Dollar on verge of appreciating?

Friday April 13th the big news was gold falling over 5%. While the US dollar index did not have a big move, analyzing other charts it is indicative that the US dollar can be on the verge of appreciating.

GBP/USD:

EUR/USD:

Looking at GBP/USD and EUR/USD they seem to be in possible bear flags, with a breakdown possibly imminent.


USD/JPY:

The USD/JPY had recently broke its multi-month uptrend line, came back and touched the uptrend line., now looks like it can fall down from this point.

TBT:

Bonds measured by the TBT (ultra-short) recently broke its 200 day moving average came back and touched it, now looks like it can fall from this point. This means bonds will increase in value (yields go down).  


Gold:

Gold broke its multi-year support possibly entering bearish territory if it stays below. Silver held its multi-year  support line, but if gold continues to go down silver can follow.


If confluence is seen with all the things indicated above the US dollar can endure a significant appreciation. This can be bearish for equities and bullish for bonds. Fundamentally, deflation is still possible in the United States so it is something that should be watched.

Bonds continuing downtrend

Bonds measured by the TLT is down a little more than 10% since its peak in July 2012. Currently the price has been below its moving average 200 for a couple of weeks now, and seems to have just broke down from a bear flag.

TLT:

As you can see TLT has gapped down from its multi-week consolidation. This short term down trend can continue down to around $113.00.

Market paused for potential upside

For the past five trading days the markets has been trading in a narrow range. Prior to this was two large candles potentially making a bull flag. To confirm this a confirmation candle on high volume is needed.

S&P 500:

Gold & Silver Short Term Bearish

A while back I wrote about how gold and silver had formed reverse head and shoulder patterns and broke out. Right now it looks like both gold and silver are falling short term.

Silver:

Silver in a bear flag.

Gold:

Gold is in another bearish set up, consolidating right under its MA 200.

Both of these charts need to wait for confirmations to confirm this setup. Medium and long term I still think that gold and silver are both locked in their ranges ( gold $1525.00-$1725.00, Silver $35.00 - $26.40).

Equities Following Precious Metals

A couple of days ago I wrote about how precious metals had formed an upside down head and shoulders pattern and have since broke out.

Gold:

Silver:

Right now looking at the major American equity indexes they seemed to have since formed their own head and shoulders pattern and broke out today.

S&P 500:

Nasdaq:

Russel 2000:

What troubles me about these patterns is that the right shoulder seems to be pretty sloppy on all three of them. Moreover, their breakout occurred on very low volume making them more failure prone. On the short term I think both the precious metals and American equity markets are bullish.

Reversal for Gold and Silver

Gold and Silver had broke out from a long consolidation in early August and have since receded to that breakout point. It now looks like they are making a short term reversal, in the form of an upside down head & shoulders, from that point. Moreover, the last candlestick on both of them appears to be a breakout, giving them bullish indications.

Gold:

Silver:

If the last candlestick is a true breakout, one can expect a target price of around $1780.00 on gold and $34.50 on Silver.

LULU appears to be in cup and handle pattern

Lululemon, a populur stock, appears to be setting itself up for another leg up. Right now it is showing signs of being in a cup and handle consolidation formation.

Lead up: A large run up from a strong base that ended at the end of of April 2012. This run up measures over 50% in price coinciding with an  increase in volume while showing strong relative strength.

Formation: Cup formed beginning in April 2012 and ended in September 2012. The handle began in mid September 2012 and ended June 2012. Stayed consistently above weekly moving average 50 and showed a decrease in volume. Moreover, stayed nicely in the upper half of the cup. The high point of the handle was $78.97, signifying the pivot point.

Entry/Exit Point: I defined an entry point when as $78.97, where a candlestick meets and surpasses the high point of the handle. Still new to using this trading this pattern I took the advice from others and went for a 20% increase in price, making the exit point $94.69.

Warning Signs: The first thing that troubled me about this pattern was that there was not a spike in volume at the bottom of the cup, a sign I like to see. Next, from peak of cup to the bottom was nearly and 55% decline, much greater then a favorable 12%-33% decline. Remember one must wait for confirmation before placing a trade on a stock.