[downrivertrader]

I think we are about to see a major continuation of a secular trend make perhaps its final leg down for a while. The stage seems to be set. The market has created just enough dollar strength to crate uncertainty for many traders and institutions. I find it interesting how we humans (myself included) always try to make trading such a complex undertaking. We have all our formulas, lines, oscillators, indicators, thing-a-ma-giggys, market profile, price distribution, etc. etc. Look a any longer term chart of the dollar and we would all be fools to be buying a market that is in such a strong downtrend. The dollar has certainly not told me that it has turned and a new directional trend has occurred.

We make trading so hard. Scrunch up any chart of the dollar past a few weeks and it is obvious that the market is going down so we should be selling the dollar. A market is never oversold. Never. Human nature makes us want to find the bottom (top). It is great for our ego but will not help your wallet.

I am selling the dollar for now based on a very simple analysis. Why? Because it is going down and I would be a fool to buy it right now. My guess is this will be a hard fast leg down....the time when the most money is made in a trend and make no mistake it is a trend. One I wish I had recognized long ago.

Something to think about.

DRT

[Sledge]

The dollar is weak right now? Holy crap.. alert CNN

[cowpip]

G'day, Downrivertrader.

I don't think the fundamentals have lined up to provide you with a big downleg in the dollar (yet). As you probably know, nothing goes in a straight line either. The dollar is driven mostly by interest rate differentials and although I personally doubt that the Fed will be raising rates anytime soon, they can have a fairly profound effect on the markets by simply talking. More importantly, europe and others are now starting to realize that they may need to start cutting rates. As soon as they commence cutting, the dollar will strengthen by proxy. So dollar strength isn't solely based upon U.S. economic factors. A slowdown in Europe will strengthen the dollar, and that slowdown is becoming increasingly apparent in the data as they lag the U.S. by some time.

It is possible you may be right. The dollar may suffer a catastrophic failure, but that likely wouldn't happen unless something equally catastrophic occurred - like the U.S. AAA rating (which probably shouldn't be AAA in the first place, but that's another argument entirely) getting downgraded by ratings agencies. I figure the odds of that happening anytime soon (within the next week or two) are about as high as getting hit by a flying whale.

A crash in the stock market might also cause a rapid decline in SOME dollar pairs, and this is perhaps the most probable cause of a rapid dollar decline. I can envision some sort of a capitulation market crash in the not-too-distant-future. A catalyst could be something as simple as Congress failing to pass the housing bill, or another major bank failure. At this point, many things might produce such a crash. EDIT: However, keep in mind that a stock market crash will only affect certain pairs. EUR/USD, for example, would probably drop (the dollar would strengthen) due to the safe-haven flight to safety feature of the U.S. dollar. Other pairs, like EUR/JPY would probably drop like a rock as risk aversion rockets higher. So care must be taken in which pair you trade during these events.

Trading what you think is often an error. Even if you're right, your timing will almost certainly bring you some level of pain.

If you really want to make money, trade what you see, not what you think. I'll trade further dollar weakness when I see it, and only when I see it. Follow the leader. Don't try to lead.

[downrivertrader]

Trade what I see..my point exactly. This is what I am looking at, what are you looking at?

[cowpip]

Originally Posted by downrivertrader »

Trade what I see..my point exactly. This is what I am looking at, what are you looking at?

Just because the trend is down doesn't mean it's safe to short. You need to look at price action too and that tells me a different story.

I see that price has already moved a significant distance lower and the risk now is for a retracement before another leg lower kicks in. Price is oversold and the last several candles seem to confirm exhaustion. An inside bar has formed and has been broken on the long side, and has not yet been invalidated. The price action to me suggests that this may be a decent location to take some profits off of the table, if not take an outright tactical long position. I definitely wouldn't short here. It's too risky for my taste.

I'd rather be out wishing I were in, than in wishing I were out.

[sevensa]

I am no expert, but aren't comments like... "Scrunch up any chart of the dollar past a few weeks and it is obvious that the market is going down so we should be selling the dollar."... normally a good sign that the move is over? Like in 1999/2000 when it was obvious that internet stocks are going up and never looking back.

I think I read somewhere that the market's "job" is to prove our opinions wrong.

With that being said, I have no opinion on the dollar and I am not trading it. Just purely my observation on what is said and I wish you best of luck with your short trade.

Regards
- FS

[zdo]

downrivertrader
I have some eurojunk you might be interested in purchasing...call me

[downrivertrader]

Let's see what happens next week. I will try to keep up with this.