Dollar weakness...Commodity Strength
Updated
The great benefit from today's close is the ability to zoom out and see the bigger picture using 6M timeframes. When you zoom out; it allows you to then make meaningful 2023 plans based upon analyzing some of the most important charts.
DXY-The above chart is telling me that the dollar is actually quite weak...the breakout in 2015 was not meaningful as it has been in a sideways type market since the breakout. In addition, the 2H 2022 candle is indicating a reversal. Some would agree the 6M looks like a cup & handle formation and I can see that if I tilt my head but it's not one that occurred on a horizontal plane. For me, the lack of thrust on the 2015 breakout; the inability to take out the 2001 high in 2022; along with the 2H 2022 reversal candle is telling me the dollar is about to weaken.
Commodities-This chart shows what a meaningful breakout looks like. In addition, it is not showing any signs of weakness nor a reversal type candle. Notice the continued thrust after the 2020 low and after the breakout. This shows the strength commodities have in the medium to longer term timeframes.
The thin red line on these charts is the 9 period (or Tenkan Sen). Continually staying above this line and not slicing through it is important. (DXY-Notice the July-Dec 2020 candle...yet another sign of weakness IMO for the dollar after it's 2015 breakout. Commodities-Notice it's distance from that line.)
I've already discussed the breakout in yields in previous posts and how interest rates are not coming down anytime soon...Zero interest rate policy or ZIRP is now a thing of the past.
So the question you should be asking yourself heading into 2023-If the dollar is weak and commodities are showing medium/long term strength; what industries or areas of the world will have the most growth potential in the coming years; where will money flow given these two charts and the fact that debt will no longer be considered cheap?
DXY-The above chart is telling me that the dollar is actually quite weak...the breakout in 2015 was not meaningful as it has been in a sideways type market since the breakout. In addition, the 2H 2022 candle is indicating a reversal. Some would agree the 6M looks like a cup & handle formation and I can see that if I tilt my head but it's not one that occurred on a horizontal plane. For me, the lack of thrust on the 2015 breakout; the inability to take out the 2001 high in 2022; along with the 2H 2022 reversal candle is telling me the dollar is about to weaken.
Commodities-This chart shows what a meaningful breakout looks like. In addition, it is not showing any signs of weakness nor a reversal type candle. Notice the continued thrust after the 2020 low and after the breakout. This shows the strength commodities have in the medium to longer term timeframes.
The thin red line on these charts is the 9 period (or Tenkan Sen). Continually staying above this line and not slicing through it is important. (DXY-Notice the July-Dec 2020 candle...yet another sign of weakness IMO for the dollar after it's 2015 breakout. Commodities-Notice it's distance from that line.)
I've already discussed the breakout in yields in previous posts and how interest rates are not coming down anytime soon...Zero interest rate policy or ZIRP is now a thing of the past.
So the question you should be asking yourself heading into 2023-If the dollar is weak and commodities are showing medium/long term strength; what industries or areas of the world will have the most growth potential in the coming years; where will money flow given these two charts and the fact that debt will no longer be considered cheap?
Note
Here are the plain/basic 6M charts with the 10 yr included. These also give you the same perspective...Dollar weakness/commodity strength. I do think the dollar can and will mostly likely try and re-test it's 2022 highs. For me, the key is that it does not bullishly break above121.02
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