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anchak (99.84)

Will the Dollar Gain Support? An esoteric TA view - Fib Fans etc!!!!

Recs

29

October 11, 2009 – Comments (13) | RELATED TICKERS: UUP

Prelude:

Hmmm…my Good friend  GoodVibe recently had an excellent and provocative post on the shiny metal. Obviously , his intention was to stir some debate and banter and he got his hands full. People like Chris ( TMFSinchiruna), Binve , Kstar – all pretty much took the opposing view –and threw up some great fundamental arguments against this call. Sinchi went a little far…against modicum – and was called by another great friend Tastylunch on that – which I second.

 

Essentially folks….I am chickening out a bit here. I am not a regular to CAPS anymore – and do not think I can handle something as polarizing as PMs….so I will take the “poor mans” ( J)  version and deal with the Greenback  ie US $ - Of course you gotta depend on me to NOT FOLLOW good advice. Both Hans ( Porte) and Tasty – suggested I do a blog on my Long Term Fibs of Dow Supercycle and S&P Rally …which I posted in CIL ( coveritlive.com the GV Community Chat room ) and Stinkyfeet boards – because they thought I will get a lot of Recs!  Obviously I love going on the tangent – so I decided on the $. This one is fraught  with issues – but I believe it needs some attention at this juncture.

And we will begin with a chart which I posted in CIL recently.  This one I discussed with GV

ENLARGE

Accompanying would be GV’s own Dollar chart – obviously it looks similar

ENLARGE

Premise
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Both of these are obviously  based on Elliot Wave Principle ( more so for GVs – I let the trajectory define direction most of the time) – and completion of 5 waves. This is important a FULL 5 waves – is the harbinger of  Trend change ( Remember GV’s calls in March – due to this phenomenon).

Here the case is not so obvious….The index needs to breach the Fan line – for it to have some room to run. Additionally, there are myriads of other possibilities – this could just be a minor correction etc…

But I think a TREND CHANGE IS IMMINENT! Hence the blog.

I’ll try to have some more supportive charts up – if I can…I have them – so this is not just one chart and me trying to conjure up TA magic…..although you could argue how Global Monetary Supply can be influenced by TA – but there’s a small data point which I have – which makes me think – this could be something you keep on your radar screen. That’s all!

13 Comments – Post Your Own

#1) On October 11, 2009 at 10:33 PM, binve (< 20) wrote:

Excellent post AC! I agree, the five wave down sequence is nearly done for the Dollar and we should get a reversal that last several months.

GV and I definitely have different long term TA and FA and EW counts on the dollar, and I don't think we are in a long term impulse up (the large 1-2 on his chart). But we definitely both agree that a substantial reversal is coming.

Thanks for sharing and keep em coming!!

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#2) On October 11, 2009 at 10:38 PM, anchak (99.84) wrote:

Allright....Here's the same chart Zoomed out LONG TERM - All you need to see is the Big Ellipse

ENLARGE

Do you see where the 2008-2009 Dollar Rally stopped...its on the 2005 Downtrend Resistance Fan! This was from the recent Dollar Top achieved in around Y2000.

As long as $ remains within this trend - the basic trend is still DOWN. So this is not a Dollar resurgence thing yet!

 

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#3) On October 11, 2009 at 10:40 PM, anchak (99.84) wrote:

Binve...we think along similar lines.....I'll try to keep adding to this one ...you'll enjoy the prior chart!

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#4) On October 11, 2009 at 10:46 PM, binve (< 20) wrote:

AC, yeah man that is a great chart!! It is amazing how it is respecting those fan lines.!

Just in case anybody is interested in my long term take on the US Dollar, it is here: http://marketthoughtsandanalysis.blogspot.com/2009/09/thoughts-on-us-dollar-analysis-of-usdx.html

And here is my relevant long term count that dovetails with what you are showing above. The USDX since 1985 has been making lower lows and lower highs:

DISCLAIMER I am just a guy with an opinion. Many people just as smart (or smarter) than me have a complete opposite view of the Dollar long term.

 

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#5) On October 11, 2009 at 11:13 PM, anchak (99.84) wrote:

I needn't post this - but some maybe scratching heads - on how I use these fans and Fibs alongside of EW - to mark my counts....Additionally this is a view from the ETF

 ENLARGE

(i) The first Wave down is obvious . Things you can do

(a) Have a Fib extension up - Yellow line
(b) Draw a Fib Fan - Here its redundant - given the corrective 2 and steep slope of 1 - if you see a near vertical drop and a strong reversal - you essentially have no view on the coming wave - ie no edge. So wait!

