The Dollar comes back from Hibernation

Published: Fri, 04/26/19

26 April 2019

The rising dollar is back from the slumber and the markets are starting to notice, or are they. Commodity prices from precious metals to base metals reacted last week and today Oil suddenly gave up its gains. However equity market are still not taking note. The charts below compare the last dollar rally with the global equity index to show what happened last time. The dollar is set up for a large advance after this weeks breakout and it is showing up across dollar pairs.Here are my notes on the dollar for this week.

Bank of New York ADR index

The global index of stocks - the adr index broke the blue trendline overnight after what has been a 50% retracement of the entire fall seen in 2018. This retracement was done while the dollar was in a pause and currency volatility was dropping. But what happens when another dollar wave kicks in, and maybe it has with last nights breakout.

adr 250419

USDJPY

USDJPY is in a large triangle and it is edging towards the top end near 113.50, with the 20dma support near 111

usdjpy 040419

USDSGD

USDSGD has been quiet after the 50% retracement in wave 2. Forming a triangle at the lows and waiting for a 3rd wave impulse to show up.

usdsgd 050419

Euro

The Euro is in decline and wave iii of iii. Immediate support is at 1.1864 near the Bollinger band, then the trendline of the last two lows for the triangle in wave B at 1.159, and then the trendline of previous two lows that is downward slanting to 1.104

euro 240419

USDCNY

The Chinese yuan made several false starts and that ended up looking like an ending diagonal from Feb to March, now finally we are above the 40dema again and i hope this is it. this should mark the start of a multi month move in a weaker Yuan and a rising USDCNY. Back towards 7.0 and higher in wave 3 of long term degree. The first minor higher top bottom is in for minor wave ii.

usdcny 240419

USDCAD

USDCAD - on the monthly chart the best interpretation for the moves so far is that we completed wave 1 of a long term 3rd wave that started in 2017. This is a leading diagonal since the rise is overlapping but still impulsive. The move held the lower end of the channel and mostly started wave 3 recently. Wave 3 of 3 should be powerful enough to get us to test the 1.468 highs. It should also have greater momentum and be non overlapping. 1.3662 is the high for wave 1 above which the third wave ia on.

usdcad 240419

USDAUD

Where goes the CAD goes the AUD, or so I believed for a while. Not sure if anything else but commodities is the common relationship for these pairs. But here is the monthly chart. Wave 1 and 2 of a long term 3rd wave was very slow and now we have a multi month consolidation that could be completing. The lower end support line is at 1.39. A third wave would then go past the previous peak of 1.464 and eventually head to where 3=1 is near 1.67

usdaud 240419

BitCoin

BTCUSD - moved above the 50% retracement mark but is below the 61.8% mark, it can now count as 5 waves up in wave (C), but till there is a trend reversal we cannot rule out that the 5925=61.8% mark will be touched or not.

btcusd 250419

Dollar Index

DXY closed above the blue line at 97.70 in a very clear breakout. After the ascending triangle pattern the breakout should have bullish implications. As long as we do not go back into the previous range the trend is up. Short term 1-2 day pullbacks will keep happening as the sentiment is getting extreme bullish from the recent run up but the trend may not change based on EW markings. The focus is to complete a 5 wave rise from the 18/03 March low before discussing the larger trend again. The chart below shows the triangle as a series of leading diagonals in an extreme bullish scenario for the dollar. This is because the rallies did appear impulsive at the time.

dxy 250419

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Rohit Srivastava
www.indiacharts.com
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