Chart Summit was a "Ski during the day and Chart at night" event held on February 22-23, 2019 in Breckenridge, CO. I co-hosted it with Brian Shannon and this is the video of my presentation:
The Top/Down Approach to Financial Markets using Technical Analysis
The US Dollar Index is approaching its Q4 highs once again, however, the real story lies underneath the surface in three unrepresented currency pairs that are offering a solid reward/risk opportunity at current levels.
With every month comes a new set of monthly charts, so I want to use this post to step back and point out the major changes since the last time we looked at them in November.
Short-term strength in Precious Metals continues, so I want to do an in-depth analysis of the space like I did last August to see if we're now entering "The Golden Age of Precious Metals".
One chart that I think sums up how I feel about Precious Metals is an equally-weighted index of Gold, Silver, Platinum, and Palladium. While no longer in a long-term downtrend, it's not in an uptrend either. All that can be said is that it's testing the top of a multi-year range. Not all that exciting.
Coming into the year, the most important chart I was watching was the US Dollar. As far as risk appetite was concerned, I felt the Dollar would be a great tell. The way I saw it, the Dollar rallied throughout 2018 to achieve its upside objective and then broke the uptrend line from those former lows. If we were to just rip through those key levels without at least some kind of pause or consolidation, it would most likely be because of a tremendous flight to safety. Stocks would probably be doing poorly under those conditions.
In the final Chart of the Week for 2018, we looked at the US Dollar reaching a key upside objective and then rolling over to finish the year on a sour note. I started out my Q1 2019 Playbook emphasizing the importance of the US Dollar Index in 2019 and I think we're already seeing the implications of a weaker Dollar. I also think this trend is likely to remain in place.
The way we saw it, if the US Dollar were to just break through these levels, without even acknowledging it, then there is most likely a severe flight to safety away from stocks and that's why the Dollar is getting bid up. The counter-argument there is that if the Dollar is weakening, stocks would most likely do well in that environment. That has been our thesis coming into the year.
USD/INR is at an important inflection point that should set the tone for this pair in 2019. Here's what we're watching for clues into its next major move.
As we wrap up 2018, it's time to forget everything that happened this quarter and this year and start from scratch. It’s irrelevant. We’re moving forward with fresh eyes. This is our Q1 2019 Playbook.
