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The Charts You Need to See This Week

Submitted by Phoenix Capital Research on 06/28/2011 14:43 -0400

First up is
the Euro which has the makings of a triangle pattern. These patterns can break
to either the upside or the downside… although it’s hard to find reasons the
Euro might rally if Greece accepts the next round of austerity measures since
most of its resilience has been based on hype and hope of this already.

Indeed, we
also see the makings of a Head and Shoulders pattern on the 60-minute chart for
the Euro (I’ve also kept the triangle lines in place).

A very
common bearish pattern, the H&S here forecasts a downward target of 135-136
or so. Of course neither the triangle nor H&S has been broken yet, so it’s
too early to make a move here.

If the Euro
does fall, expect the US Dollar to rally based on its index weighting to the
former currency. Indeed, we see the potential for a serious US Dollar rally in
the form of a bullish falling wedge pattern that may just have broken out to the upside:

The target
for this pattern would be north of 80… possibly even 84-86. However, the only
thing that could trigger that kind of a run in the greenback would be a MAJOR
Euro Crisis.

Since 2007,
all major rallies in the US Dollar have been the result of stuff hitting the
proverbial fan (the US has most certainly not implemented any fiscal moves that
would strengthen our currency from a fundamental standpoint).

So, if and
this is a BIG IF the US Dollar starts another bull run courtesy of a Euro
collapse, we’ll likely see it peak out in the 84-86 range.

Should this happen,
both stocks and commodities would take a sizable hit. However, of the lot Gold
would come back the quickest. During the 2008 Crisis, Gold bottomed out in
November 2008, a full four months before the US Dollar peaked. And the Euro
Crisis of 2010 barely even dented Gold’s upward momentum:

To conclude,
the charts today appear to be emphasizing the threat of deflation courtesy of a
Euro collapse rather than inflation. And while it’s too early to invest based
on these patterns (most of the patterns have yet to break-out), we’re getting
close to finding the most prevalent trends for the coming months. We’ll have a
much better idea once we see the results of Greece’s austerity vote.

However,
regardless of what Greece does, the facts remain that we are headed into
another Crisis in the near future. The global economy has already begun to roll
over. Social unrest has spread from the Middle East to Europe. The US is now
actively raiding pension funds to fund its debt issuance, and more.

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Summers

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Wed, 06/29/2011 - 00:53 | 1410789 Fishhawk

The central banksters are milking this Euro crisis every day, and the cartel has certainly demonstrated that they can make the market do back flips, at least for a little while (the Strategic Reserve caper impacted the oil market for almost 3 full trading days). So they may take the euro down, which would take the dollar up, which would crush the stock market, and take some excess exuberance out of the commodities and help beat down gold, so if you are a trader, and especially if you know someone inside the cartel, all this posturing and crisis management excrement (good call about our flies, Rocky), then this is the ultimate electronic casino environment: a new crisis every day, with disastrous, TEOTWAWKI implications, and 5 to 10% moves in paper prices can be instigated with just a few minutes of bot trading time. The gross criminality has become so blatant that there can't be anyone left trading this 'market.' As others have noted, chart patterns are now routinely painted every afternoon, so I would view any easily recognized pattern as a contrary indicator - it is at leat as useful as a GS buy or sell call.

But seriously, folks, the Bernank is doing all he can to weaken the dollar, so any strengthening trend would be short-lived, perhaps just long enough to take some pressure off the long bond interest rate during the lull between QE2 and the next official admission that the money printing will continue until morale improves.

Tue, 06/28/2011 - 18:50 | 1410236 verbal_kint

H&S patterns need to be confirmed by additional indicators. Usually 3 indicators are used to have a solid "prediction."

Though if the past 2-3 years have taught us anything, don't underestimate TPTB.

Global domination doesn't happen overnight, only when the water pumps stop pumping water into peoples homes, and the cable TV propaganda is discontinued will the sheeple wake up and take additional action.

Not holding my breath

Tue, 06/28/2011 - 19:35 | 1410316 cossack55