The U.S. dollar is often a safe-haven in times of stress. Stocks have fallen since September and the US Dollar Index has surged. What is interesting right now is the fact that a reversal for the dollar versus GBP and EUR is looking like a possibility, i.e. if GBPUSD and EURUSD were to rally we would take this as a positive indication for stocks.
GBPUSD: 1.2481 is the 30-month Support. GBPUSD found exact Support at this level in early December and again earlier this month and has rallied. This could potentially be a double-bottom on the chart. If so, we would expect this to be bullish for stocks. A break of that level would be a bearish pointer for stocks.
EURUSD: this chart has found Support four times over the last two months at the 1.1310 poc. This is a potential basing pattern which could resolve higher and be a bullish pointer for stocks. Price breaking below that level would have the opposite implications.
The U.S. T-Bond ETF (TLT) rallied strongly as equities fell and reached its major level at 121.00. Currently it is printing a little above this price and I am monitoring this chart level for a clue re the risk-on / risk-off dynamic.
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