US Dollar, Dead Cat Bounce

If you go back in time and read comments from 2-3 weeks ago I had called for deprecation in the dollar and the market delivered. I only bring this up because the move happened a lot quicker than I anticipated…from the high made 5/23 June futures are lower by 3.3% in just over 2 weeks. That being said I expect a “dead cat bounce” from here. The 61.8% Fibonacci levels (lower white jagged line) appears to be the line in the sand as prices are bouncing from oversold levels…see stochastics on the daily chart below.

So where from here? I anticipate a move back to the 50 day MA (dark blue line) and quite possibly the 20 day MA (dark blue line) in the coming weeks. U.S. Dollar Futures

As always when I do analysis on the greenback it is not because I am establishing a bullish or bearish play for my clients in the dollar but rather it will dictate how I trade other instruments depending on their relationship to the dollar. Markets that I think could have a direct inverse relationship if this plays out are the Swiss franc, Euro, Cable, Cocoa, Crude oil and metals complex. Those long European crosses should tighten up stops. I like probing bearish plays in cocoa and Crude oil. As for the metals gold and silver continue to tread water but on a 1.5-2% advance in the dollar we may get a washout in metals dragging silver under $20/ounce and gold closer to $1300 in my opinion.

Perhaps an argument can be made technically when looking at the daily chart above that we resume a move higher but please take a look at a weekly chart and convince me that the depreciation in the last three weeks may not be the beginning of a larger move that drags the dollar back under 78.00…levels not seen in fifteen months. On the docket domestically in the coming week is CPI, PPI, and a FOMC meeting…stay tuned.

As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997

Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

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