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I know that there is interest in the Dollar.... I sent a note to my
Institutional clients earlier today with a brief technical comment, a trade
recommendation and a daily/weekly chart of the index. The set up is really
a pretty one and I would be happy to share it with you.
COMMENT:
I have been watching a very nice setup developing in the Dollar index. I
view the Dollar as the lynch pin market..... A lower Dollar will translate
to higher gold, higher CRB, lower bond prices and eventually lower
equities.
Without going into a lot of technical detail, there is good reason to
believe that both SF and DM are bottoming and the technical setup on the
Weekly Dollar Index (poor volume, wedging up,overbought etc.) supports
this. I estimate that chances are 75-85% that the index will break lower
and the risk reward in the trade is very very good.
JUNE DOLLAR INDEX: Has been wedging up, volume has been poor, there is poor
result of
effort, there are three drives to a high.... a bunch of stuff I like. The
only thing lacking has been bearish thrust below an appropriate trigger. I
think that today's break below the trend line/trigger line qualifies
nicely. ADDITIONALLY: Volatility in the currencies has declined to the
point where a large expansion in vol. is likely. Anyway, I see two ways to
play:
1) Sell a small initial position (DX9M) at the market (particularly if the
contract moves to new daily lows). Place the initial stop just above the
recent highs. If you are really risk adverse, place your initial stop just
above today's high @100.62 (yesterdays close).
2) More conservative traders can wait and sell the first rally or bear flag
that builds after a confirmed break below the breakout point.
Keep in mind that these signals are actionable in other markets. Both the
Swiss Franc and the D-Mark are setting up reversals that should be monitored.
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Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/From ???@??? Wed May 05 10:05:07 1999
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Date: Wed, 5 May 1999 11:04:01 -0600
Reply-To: eadamy@xxxxxxxxxx
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From: "Earl Adamy" <eadamy@xxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: June Crude and Astrology
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Here's a chart of the June Dollar which has clearly broken down and the June
S&P which is under pressure. Note the similar 5 wave diagonal pattern. There
is a great deal of information which can be gleaned using nothing more than
price action and intermarket relationships.
Earl
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