UPDATE: 10:00 AM
The Dollar Index (DX) found support at the fan line we were watching. There’s plenty of resistance up ahead, but the channel it’s in indicates a potential meteoric rise. Note that this channel is at the exact same slope as every other from the past 4 years.
I expect a rise to the 87 area, sometime in the Dec 11 – Mar 12 time frame. This part is tricky, as previous rises have channel surfed. In the summer of 2008, DX accelerated when it shifted to a parallel channel to the left – not once, but twice. Eventually, it returned to the original channel to complete the move.
The Oct 09 – Jun 10 run did a bunny hop to the right, effectively slowing the pace of the rise. The Oct 10 – Jan 11 rise fizzled after a respectable 10% run. We’ll keep an eye on this one.
ORIGINAL POST: 2:05 AM
Updated chart on AUD/USD. Start with a pretty cool 20-year trend line…
Toss in some neat fan lines, channel and some Fib retracements…
Makes a pretty compelling case for a reversal.
More later.
I am not bullish per se. I believe this is a bear market rally of unknown duration.
Thanks for the post and analysis Pebble.
Hook, I appreciate the bull perspective. I have been doing a lot of searching for a TA bull case the last few days and had come up empty handed. The Zweig maybe the first.
This is from Parker Binion:
The signal is based on a 10-day exponential moving average of the percentage of advancing issues compared to advancing + declining issues.
When the 10-EMA rises from below 40% advances to above 61.5% advances within 10 trading days or less, the signal is activated.
According to Steven Achelis, there were 14 such signals between the 1940s and 1984 which produced an average 24.6% gain in stocks over an average of 11 months from the date of the signal. According to Achelis, “Zweig points out that most bull markets begin with a Zweig Breadth Thrust.”
The next signal after 1984 came in March of 2009. It produced a ~50% gain over the next ~13.5 months.
I read about that, haven't seen any historical data on effectiveness of the call. Anyone out there have any references?
The McClellan Oscillator shows a similar swing, but under certain circumstances, this has been a great signal of a downturn.
Pebble, the excessive bearishness caused a Zweig Breadth Thrust. Last one was in March 2009, before that 1984. Do you have thoughts on this.