US Dollar strengthening again

The US Dollar may continue its prior uptrend after breaking to the upside of its symmetrical pattern yesterday, when the US Dollar index gained 1.06 points to close at 87.14 (see Chart 1 below). While there will be some resistance at its October high of 87.88, the short-term outlook is bullish for the US Dollar.


Chart 1: USD's daily chart as at November 11, 2008 (Source: Stockcharts.com)

A bullish US Dollar is negative for commodities. From Chart 2 below, we can see that CRB dropped 9.18 points (or 3.51%) to close at 252.08 yesterday. This is lower than the October low of 253.85. Unless a quick recovery happens, CRB looks set to continue its prior downtrend.


Chart 2: CRB's daily chart as at November 11, 2008 (Source: Stockcharts.com)

Crude Oil is one of the weakest commodities now. From Chart 3 below, we can see that Crude Oil (using on NYMEX crude oil contracts) has just broken below its immediate long-term uptrend line support of USD63-64. Its next support will be its strong horizontal support of USD55-56 & thereafter its next long-term uptrend line support of USD52-53.


Chart 3: NYMEX Crude Oil's monthly chart as at November 11, 2008 (Source: Supercharts by Omega Research)

Will CPO be able to escape the resurgent bearishness in the commodities sector? From Chart 4 below, we can see that CPO has begun to show signs of weaknesses. The inability of CPO to stay above its 20-day SMA & the failure of +DMI to crossover -DMI indicates that the downtrend in CPO is still intact.


Chart 4: CPO's daily chart as at November 11, 2008 (source: ifs.marketcenter.com)

If CPO's downtrend re-commence, then we should expect prices of plantation stocks to weaken again.