Don’t take your eyes off the US dollar and interest rates!
I know it’s been a long year, but we’re finally witnessing early signs of potential trend reversals. The breakdown in the dollar last week confirmed the mounting evidence suggesting the USD has reached its peak.
Now, will interest rates follow?
Check out the dual pane chart of the US dollar index $DXY and the 30-year yield $TYX:
They look almost identical. The recent breakdown in the dollar marks the lone flaw between the two, raising the question…
Will the strong relationship between rates and the dollar hold?
I won’t pretend to know where rates are headed. But if the dollar and rates remain on similar paths, my money is on declining yields at the longer end of the curve.
A falling 30-year yield also makes sense based on a...
Market breadth has to be the handiest tool in our technical analysis kit.
Sure, we love ripping through thousands of charts to gauge broad market trends. But breadth indicators are a cheat code. Putting in the work, we can easily quantify and, more importantly, visualize how well a market is being supported by its constituents.
Because remember, it will always be a market of stocks, not a stock market. Or, in this case, a market of cryptocurrencies.
There are numerous ways to optimize this data output; we can use this breadth data as the basis of a systematic approach.
Your trading system is only as good as your understanding of how well your system operates in different market environments.
If you understand that particular systems and strategies work better in trending environments but are terrible in rangebound markets, you can optimize your trading performance by leaning on different approaches depending on the market environment.
This is where quantifying breadth can have a lot of edge for a trader because it helps them objectively recognize the current market environment and, subsequently, which strategies they should lean...