Thursday, April 23, 2009

USD's uptrend to continue

USD's uptrend is expected to continue after it broke above its symmetrical triangle at the 86 point level. The ADX, MACD & Williams %R indicators all confirmed the move to upside for USD. See Chart 1 below.


Chart 1: USD's daily chart as at 22/4/2009 (Source: Stockcharts)

From Chart 2, we can see a close inverse correlation between DJIA & USD. This inverse correlation developed as investors sought out USD as a safe haven during the tumultuous period of the Global Financial Crisis. With the critical stage of the crisis appeared to be over, would this relationship still hold?


Chart 2: DJIA & USD's daily chart as at 22/4/2009 (Source: Stockcharts)

If this inverse correlation still holds true, then the continuation of the uptrend for the USD would signal a correction for DJIA. I have plotted below the chart of DJIA:USD, which shows signs of correction.


Chart 3: DJIA:USD's daily chart as at 22/4/2009 (Source: Stockcharts)
at

4 comments:

  1. ACThursday, April 23, 2009 4:35:00 PM

    Alex,
    For USD against RM, what rate it will go up to? And in what term (one month, two months time etc?

    ReplyDelete
  2. MaxWealth88Thursday, April 23, 2009 9:31:00 PM

    alex, our Bursa continue to break record year high despite weak fundamentals. Is the banking crisis over?

    ReplyDelete
  3. Alex LuFriday, April 24, 2009 9:37:00 AM

    Hi AC,

    I think USD/RM exchange could rise to 3.80 level, within next 2/3 months. I doubt our BNM will allow this rate to go below 3.80.

    A good link for a chart of this rate is- http://finance.yahoo.com/echarts?s=USDMYR=X#chart2:symbol=usdmyr=x;range=2y;indicator=sma(100,200,400)+volume+macd+wpr;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

    ReplyDelete
  4. Alex LuFriday, April 24, 2009 10:25:00 AM

    Hi MaxWealth88,

    The experts are divided on whether the Global Banking System is on the mend. The recent crisis is one-of-a-kind (think Ebola) & was so contagious & virulent that the authorities have pulled out all stops to tackle it. I don't know for sure whether it has been resolved. Like everybody else, I can only hope that the extreme measures taken will do the trick. The market seems to think so. Will the patient be up & running any time soon? I doubt it. We can declare a small victory as long as the rut in global economy has been halted for now.

    ReplyDelete