Before this Happens?

TOUGH CALL - We've moved into a difficult spot with respect to the US Dollar outlook. I had been looking for the Euro to push up a little more before rolling over for a meaningful US Dollar recovery, and yet, there are signs that we may stall out before pushing up to that targeted area in the form of massive falling trend-line resistance off the 2008 record high. From my experience, it's better to get a level like that tested and out of the way, so there is less of an excuse for the market to need to feel like it needs to go back and revisit the area. If we roll over right now, that trend-line will still be calling out and could keep the Euro from wanting to really pull back. But fundamentally, last week's Fed warnings of higher inflation in 2018 and subsequent jump in average hourly earnings in the US, are already setting the stage for the Dollar comeback. Strategically, it puts me in a familiar place, a place that many struggle to love, but a place where if you learn to love it, you will be rewarded a thousand times over. That place is the sidelines!

cartoon feb 6

WHAT WE REALLY WANT - It very well could be the case that the US Dollar actually starts to rip higher from here. And if that happens, I may not be in for the ride. But that's ok! Something else will come along. As I said the other day, we don't need to be trading the most exciting things going on out there, we just need to be trading the opportunities that come our way, in whatever form the present. So maybe it's AUDNZD again, something completely removed from the Dollar story. The Pound is the one that's really showing that reversal after a rocket run up into the 1.4300s. With this one, we're looking at a double top that projects weakness back down into the 1.3600s. Of course, it could be a scenario where the Pound weakness is more specific to the UK, with Brexit bumps and pre-BOE positioning factoring into the price action. But right now, the US Dollar is trying to make a run and it might just do so, with the Euro having stalled out ahead of the trend-line. The most important thing is that we see volatility out there and we've definitely been seeing welcome signs of that. So I do anticipate we will be in our next position sooner than later. Let's see.

We may see a jump in volatility around the US Dollar, but that doesn't mean there aren't other opportunities elsewhere.

FX Positions Pointing in the Right Direction

Portfolio is waiting for follow through. The Friday closes set up an encourag...


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A beautiful reversal on the daily chart was too perfect this week and we're b...