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The Dollar Is Near Major Support…

By Red, on April 1st, 2010

The-Chart-Pattern-Trader-dollar-daily

As you all know by now, the government likes to sell the dollar to pump up the market.  And it’s no mistake that the dollar has been pounded hard lately.  However, there is huge support coming in just a hair under todays’ close.  Look at that lower rising trend line (in blue) that starts from back in December of last year.

If it breaks, then the market is off to the moon, but if it holds… and bounces off of it, then the market will fall.  There is still a little bit of downside left, before it actually touches it… but not much.  I’d give it one to two more days at most.  That means that Monday could still be an up day, if the job’s numbers’ are viewed as positive tomorrow?

Of course I’d expect the numbers to already be “baked into the cake”… so to speak.  Meaning that regardless of what they actually are, the market has already picked the next move.  If todays’ new high wasn’t yet enough to squeeze out the last bear, then a quick pop on Monday could still happen… before the much anticipated sell off occurs.

Not that the sell off is guaranteed, but it’s the likely next move… before any summer rally to 1200 plus occurs.  So now we wait for the jobs numbers tomorrow, and then to see how the market views them next Monday.  Regardless of the number’s, the media will have 3 day’s to turn them into something positive.  I think the best we can hope for… is a flat close on Monday.  That would be a huge relief for the bears, as every Monday since I don’t know when… since I was born?  … has been bullish.

I’d had about enough of the Bullish BS… how about you?

Red

Weekend Update...

Related posts:

  1. Falling Dollar…
  2. Worthless Dollar…

Leo's Den
  • http://www.reddragonleo.com Red Dragon Leo

    More good reporting from Zero Hedge…

    http://www.zerohedge.com/article/fed-raise-disc…

    Do you think the market will like it if the rates raise?

  • StockObserver

    Red:

    Thanks a lot for the excellent analysis!

    You may think the bullish news they are spinning is BS, but don't you think the bearish news they were spinning to pound the market back in 2008 was also BS? I mean the economy was bad then but was it really THAT bad — to warrant the crash in Oct. '08 — or was the bad news exaggerated and used as an excuse for short-selling?

    • http://www.reddragonleo.com Red Dragon Leo

      Yes, they push it both ways. It's not easy to unload a ton of shares at the top, or to buy a ton of shares at the bottom. So, they have to sell (or buy) them at various levels going up and down.

      That means that they can't make a huge profit on a small move up or down. So, they have to push it 100+ points in each direction to profit nicely. The positions that had during the crash must have been massive, as they did push it just as hard going down, as they have recently going up.

      However, the economy really is a bad shape now. How bad? That's yet to be known…

      • StockObserver

        Red:

        I agree the economy is in a bad shape now, but don't you think that if they keep pushing the market up, the economy will eventually turn around? We often hear that the economy and economic news drive the stock market, but it's actually the opposite: the stock market drives the economy. This means the whole economy is at the mercy of the people who manipulate the stock market. This is the scary truth we don't want to face.

        • http://www.reddragonleo.com Red Dragon Leo

          That's what they are trying to do… talk the people into spending again. But where do they get the money to spend? Many are now jobless. Real unemployment is over 17%, not the 10% the government lists.

          A few days ago I read an article that said that 33 states have unemployment over 15% (which means their 17% figure is really about 25%). Let's not forget that we have huge numbers of people underwater in their house value.

          Many of them were taking out loans on the new appraised value back in 2007 (when the housing market peaked), and buying cars, flat screen TV's, etc… They were spending with borrowed money.

          Where is the money going to come from now that their house is worth $250,000, while they paid $400,000 for it? It ain't coming from the TARP funds, as that money went straight into the stock market to buy up shares of the big banks… so they could write themselves record bonuses from the taxpayers money.

          American's are broke! They aren't spending… no matter how high they push this market. Record numbers of them are paying down their debt, and stuffing cash under their mattress.

          It's only going to get worse I'm afraid. The market will likely put in a long term high this summer, that won't be seen for many years to come. I hope the economy improves… I really do!

          But the crooked banksters want it to collapse (at some point in the near future), so they can eliminated their competition by forcing them into bankruptcy, or by driving their stock price down so far that they can buy them out.

          It's evil and corrupt… much like what Richard Gere did in Pretty woman. Buy out the companies' stock so you own it, then sell off the assets and make a profit from them. You can control a lot of America if you profit hugely on a crash down, and use those funds to buy everything at rock bottom prices.

          It's happened many times in the past too. Just look as the 1929 crash. Who do you think profited hugely back then? Did you know that J.P. Morgan (senior, of course) gave the government money to keep the economy from collapsing?

          You don't think he did it because he's such a nice guy, do you? No, it's was all structured and planned, so he could acquire certain assets at big discounted prices. That's why they are still around today.

          Let's not forget about the Rockefeller's too… They owned America back then, and they still do today. And yes, they are part of the Illuminati…

          • StockObserver

            Red:

            I agree with your conspiracy theory and your other points except one thing: I suspect the market will keep slowly rolling up for many months to come and we are witnessing the birth of a new bull market that will make new record highs two years from now.

            After all, didn't the all-knowing Abby Cohen of Goldman declare in August that “the new bull market in U.S. stocks has begun”? (See “http://www.reuters.com/article/idUSN0632914320090806″). It surely meant something, didn't it?

