Saturday, December 05, 2009

MAJOR BUY SIGNAL - US Dollar




The above chart of the US Dollar reveals a Major Buy Signal, basis the Daily chart.  This is an Advanced GET "Mechanical Trade #2" which requires five waves down accompanied by a divergence in the Elliott Oscillator (lower indicator window) and finally a trade trigger generated by prices breaking out above the downward sloping Wave 5 trend channel.

The triggering of an ATR Buy Signal at the close of trading Friday pretty much confirms the entire set-up.  Only a reversal below Friday's lows in the dollar would negate the set up and the confirmed Buy.  In other words, there are now overwhelming probabilities of an Intermediate Buy in US Dollar, but with a defined exit if prices move lower.

The snippet embedded in the chart is from latest issue of EWl short-term update published after the close on Friday (links all over my blog for EWI freebies and subscription services).  Their message is that everything priced in dollars is about to or has already reversed from Long to Short.  Included are gold and silver, oil, hard assets of any kind and global equities.


A

15 comments:

Anonymous said...

Alan,

Is their an easy way for us amateurs to take advantage of the confirmed buy signal in the form of an ETF?

Thanks in Advance and many thanks for your efforts here!

C

Anonymous said...

C,

UUP is one of the ETF's to consider.

Regards,
Eric
Milwaukee

gwac0 said...

EUO is a short Euro etf

Anonymous said...

Interesting how the market plays a game of Three Card Monte, keeping our dull eyes fastened on the three major indexes and the blue chips, which have tiredly churned out smaller and smaller gains. Meanwhile, everything else slowly slides into the pooper. Friday was the wake up call for most of the herd. Suddenly, the good news fed to us isn't good enough to hold onto our intraday gains, and the fairy tale of gold has turned dark and ugly. All of the guests at Cindarella's ball are now realizing the castle is on fire and the exits are oh, so very far away.

Deliciously dark.

Anonymous said...

Japan's small cap (JOF) leads $RUT longterm


Friday's candle on JOF disconfirms Friday's $RUT action


Vanilla Mood J-girls

Anonymous said...

Dr Copper vs DJIA

Lumber futures vs. SP500

Lumberjack Competition

Earl Scruggs & Steve Martin

Allan said...

C:

Learn from what I am doing, simple concept for a rule-based system. Does it work? Damn straight it works. "FIND SOMETHING THAT WORKS..........THEN TRADE IT!


A

Anonymous said...

Yes, Alan, that's the plan I aspire to. Someday, I will have the wherewithal to do just that.

But, for now, there's no ETF you like to follow the dollar's longer trend?

Eric like UUP. Thanks for that Eric. Thoughts Alan?

And, again, thanks for the education and opportunity you present here.

C

Allan said...

C,

I misread your question, thought you were making a more general tactical inquiry.

As for playing the US Dollar rally, I am trading the UUP March calls. Take a look at the volume and open interest from Friday. Sometimes, these instruments scream bloody BUY BUY BUY but only those who are listening can hear them.

Another approach would be to buy a SHORT GOLD etf, DGZ is one, assuming that as the dollar rallies things priced in dollars will appear to be declining.

A

Anonymous said...

Hi Allan,

As far as I understand, the ATR has 2 major variables that can affect the results: the length of the moving average and the multiplying factor.

Do you keep the same values for every signals you analyze or do you tweak them?
Also if you tweak them, do you have some kind of automated way to adjust those variables or do you just adjust them manually doing a few experiments?

Thanks and congrats' for the amazing work you're doing!

Allan said...

Re: ATR variables


I'm keeping it simple, no tweaking. 7 period look-back, 1.3 multiplier, if it ain't broke, don't fix it.

Allan said...

Make that 1.5 multiplier, my fingers were lagging behind my mind, something left-over from last night's foreplay.

Anonymous said...

Thanks for the quick answer!
Glad to hear to had fun last night! ;)

Anonymous said...

Allan,
what does the weekly usd chart say?
Thanks
jeff

Anonymous said...

Mr. Gold Jim Sinclair has said more than once that if one has to ask where a particular market or security is going, then one should not be holding or executing position on it.

So, while it is okay to ask Allan for his opinion, it is more useful for the trader to first apprehend why he himself is asking it in the first place. Usually one is looking for confirmation or disconfirmation of one's own trading bias. And as such, getting an answer is not helpful, whereas unless one has first ascertained why one asks. Otherwise one is acting in the market with Sartrean bad-faith or Marxian false-consciousness--which is to say, there is a disjunct between one's ostensible intentions and the actual motive for the trade. . . . . and such as is one will continually be mystified by one's failures and successes.

...

Like quantum physics in a way, there ain't no objectivity in the markets--none in the sense of a fulcrum upon which to lever the world. This means there is no sense in counterfactual assessments of the market: e.g., were one to have done this instead of that; or if one were to do this.

Because to do anything different than what one did, or does, makes for an entirely different market.

Markets are homoplastic--meaning you touch them they touch you and both mutually undergo a convergent-evolution.

Nobody, not even B. S. Bernanke is an inert factor in a market. ... Duh! What is a market other than a collection of individuals acting. Ergo, thought experiments like paper-trading and backtesting are deceptive for they are not market actions.

However, there can be objective subjectivity in trading.

To the extent the trader can discover the wellspring of his own questions, impulses and articulations, the trader will be catapulted ahead of even the well knowledged trading crowd.

As Socrates, the king of question making, used to say . . . In Latin, the aphorism is generally given as nosce te ipsum. The Latin version of the aphorism is written on a plaque above the Oracle's door in the Matrix film series-- temet nosce ("thine own self thou must know") translated in the Matrix as know thyself.

Where Are We Runnin'? - Lenny Kravitz