De-Dollar Touts, Start Your Engines!

Market noise set to fuel big-picture prophecies...

'DE-DOLLARIZATION' touts about the US Dollar should regenerate if Uncle Buck loses the base breakout and bull traps, writes Gary Tanashian in his Notes from the Rabbit Hole.

The US Dollar index has been asking the question "bull trap?" since well before it actually broke above the March high, to create said potential.

Well actually, your friendly NFTRH blogger has been asking the question. That is because we had anticipated a potentially strong rally off of the false breakdown in July which included much chanting about the BRICS and de-Dollarization.

The de-Dollarizers got bear trapped and now the poetic outcome would be a bull trap.

Just last week USD bear trapped upward out of a bull flag and this week lost that flag breakout, which is a bearish omen, short-term. From an NFTRH+ update yesterday:

"USD's bull flag is getting thumped and the question 'bull trap?' is still a valid one. The pattern continues to favor 'bullish consolidation' as long as it holds the SMA 50, but the looks of RSI and MACD indicate a southern exposure."

If Uncle Buck makes a bull trap and declines there is much more to the story. I'll leave that for NFTRH to manage, but here is a hint:

If at some lower level you hear the De-Dollarization chants start to reverberate loudly, have some caution. The bear trap scenario is only indicated to be a breakout failure and little more at this time.

Beyond seasonal market rallies, the global counter-party is expected to find a liquidity bid in the coming months.