King Dollar and Euro could change trends near here



Established current trends....U.S. Dollar Up (Hot), Euro Down (Cold)

The upward trend in the US$/Yen has it facing a cluster of resistance at (1), monthly momentum is the highest in 40-years and bullish sentiment towards the US$ at 91%, according to Sentiment Trader.

The downward trend in the Euro has it facing potential falling channel support, with weekly momentum the lowest level in 15-years and bullish sentiment toward the Euro at 14%.

No doubt the solid current trend in the US$ is up, the world continues to look at the US$ as the tallest of the seven dwarfs. No doubt the current trend in the Euro is down and the world see's plenty of troubles in Euro land.

Some times trends have counter trend rallies or they reverse trend. The current situation with both currencies presents a potential for short-term reversals in these prices zones. Our strategy is called TB&M, which stands for "Tops, Bottoms and No Middles" as we attempt to find key turning/inflection points.

The odds for a reversal here might have moved up a little of late as Gold & Silver are both reflecting relative strength against the US$ of late. See metals strength (HERE)

The Power of the Pattern, when Silver was trading at $28, shared that it could fall almost 50% more, to the $15 zone and metals and premium members would look to be a buyer near those levels. Even though the US$ has been strong of late, Silver is gaining strength against the US$ right now too!

A few weeks upward move in the metals hasn't proven a thing at this time, I do really like some things I am seeing in this complex and if the the US$ would turn weak here, metals could really be attractive to buyers!!!



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Kimble Charting Solutions


Staples/Discretionary diverging and breaking resistance



The Staples/Discretionary ratio has been in a steady downtrend since 2009, which reflects investors have been comfortable with risk, pushing more money towards discretionary holdings (risk on trade). A falling resistance line has been in play for the past few years, until recently.

Of late the ratio is breaking above resistance, reflecting that money flows now are turning towards Staples (risk off trade). 

Back in 2007 the ratio started heading sharply higher, when it did, the risk off trade was the place to be.

At this time the ratio is NOT looking like a "hockey stick pattern" as it did back in 2007.  If it starts turning sharply higher and the S&P 500 breaks weekly support line (1), it would appear that the risk off trade is on.



Gold & Silver much stronger than King Dollar of late



When one looks back over the past few years, King Dollar has been much stronger than Gold & Silver by a big percentage. The above ratio of  the Dollar compared to Gold, reflects a strong trend downward (Dollar stronger than Gold). It's been best to own the Dollar over the metals since 2011.



The above chart is a 30-day performance comparison of the metals to the US$. As you can see gold has almost been twice as strong as the Dollar and Silver is almost three times as strong. Want to make this clear at this point...30-days does NOT make a trend.

Is a reversal in play and investors should now own Gold & Silver over King Dollar?



Miners have been rather impressive of late, actually the most impressive in the history of miners.  ETF Trends shares that GDX, has just experienced the best three weeks since it was created (Record performance here) 

The Gold Bugs (HUI)/S&P 500 ratio has been sinking fast over the past few years as well. The ratio above is now facing a big test of resistance, as its up against a two-year falling line as momentum is deeply oversold and could be creating higher lows.

New trends have to start from somewhere! Are new trends actually in play now? The Power of the Pattern started sharing 6 weeks ago with metals members that positive conditions for a Metals and miners rally looked to be forming. 

A further breakout of the Gold/Dollar ratio and new breakout by the Gold Bugs/SPY ratio would be encouraging signs for the hard hit metals complex. From a sentiment perspective the conditions are ripe for a change as 90% of investors are bullish King Dollar at the time. If King Dollar would turn into Queen Dollar for a while, the metals complex would like it!

If you would like weekly updates and special alerts to opportunities in the metals complex, I would be honored to have you as a metals member. 



More details on our research can be found at Kimble Charting Solutions (HERE)