Bearish Pattern Warns Of Dollar Weakness

A unique setup has occurred in the Invesco DB US Dollar Index (UUP) that resembles an Engulfing Bearish type of pattern (even though it is not technically an Engulfing Bearish pattern). Technically, an Engulfing Bearish pattern should consist of a green candle followed by a larger red candle whereas the red candle’s body (the open to close range) completely engulfs the previous candle’s body. In the instance, we are highlighting in this article, a unique variation of what we’ll call a “Completely Filled Engulfing Bearish” pattern is setting up.

This is when two red candles set up in an Engulfing Bearish type of formation – omitting the requirement that the first candle is green. Japanese Candlesticks help us to identify the psychology of the market price in relation to our other specialized tools. We believe this formation is important because both of the red candlesticks that make up this pattern opened much higher than the previous bar’s close and dramatically sold off into the close of each session. We believe this type of rotation clearly illustrated that price is reaching resistance near $25.50 and pushing lower because of this strong resistance. We also believe this resistance/pattern will set up a downside price move in the US Dollar very soon.

bearish pattern

Below, we have highlighted the traditional formation of an Engulfing Bearish Candlestick pattern. The example chart, to the right of this definition, shows another variation of the Engulfing Bearish pattern setting up after three minor sideways candles. The interpretation of this Bearish Reversal pattern is subjective in terms of understanding the psychological representation of the Engulfing Bearish pattern. This pattern represents a total reversal of power within the price bar where the buyers were in control at the open (resulting in a higher opening price) and lost control through the trading session to allow the sellers to drive the price much lower into the close of the trading session. Thus, the Engulfing Bearish pattern represents a “key pivot point” in price that may prompt a larger downside move in the near future. Continue reading "Bearish Pattern Warns Of Dollar Weakness"

Saudi Crown Prince Claims Lost Iranian Barrels Will Be Offset

Back in 1973, Saudi Arabia took a very aggressive move against the U.S. by starting the Arab oil embargo:

Saudi Crown Prince

But the Trump Administration has taken a strong position against Iran, Saudi Arabia’s nemesis. KSA also depends on the U.S. for its protection as well as its economic development. The current relationship between Washington and Riyadh could not be better:

"I love working with him (Trump)." - Crown Prince Mohammed bin Salman, October 5, 2018

Saudi Crown Prince
Photo Courtesy Of AFP)

Prior to announcing the U.S. pull-out of the Iranian nuclear deal in May, the White House had secured assurances from producers, namely Saudi Arabia, that any disruptions in Iran’s exports would be offset by higher production by countries with spare capacity, according to Treasury Secretary Mnuchin. The Saudi energy minister confirmed it. Continue reading "Saudi Crown Prince Claims Lost Iranian Barrels Will Be Offset"

Dow Jones Industrial Joins Sell-Off Party

Hello traders everywhere. The Dow Jones Industrial finally succumbed to the pressure of the current market sell-off issuing a red weekly Trade Triangle at 26,303.35 after falling -431 points at it's lowest level in morning trading approaching the 50-day moving average which stands at 26,004.22. The move lower came after the DOW had been relatively unchanged the last couple of days as both the S&P and NASDAQ were under heavy selling pressure. All three indexes are currently trading down over -1.3% on the day.

Dow Jones Industrial

The S&P 500 opened trading below its 50-day MA, that move lower came after the S&P briefly broke the 50-day MA yesterday. As it stands right now, the S&P is on track to post its worst weekly losing streak in a little over two years standing at three weeks. The next level of support to keep an one will be the 200-day MA standing at 2,765.77. A move below that level could signal a steeper sell-off.

Meanwhile, the NASDAQ continues to get pummeled as the tech sector is seeing the most significant losses. The NASDAQ is on pace to have it's the worst trading month since January of 2016. Key support lies at the 7,449.62 which is where the 200-day MA is. A move right below that level (7,443.10) will trigger a new red monthly Trade Triangle signaling a move lower is ahead.

Key Levels To Watch This Week:

Continue reading "Dow Jones Industrial Joins Sell-Off Party"

Onward And Upward

Apparently, the bond market just got the email that the U.S. economy is smoking and that interest rates are going up.

The yield on the benchmark 10-year Treasury note jumped 17 basis points last week to close at 3.23%, its highest level since March 2011. The yield on the 30-year bond, the longest maturity in the government portfolio, closed at 3.41%, up an even 20 bps.

The pertinent questions are, what took so long to get there, and where are yields headed next?

Analysts and traders pointed to the Institute for Supply Management’s nonmanufacturing index, which rose another three points in September to a new record high of 61.6. The group’s manufacturing barometer, which covers a smaller slice of the economy, fell 1.5 points to 59.8, but that was coming off August’s 14-year high.

Bond yields jumped further after the ADP national employment report showed private payrolls growing by 67,000 in September to 230,000, about 50,000 more than forecast. It turns out the ADP report didn’t precursor the Labor Department’s September employment report, but it was still pretty strong. Nonfarm payrolls grew weaker than expected 134,000, less than half of August’s total of 270,000, but that number was upwardly revised sharply from the original count of 201,000, while the July total was also raised to 165,000. The relatively low September figure was blamed not on a weakening economy but on the fact that employers are having trouble finding workers. Meanwhile, the unemployment rate fell to 3.7% from 3.9%, the lowest rate since December 1969.

Indeed, last week’s jobs report only confirmed Continue reading "Onward And Upward"

A Fear Of Rising Interests Rates

Hello traders everywhere. A fear of rising interest rates is what is driving the latest sell-off in the stock market which is gaining steam for the third straight day. Interest rates were on a tear last week after the release of several pieces of strong economic data. The benchmark 10-year Treasury note yield rose to above 3.2% from around 3.06%. The 10-year yield also hit its highest level since 2011 last week and even though the U.S. Treasurys are not trading today in honor of Columbus Day that move has had a lasting effect.

A fear of rising interest rates

The S&P 500 triggered a new red weekly Trade Triangle joining the battered NASDAQ while only the DOW remains in an uptrend. The DOW remains resilient, but how long can it fight off the downward pressure?

Crude oil and gold both issued new red daily Trade Triangles with oil posting its Trade Triangles in late trading on Friday moving to a sidelines position with both the weekly and monthly Trade triangles remaining green. Gold posted its red daily Trade Triangle in late trading Sunday night resuming the long-term downtrend that has been in play since April when the monthly Trade Triangle turned red.

Key Events To Watch This Week:

Continue reading "A Fear Of Rising Interests Rates"