here before a renewed decline. This week we felt that a
minimum retracement had been achieved and in yesterday’s FX Focus report we said
to watch for the key 1.2350/80 level for EUR/USD to act as a pivot point in the
market. Marginal new lows were made this morning in late London trade at 1.2383
which we suspect was the successful “third test” of that general support area.
We added to our long position this morning at 1.2400 bringing our averaged rate
to 1.2420. But it will take a move above key resistance at 1.2450 today or
Monday to see follow through.
No change in our target: “We still expect a rally
to 1.27 initially which corresponds to a decline in USDX into key support at 85,
where a number of technical tools suggest we should see a bounce. So while we
think traders can remain short USD into that support, we are looking to close
our EUR/USD long around 1.27 and go long USD/CHF when USDX is at 85.”
*Note – I will be golfing in North Carolina
next week, but reports will still come out before tee-off. Fore!
Stocks:
The bounce we were looking for two weeks ago from
1,200 is very long in the tooth and for our bearish stance to hold prices must
remain below last month’s highs. So the key levels right now are 1245 and 1200
for the bull and bear case.
Bonds:
No change: After a decline to 4.0% as we
expected, yields bounced as the possibility of an inverted yield curve is making
it difficult to be short shorter maturity bonds and long longer maturity bonds.
There is little evidence of any major trend developing at this time.
Regards,
Jes Black
FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
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.
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.