The Dollar Index (DX) found support at the fan line we were watching. There's plenty of resistance up ahead, but the channel it's in indicates a potential meteoric rise. Note that this channel is at the exact same slope as every other from the past 4 years.
I expect a rise to the 87 area, sometime in the Dec 11 - Mar 12 time frame. This part is tricky, as previous rises have channel surfed. In the summer of 2008, DX accelerated when it shifted to a parallel channel to the left - not once, but twice. Eventually, it returned to the original channel to complete the move.
The Oct 09 - Jun 10 run did a bunny hop to the right, effectively slowing the pace of the rise. The Oct 10 - Jan 11 rise fizzled after a respectable 10% run. We'll keep an eye on this one.
ORIGINAL POST: 2:05 AM
Updated chart on AUD/USD. Start with a pretty cool 20-year trend line...
Toss in some neat fan lines, channel and some Fib retracements...
Makes a pretty compelling case for a reversal.
More later.
Pebble, the excessive bearishness caused a Zweig Breadth Thrust. Last one was in March 2009, before that 1984. Do you have thoughts on this.
ReplyDeleteI read about that, haven't seen any historical data on effectiveness of the call. Anyone out there have any references?
ReplyDeleteThe McClellan Oscillator shows a similar swing, but under certain circumstances, this has been a great signal of a downturn.
This is from Parker Binion:
ReplyDeleteThe signal is based on a 10-day exponential moving average of the percentage of advancing issues compared to advancing + declining issues.
When the 10-EMA rises from below 40% advances to above 61.5% advances within 10 trading days or less, the signal is activated.
According to Steven Achelis, there were 14 such signals between the 1940s and 1984 which produced an average 24.6% gain in stocks over an average of 11 months from the date of the signal. According to Achelis, “Zweig points out that most bull markets begin with a Zweig Breadth Thrust.”
The next signal after 1984 came in March of 2009. It produced a ~50% gain over the next ~13.5 months.
Thanks for the post and analysis Pebble.
ReplyDeleteHook, I appreciate the bull perspective. I have been doing a lot of searching for a TA bull case the last few days and had come up empty handed. The Zweig maybe the first.
I am not bullish per se. I believe this is a bear market rally of unknown duration.
ReplyDelete