The dollar uptrend resumed this week, and there could be further long dollar breakouts in the coming days. Interest rate futures also look set to resume their long-term uptrend, while stocks continue to look tired as momentum wanes.
This week sees quarterly stock and currency expiration, where the March contract rolls to the June contract.
From last week on stocks: “It is also notable that volatility and volume have contracted and that there is bearish momentum divergence. This shows that the current rallies are tired.” The stock markets have shown continued weakness this week as the corrective rally from the late December lows continues to look like it may be in its latter stages.
Copper and Palladium have both seen weakness this week, and it’s likely that both markets will test support in the coming day or so, with the trends under pressure. Palladium has been a monster move, and the LS Trader system has been long since the 19th of September. If the trade is exited this week, which appears likely, it will be the largest winning trade of the year to date.
From last week on the dollar: “The long-term trend remains up for the dollar against most of the majors, and there are possible long dollar breakouts within range this week. These include resumptions of the long-term trend for the Dollar Index (up) and the EUR/USD (down)”. Both of these markets broke out as expected, resuming the long-term dollar uptrend. Further breakouts this week are within range for the dollar against the Australian and Canadian dollar.
Interest rate futures
From last week on interest rate futures: “Bull market RSI support is being tested with the markets closing just above the 40 level on Friday”. RSI bull market support held firm and interest rate futures put in a rally, and we could see multiple breakouts this week. The long-term trend remains up across the sector, and new highs for the current move could be seen within the coming weeks.