What’s Next For The US Dollar?
FX: A dollar correction was well
forecasted by us last Friday. “Well forecasted” because as we wrote on Friday,
the rally to 88.90 marked the 50% retracement of the 90.77 to 86.80 decline. In
this weekend’s report we wrote for subscribers, “Our forecast last week was for
two very tradeable moves in just four weeks time.” Nice call! Contrary to
popular expectations, USDX retraced 50% of its three-week decline in just one
week but is now butting up against key resistance at the 89 area. As stated, we
covered half our long USD/CHF position from 1.2485 at 1.2765 at the day’s close
and moved our stops up on the remaining position to 1.2585.”
As you see we captured last week’s five-day rally
in its entirety and now have 1/2 our longs from 1.2485 riding higher with stops
placed at 1.2585 (current spot price at 1.2685). Unfortunately, our long USD/JPY
trade from last week at 106.65 was stopped out at the entry level for a wash.
Note*** Traders may want to start watching EUR/JPY for a long position today on
a break above downtrend resistance at 134.30.
Meanwhile, we are closely looking to initiate
shorts on USDX in case of a suspected “September Mini-Crash.”
Stocks: No change: 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.
Bonds: No change: 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.
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.
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