Sept 23, 2011- A Little Common Cents Corner #15- Dollar is Key

For Short term bottom fishing, you need to take a look at these charts for confirmation.

USDSGD seems like it just experienced an intraday double top (this is good for the markets to have a relief rally).  Please read my other posts to understand what I’m talking about. (Just click the A Little Common Cents Corner category for all market related posts).

As I said earlier, the mommy of all short squeezes is in the dollar.  When the short squeeze there stops, bearish raid, here we go 😀

As we speak, most Asian markets gapped down but are off lows, with several stocks exhibiting hammers, one day reversals and hanging men.  Prepare for some wild action, guys and gals.

*A bearish raid, for those who don’t understand me, means that all those who are too gloomy (bearish in the markets) get eaten up alive by the short squeeze.

– The Faceless Trader

(15 minute intraday & Weekly chart of USDSGD)  Also, USDPHP just exhibited a one day reversal today (this is good for the markets):D

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5 Responses to Sept 23, 2011- A Little Common Cents Corner #15- Dollar is Key

  1. ScIoN says:

    I am just a bit confused with the macroeconomics of the dollar. Economic outlook on the US is getting weaker so isn’t it that investors would have to do away with the dollar (capital flight towards foreign –> weaker dollar?) ? However, what happened was that the dollar became stronger as global markets turned to the dollar for safety(?). Even gold weakened. What’s with the dollar? Is it still because of the impression that US treasuries are risk-free?

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    • Hello Scion, glad you asked 😀 The logic is simple. The dollar’s primary trend is for it to depreciate, thus all the traders, investors and banks in the world borrowed in dollars (heavily leveraged), unwinding their positions results into a sudden demand for dollars (deleveraging—this is what you usually hear from CNBC or bloomberg). This explains the same reason why USDJPY is very strong (i think it closed at 75 or 76) considering the Japanese economy isn’t really strong. USD and JPY are called funding currencies– i.e. borrow USD at almost 0.25% per year, and use the money to bet on risky assets (whether its gold, stocks, bonds etc). As for the gold breaking down last Friday, primary reason is most of the stocks have fallen huge these past few days resulting in margin calls. This is the reason why we get panic selloffs (please read my article- nature of selling climaxes)- this is the reason why bargain hunters can have an extraordinary bounce, because it’s not really selling but just simply forced liquidations. Hope all of what I said helps 😀

      Feel free to ask, if I’m not clear. – FT

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  2. Andrew Tiu says:

    Lots of things to learn from FT

    Like

  3. Pingback: Sept. 25, 2011- A Little Common Cents Corner #16 – The Shopping List & Personal Accountability | Faceless Trader

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