USD Index (DX) received a system sell signal Monday on the close, while some of the other pairs against the USD, such as the AUDUSD, either had buy signals or look like they will have system buy signals or manual breakouts of trend-lines signals over the next 24 to 48 hours. The EURUSD currency pair, while not as strong as the Aussie or the Canadian Dollar, might break out up as well, but since it is compressed, we would suggest straddling the 2 day range for a breakout either way – but up looks more likely. See the daily Euro chart with analysis below.
Apparently, the USD markets were not thrilled with President Obama's more liberal leaning speech at Monday's inaugural address. I thought is was a an excellent upbeat speech as far as speeches go. However, the currency markets realize that it takes more debt to maintain or expand the huge US government and their social programs, regardless of how humane and necessary they may seem at this time. This is likely bad for the Dollar for now. The United States could survive the debt that they currently have should there be a significant increase in economic growth, but that would be hard to come by in this global environment. We are expecting just the opposite to occur over the next 3 years.
USD (DX): look to short when the 30-240 minute charts are at overbought levels, AS LONG AS TRENDS ARE HEADING LOWER.
JAPAN SHOULD SEE STRENGTH FOR 150-200 more pips, so look to short most of the crosses when the 30-240 minute charts are at overbought levels, AS LONG AS THOSE TRENDS ARE HEADING LOWER.
CADJPY: SELL–look to short when 15-240 minute charts are at overbought levels, AS LONG AS TRENDS ARE HEADING LOWER. See the CADJPY daily chart below, as well as the 240-minute Euro-JPY.
EURGBP: SELL, BABY SELL! It looks like a 5th wave high on this leg up. Look to short when the 15-240 minute charts are at overbought levels, as long as trends are heading lower, especially after the first 60 and 240 minute corrective rallies. It may take a 12-48 hours for the topping process, but it looks like it will get hammered, so stay alert on this one (and the Asian crosses going down). See the chart below for this cross.
US STOCKS should have some weakness in this atmosphere as well. We are looking for a potential top between now and March. Look to short when the 15-240 minute charts are at overbought levels, again, AS LONG AS THOSE TRENDS ARE HEADING LOWER. This should be the case for the next 2-4 days and we will reassess then. It may still try for one more high, but a sizable down day is likely any day now.
The S&P500 index hit the 1.618 extension level from the last major pullback, look to sell overbought rallies. See daily S&P chart below with complete forecast.
The JP225 (Nikkei) has a DOUBLE TOP formation we will also look to short when the 15-240 minute charts are at overbought levels. See the daily chart below.