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02-09-2017 09:42 AM
Lots of long shadows over the candlesticks on a long, bull flaglike correction off the late-'16 tops.
Seems consistent with an administration that (correctly) sees dollar strength as a threat to their plans (Reagan strong dollar kicked off the collapse of US manufacturing).
Tall shadows might suggest some daily intervention which is neither unusual or unexpected, and the DX (euro inverse) was historically overbought at the highs anyway.
The gubmint can throw a lot more at it if they choose but I'm inclined to go with the chart which, to me, looks like another 5 wave move to a new high is the best expectation. The correction was about a perfect hit on Wave 4 of a lesser degree and MACD is trying to turn from a well corrected point.
COTs show the heavy net short in the major currencies has been pared.
Further toward the guessing side, I kind of expect a long, choppy and overlapping ending diagonal* look to the DX, and perhaps similar to the major stock indices.
I'd expect both to maybe run roughly into mid-year before policy incoherence catches up and we make a major secular top in the dollar and stocks and bonds again become the play as interest rates sag into year end.
*ending diagonals sometimes truncate and fail to make new highs/lows.