One of those things that are useless for short-term trading but interesting to look at – the big picture.
$SPX is candles, U.S. dollar is the black line. Not always perfectly correlated, but clearly that’s the game for now.
I looked at this chart on June 22nd. I wasn’t sure if the pattern that was building was bullish or bearish. It didn’t exactly break out, there’s now an extension to that ‘whatever-it-was’.
And I’m now leaning towards it being a bull flag (= falling wedge).
Dollar daily cycle low is due any day now. Today is day 20 of the daily cycle that usually lasts between 18-28 days according to The Smart Money Tracker.
If current dollar-market relationship doesn’t change, then U.S. dollar going up would be bearish for the market.
I’m not sure if this is a bear flag (chart 1) or an ascending triangle (chart 2). Will the dollar go up or down in the next month or so? Can’t really be the triangle because normally it’s a continuation pattern, that is if the dollar was going up before the triangle formed, then it would be a valid ascending triangle.
So I guess a bear flag – or a rising wedge – it is.
Regardless of the type (reversal or continuation), rising wedges are bearish.
$USD down = stock market up.
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