market peak

Dollar strength, S&P weakness?

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A previous analysis posted in TRADING2DAY.com analysed the pattern that was forming in the US dollar index. Then we mentioned that a head and shoulders pattern was forming and that it needed to break below the neckline in order to decline as much as the HEAD of the pattern.


As you can see in the daily chart above, the neckline never really broke and prices bounced upwards towards the purple pitchfork resistance and the ichimoku cloud. Prices currently trade above the resistance level. This could be the addition of another worrying signal for the US markets.

As shown below, S&P and the Dollar index are inversely related. It is very common and usual that when one rises the other fall.


This is another signal that we should take under serious consideration when it comes to the security of our long positions. Apart from the bearish pattern in Europe, this comes at a time where a correction is very possible in the US indices. Caution is advised. Better safe than sorry.

As always, thank you for taking the time to catch up on my thinking.

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