US Dollar Reversal?

Alright, another day and more of the same- Stocks up! It really is a bore and this evening I must talk about my favorite markets and that is the currencies. Yesterday we had the US dollar punch above 83 as I had expected, today we had some spectacular movements across the currency board. I will break down the action and offer up my opinion on my favorites. First lets take a look at the dollar

The chart above shows rejection from 83. Is it a reversal or just a typical pullback? Stocks were up over 80 points on the day and dollar bulls took profits? I have been cautious with the currencies because I am expecting a pullback in the equity markets. I believe that other markets are showing doubts about the rally in stocks as well. I am sticking with the currencies tonight but I will say Oil, Copper,Platinum and Livestock markets have all taken it on the chin the past several weeks. I really think these markets are telling us about the true growth of our economy here in the states and abroad!

Next, is the Aussie, how about the past 24 hours mate! Let's have a look

Aussie job report was last night and you can see that the Aussie exploded for 80 pips in less than 1 minutes time. +72 thousand jobs created-much better than the 10k expected. There were questions about the accuracy, but I guess we will have to wait until next month for the revision.

Next up, The CAD- have a look

Nice move today, you want to talk about a boring market that woke up today, this was one of them. Notice how it did stop at horizontal resistance. Again with stocks showing more strength today, the two commodity currencies are performing well. This has not been the case lately and I am willing to say that the shorts in both of these markets got caught off guard today with such a big move in stocks.
For me to tell you what is going to happen next from here, ummmmm, at this point you have to use stocks as your guide! If stocks reverse from today's high, then I feel the dollar will trade higher and the CAD & Aussie will turn lower.

Last, lets have a look at the EURO

Yesterday, she was plummeting way below 130 and did not look so pretty just shy of 129. Today all those Euro bears got punched in the gut! I am showing the Euro because the action just fascinates me. Not only that but I would like to point out that with the Yen, British Pound and the Euro giving the US Dollar much of its strength as of late, currency flows must go somewhere so I hope you understand why I am fond of the CAD & Aussie. With that being said, I am not a believer in this equity rally but if it keeps going higher these 2 currencies have value. Like trading Gold right now, we must be quick and nimble. I say quick and nimble because all you have to do is go back through these charts and see what can happen in such a short period of time if you are caught on the wrong side.

Some other thoughts without looking at charts. Gold is currently trading at 1590, THEY triggered stops early this morning and Gold traded as low as 1575, buying came in and Gold traded in the mid 1580s for the rest of the day, it did make a punch to 1592 at the close of the NY pit session. A couple of events to be on the lookout for, first the FED meeting next Wednesday and the Tuesday after that we will be facing the expiration date for April Gold options. With these 2 main events get ready for some wacky metals volatility the next couple of weeks. Keep these 2 events in mind and try your best to keep your emotions in check if you are trading. Be CAREFUL!

Lastly, I have been speaking of Bonds as a nice opportunity this week to the upside. In the face of this equity rally today, Bonds should have had a nice down day and they actually traded a touch higher. If you are long, be prudent and move up your stops at this juncture. If equities keep strong tomorrow to end the week, there is a good chance that Bonds head back towards the lows of this past week. For now keep your eyes on the Stock Markets and you should know what to do.

I hope you found this informative! Thanks for reading and Good Friday to All.
Martin

P.S.- I hope you know to click on the charts and you will have a better view. And if you think I am changing my stance on Stocks, absolutely not, at some point I believe the game is up and alot of people are going to be blindsided! As a trader you need to be willing to adapt and go with the flow each day! Patience is better than stubbornness.