  • moon

    U-6 IS 17-20 % GALLUP POLL JUST CAME OUT YESTERDAY WITH 20% UNDEREMPLOYMENT. RATES ARE RISING DUE TO DEBT/SUPPLY. THE FED CANNOT CONTAIN THE BOND MARKET. IF THIS HAPPENS HOUSING DOUBLE DIPS ( NEVER UNDIPPED)

    STIMULUS PULLED WILL TELL THE REAL STORY AND NO THEY CANNOT KEEP THE STIMULUS UP BECAUSE THE BOND MARKET IS STARTING TO SAY STOP! NO WAY THE STOCK MARKET WINS VERSUS THE GOLIATH BOND MARKET. NOT GOING TO HAPPEN

    • http://www.reddragonleo.com Red Dragon Leo

      Agreed, and if Bernanke raises the discount rates .25% on Monday at 11:30 am… the banks aren't going to be happy.

  • monicadern

    Thanks Red for the post and for the zero hedge article. Hopefully the fed raises the discount rate Monday. On another note, looks like last print in XLF is now showing 16.08 – bad for us bears I guess in the long term. I would expect a big move lower then followed by new highs.

    • http://www.reddragonleo.com Red Dragon Leo

      That doesn't mean that we still won't sell off Monica. Many other charts did hit their de-leverage points as Sun mentioned. I don't know how far we sell off, but I expect some selling in the next couple of weeks.

      • monicadern

        I agree that we will still sell off but maybe it suggests that the bull run isn't over. Sundancer knows best.

    • sundancer390

      my primary data feed that i use for my inputs is showing 16.10
      http://www.flickr.com/photos/47091634@N04/44842…

      this is where i derive my data for consecutive close sequences

      • monicadern

        Well, as pathetic as it sounds, that news makes my weekend so thank you. I was looking at Ameritrade and Yahoo but I figure your data is more accurate.

      • http://www.reddragonleo.com Red Dragon Leo

        Well that's good news then… So the de-leverage points were met on the xlf, and many others too. Couple that with the 11:30 am Monday Fed meeting, and we have our reason to sell.

        Just raise the discount rate a 1/4 percent and the banks will start the selling. Funny how well timed all this is…

  • Domino412

    So, what does this mean for the dollar? I have gotten crushed in my currency trade account since I was long the dollar. I've lost a crap load this week. Is the dollar going to contine to rally against the EUR? Some say its (EUR) going to 1.20

    • http://www.reddragonleo.com Red Dragon Leo

      Domino… the dollar (via the USO) can fall down just a hair more… to 23.60 before major support is hit. At that point, it must bounce back up, or fall through an upper sloping trendline from December. I think it will hold, and the market will sell off next week.

      However, should the trendline fail, then the market could rally much higher. On the chart above, I'd say the lower target is around 80.40-80.50 area. Any lower and the trendline would be considered busted.

      A second day close below the trendline, and the dollar will fall hard… meaning the market will rise. I don't see it happening this time… but it's still possible.

      • http://dreadwinaard.livejournal.com/profile dreadwin

        Pretty sure you mean UUP above, not USO. Looks like the Euro is back to 1.3487 after today's tiny amount of market action. I think that the USD gets a strong bounce, maybe even sets new rally highs. There are a lot of treasury auctions during the coming week, and the Fed/Treasury need to chase money in that direction.

        • http://www.reddragonleo.com Red Dragon Leo

          Yes Dreadwin… I did mean the UUP, not the USO. (Too much stuff on my mind I guess?). Thanks for correcting me. Hopefully, Domino figured out what I meant too.

  • Earl of

    The Weekly view from Americanbulls

    TNA has a weekly HOLD signal. The candlestick this week is a White Spinning Top.

    AmericanBulls has this trade starting at $44.23 on March 3rd, and this week closed at 55.95.

    TZA has a weekly WAIT signal. The candlestick this week is a Black Spinning Top.

    AmericanBulls last placed a SELL on TZA at $9.83 on February 19th and this week closed at $6.98.

    Summary of $RUT based ETFs & a few popular ETFs (Market positive):
    Hold: QQQQ(up 12%), IWM(1x, up 8.1%), UWM(2x, up 17.1%)
    Hold: TNA(3x, up 26.5%), IYR(1x, up 14.3%), SPY(up 8.2%)
    Wait: RWM(-1x), TWM(-2x), TZA(-3x)

    Market Transition:
    Low Reliability BUY-IF: DRV(-3x),
    Not Very High Reliability BUY-IF: SRS(-2x)
    Not Very High Reliability SELL-IF: DIA(up 5.4%)

    Market Negative:
    New Confirmed Sell: DRN(3x, up 35.1%), URE(2x, up 32.8%)
    Hold: DTO(-2x oil, down 7.28%)

    Action for Monday: None

  • forex_cat

    Good blog.
    Your article serves as a reference.
    お互い頑張りましょう。

    I has put your link on my blog:
    forex chart analysis and a cat
    …(I'd be pleased if you exchange reciprocal link with me.)

  • http://www.reddragonleo.com Red Dragon Leo

    Ahhh… you must one of Cobra's followers, as your blog is in Chinese. I'd be interested to read your blog, but I need to read it in English.

    Do you have a translation link available somewhere? Thanks for stopping by.

    • moon

      use the google translator on the page red it is on the left column

  • forex_cat

    Oh,sorry.
    I has put “translation link” on my blog.
    You can read my blog in English.
    (Japanese ⇒ English)

    …my blog:
    forex chart analysis and a cat

  • http://www.reddragonleo.com Red Dragon Leo

    I added your link in my blogroll and added a google translate button too.

  • moon

    use the google translator on the page red it is on the left column

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