(ii) As the 3rd started - I drew my first wave of 3 ie (i) of 3 ....Grey Fib. The drop was right alongside....and it stopped at the 161.8 extension of Wave 1. ( Same as DXY0). This typically marks the end of a NON_EXTENDING 3rd.

(iii) Given that the next corrective immediately laps over the entire Grey Fib - leans me to calling the 3rd here and the 4th at the top. 

 

 

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#6) On October 11, 2009 at 11:21 PM, anchak (99.84) wrote:

All right now the zoomed in view for UUP - the reason I chose the ETF is to get to the hourly fidelity.....

The point of reference is the RED fan from above

ENLARGE

In my view we are dealing with a 5th extension here. Hence I am trying to use the RED one to figure out where it'll give

Conclusion
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2 resistance lines - remain - a clear breach - and the downtrend is BROKEN.

Hope this added value to your line of thinking!

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#7) On October 11, 2009 at 11:42 PM, anchak (99.84) wrote:

The last but not the least - EUR/USD minute chart.

This one is actually cautious - because the current down wave seems more corrective than motive/impulsive - needs another Leg down ( This is inverse to the Dollar chart!)

ENLARGE

 

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#8) On October 12, 2009 at 12:05 AM, Tastylunch (29.94) wrote:

AC

thought provoking stuff as always.

As you know I'm skeptical of Fibonacci's predictive power for the reason Michael laid out Re; universality of interpretation (although your fans have me reconsidering how I use them, they ake much more intutitve sense to me than Fib retracements sincemthey mimic trend channels- they seem to mitigate this factor considerably)

 here's a queston I have

I see you used UUP in some of your charts. Given the dbl leverage and the decay issues there do you think TA still applies?

I've personally had very very little luck in using any TA other than daytrades only on the Inverse andLevered ETFs

and the few times I've been right I've had them go against very quickly if I dare hold overnight (i remmber one trade on FAZ i made I was 20% or so and then it opened the next mroning down 28% wiping out my gain)

obvioulsy UUP is less volatile then most but I usually only dare use TA on the underlying (though I may use the ETF as the trade vehcile) . I suppose of course the shortcomings I could be experienceing could be operator error. :)

In any event, I think a dollar snapback rally should be probable.

even mega dollar bear Jim Rogers seems to be in that camp of late.

 here's an odd bit of trivia I was thinking about today. You know Cycle theorist Martin Armstrong?

I'm pretty sure the core tenet of his beliefs were that cycls tend to last ~9.6 years. 9.6 years ago fits pretty neatly with the 2000 dollar top if memory serves.....

Perhaps that explains Prehcter's uber bullishness (as well the etxreme deserved dollar pessimism)

Of course as neat of these things are most cycle theorists I've read have yet to make any sort of fortune in markets. (although people who use their work have  e.g. Paul Tudor Jones) :)

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#9) On October 12, 2009 at 9:28 AM, anchak (99.84) wrote:

Tasty....My understanding is that the UUP is not a Leveraged fund ......its just a market basket Long ...for the dollar.

On Fib fans....Neither am I - however to me - it all depends on the fit - ie the test whether its being respected. Strangely a lot of cases they are - the reason should be obvious - its a SLOPE study tool....and has very defensible angles ie 38.2% retracement (30-40% range), 50% and 61.8%......It does a great job at channeling. And the probabilistic aspect of it is also defensible - from an angluar sub-sector sense.

To me - its a question whether the model fits or not - I never treat models as gospel truth.

 

 

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#10) On October 12, 2009 at 12:18 PM, kaskoosek (98.38) wrote:

I am going with the fundamentals on this one.

 

Long term we all know the outcome, so why speculate on short term movements? 

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#11) On October 12, 2009 at 1:56 PM, Tastylunch (29.94) wrote:

kaskoosek

if no other reason than to know to not add more short positions on the USD. 

I think it's useful to know regardless of your timeframe outlook.

anchak 

hunh I'll just have to look into UUP more closely then.

its a question whether the model fits or not - I never treat models as gospel truth.

that's a good philsophy to have, it sure is tempting though sometimes to get lazy and just use the model whne it seems to fit so well. :)

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#12) On October 12, 2009 at 3:25 PM, RussWild (< 20) wrote:

Well done AC!

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#13) On October 12, 2009 at 6:45 PM, GoodVibe4Ever wrote:

Anchak - Tip my hat to the master and top fan of fib fan! :) I really appreciate what you showed me over the times of how you developed a keen eye for using this esoteric tool. Thanks for sharing.

GoodVibe

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