Dollar way up! Dollar way down! -- Since last weekend, when I was once again pointing out to watch currences - and Raymond Merriman's weekend comments mentioned some strong movements likely ahead in currencies - the dollar moved strongly up, with euro and yen strongly down. Then Wednesday I pointed out that they were reaching resistance/support levels ... then yesterday and especially today, they moved strongly again - dollar way down! With movement up in euro, yen and gold ... but not to new highs there - yet. After we take our anti-vertigo remedies, how to we interpret all this?!While the wave pattern in the dollar became choppy, it does look like the drop today can be a wave 3 of 5 to place the dollar closer to completing a cycle low. Today's low of $78.22 still did not test onto the $77.92 level that I've shown as a Fibonacci .618 retracement level on the $USD monthly chart. Toss in the fact that euro, yen, and gold did not make new highs (yet!), and I've got to question whether this isn't just edging closer to an important low that may be close by.
The technical indicators are not slam-dunk, but you do see positive RSI and MACD divergence on the $USD daily chart, and slow stochastics having moved up with this being a possible kissback. The same might be true in reverse for the euro. As for the yen, it narrowly missed losing support and moved up smartly again, and I don't know how much longer it can flirt with the bullish vs. bearish scenarios. I'm willing to give it the benefit of the doubt, once again, so long as it respects prior swing lows which have now provided a closer-by support level at the lows of yesterday and today. For the bearish case, when it moved up smartly recently it was to the .618 retrace to its highs around $112, so falling from that didn't look good. For the bullish case, it did not lose support on this drop, and the series of three wave up that it's made from its lows can be interpreted as a leading diagonal or very similar; point being, it can still have a third wave or "C" wave ahead of it to try retaking the $111.49 pivot and even new highs.
I've included a chart of GLD below (as the $GOLD chart wasn't updated yet at Stockcharts.com) and wow! what a move today. It still did not place gold above the $960 level that I've mentioned, which would focus it toward $990 and then of course above that are new highs. Maybe it does, and maybe it doesn't, and here once again I've got to point out that the bearish scenario remains viable and the indicators such as the slow stochastics can be read bearishly with this being a kissback. Don't get me wrong, I'll jump in big-time if I think gold is going to rocket up to new highs! But it's meandered too much, and kept the bearish scenario viable for too long, for me to feel all warm and fuzzy about being bullish on gold without real price proof. This is definitely a time when I will let "price [be] the ultimate indicator."
(click any image to see it larger or more clearly)
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