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Created on: 6/15/2020 3:30:29 PM Last Update: 6/15/2020 4:11:50 PM Posted by: RTT
WARNING: This entry is 1744 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.
1 POST
Where is the US Dollar trend headed ?
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 Jesse Livermore said we consider all matters concerning the market, this includes demand and supply fundamentals, general conditions and price patterns.
A high US dollar is the mighty destroyer of all, it explodes foreign debt and risk assets, and it will likely change US politics.
The chart below supports a greater supply of US dollars and a bearish dollar view.
The green line is the spread between the German 10 yr interest rate versus the US 10 yr interest rates, and it is showing bearish pressure on the US dollar. The black line is the trend of the US twin deficits and the US dollar as followed this trend over a very long time and the forecast is for deeper deficits into 2020-22.
The red line is the growth of the US dollar deposits in institutions (turned up side down, or inverted), the more supply of US dollars is bearish for the US dollar. The massive explosion of the red line is directly related to the US Federal Reserve money printing. The TRUMP administration is doing all it can to cap or lower the US dollar, maybe it is lagging the the bearish fundamentals, however we must wonder why the US dollar is not crashing down to $65.
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The bullish support for the the US dollar is the growth of US dollar assets and liabilities out side the US.
As you can see the levels are $30 to $40 trillion. Massive! This matters because a negative change in these levels will create a shortage of US dollars. If the holders of the above get nervous with economic conditions, COVID19 second/third wave or China - US relations this could promote a wave of selling, which is US dollar supply destruction, hence a shortage, which leads to greater demand and higher prices as the world needs US dollars to trade.
The chart below is the US Dollar (DXY) with Richard Wyckoff demand and supply analysis.
Price action into 2020 has shown strength, testing the bull trap zone, currently the pullback is into middle (or muddle) ground and on the balance US dollar strength is still in the chart. However, price could easily test $92 - $94 and return with strength to $102. But in truth true demand and supply is expressed at support ($92) and resistance ($102) levels and while price is in the middle (or muddle) zone not much can be done, therefore we must wait for more price evidence to see which fundamentals are taking charge. If the financial shock of COVID19 is not over then higher US dollar prices can be expected as we all know the US FED can not create jobs with money printing.
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NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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Investing Quote...
.."Don't take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don't be an impatient trader"...
Jesse Livermore
.."Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs"..
George Soros
.."If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks"..
John (Jack) Bogle
Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.
Nobel Laureate for Economics Paul Samuelson
..“Investing should be like watching paint dry or watching grass grow. If you want excitement…go to Las Vegas.”...
Paul Samuelson
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