- New Science in old markets -

Dollar extends

The US Dollar has recently risen, presumably because a rate rise in December is now considered more likely. This rate rise has been more anticipated by markets than second coming, so we are sceptical (see the 15th September edition for reasons). In the meantime it seems reasonable to sell some dollars. Here are the three signals we have seen:

$ ind, $-€ $ Swiss

Each one of which may be considered candidates to take this 'sell dollar' trade. The $/€ chart is shown the opposite way up from the other two, by market convention but these are all dollar top-extension signals.

The best of these candidates to buy may be the Swiss Franc as it is unlikely to be weakened by any QE and the same is also true of the £, which hasn't extended even though it has recently dropped (see below). Consider taking two of these anti-$ trades as the preceding market movement that led to the extension signals has entirely come from a shift in mood, not from any actual news. Another reverse shift is entirely likely.

Pound futures