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Welcome all Safety in the Market traders to this month’s dedicated newsletter.
It’s been a huge couple of weeks on the markets across the globe. We have seen currencies moving strongly, commodities sharply down and stock indices under pressure. One thing that is related to all these markets is the once almighty U.S. dollar, which is our focus this month. Much of what I’m going to cover with you came from work the students and I conducted at the recent Interactive Trading Workshop in Brisbane.
The U.S. dollar is the base currency for all currencies futures contracts and all tradeable commodities. Opportunities found in the U.S. dollar can translate to opportunities in other currencies and commodities. So while our focus here is on the U.S Dollar Index Chart (DX-SpotV), the value of the analysis extends far more widely.
Chart 1 is something that I shared with you many months ago and have been using in workshops for some time. Here we have a big-picture quarterly chart of the dollar index showing the repeating bear market range into the low of April 2008 (71.05). There is no doubt that this chart is impressive for the equal ranges displayed over the two periods.
Chart 1 – U.S. Dollar Index Quarterly Chart – Repeating Bear Market Range
click chart to enlarge
Chart 2 is also a quarterly analysis and the final range into the 1995 low before the U.S. Dollar last went ballistic to the upside shows a distinct similarity with what we are seeing today.
Chart 2 - U.S. Dollar Index Quarterly Chart – Repeating Final Range?
click chart to enlarge
By now I hope I have sparked your interest in these repeating ranges. For the final two charts let’s move in closer and look at more recent market action. For Chart 3 we are still going to stay relatively big-picture as we take a look at the monthly changes.
Chart 3 – U.S. Dollar Index Monthly Chart – Another Repeating Bear Range
click chart to enlarge
Ok, by now you might be saying ‘enough already’. But hang in there, I have just one more chart and this time we are going to zoom in a little closer and study the weekly chart.
Chart 4 – U.S. Dollar Index Weekly Chart – Repeating Bear Ranges
click chart to enlarge
Looking closely at the recent low on 4 May (72.86) we can see amazing harmonies with repeating ranges. All these are good examples of how Gann analysis works the same way regardless of your perspective. Here we are looking at wheels within wheels or cycles within cycles and can see an overlapping of end points.
I’ll leave it for you to do, but if you study the daily bar chart of the dollar index you will find we are in the midst of a movement that could possibly be our ‘A to B’ range. The daily chart is yet to show or confirm a first higher swing bottom opportunity. It’s a big call to think about the U.S. Dollar heading to the upside but if you ever wanted to find a great example of repeating ranges across the board, this is it. When we came across this at the Interactive Trading Workshop in our lesson on Price Forecasting, it was one of the highlights of the three days and definitely had us sitting up in our chairs.
Until next month...
Noel Campbell
Professional Derivatives Trader
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