In case you did not receive yesterday’s post on tick charts, you can check it out here: Tick Charts: 5 Great Reasons to Use Tick Charts.
Explosive moves in the FX markets. Thought I’d show some cycle analysis using the Better Sine Wave – which has nailed a couple of really significant turning points.
Cycle Analysis: US Dollar Index (weekly)
The US Dollar Index reached a cyclical turning point with "End of Trend" warning signal two weeks ago. Since then we’ve had a 7.5% decline in the value of the US Dollar.
Cycle Analysis: Euro (weekly)
The strongest currency to respond to the US Dollar weakness has been the Euro. This has appreciated 9.6% against the US Dollar. Again the "End of Trend" warning signal on the weekly chart caught the low nicely.
Cycle Analysis: Crude Oil (daily)
Commodity prices are responding to the decline in the US Dollar – rather than anticipating stronger economic growth. Crude Oil has made a rounded bottom.
Cycle Analysis: Copper (daily)
Similarly, Copper is also on the rise. The "End of Trend" warning signal has worked out well in both cases. I track Copper prices because it’s used in the manufacture of a broad range of goods and so can be a useful indicator of economic growth.
Cycle Analysis: 30 Year Treasury Bonds (weekly)
Lastly, the Bond market has bounced off a "Pull Back" signal on the weekly chart. Bond prices appear to be on their way towards a cyclical high and "End of Trend" warning signal over the next few weeks.
It’s going to be fascinating to see how investors – particularly the Chinese, Japanese and Gulf States – react to the US’s new Quantitative Easing policy.
Good luck with your Emini trading.
