Commodity Currencies Have Yet To Confirm Commodity Uptick
Eric De Groot | Feb 26, 2015 12:19AM ET
Readers have likely noticed an uptick in the base metals lately. This is consistent with concentrated distribution in the U.S. dollarsince January. The dollar's pause has been commodities' go. The message from the market, however, advises against chasing strength.
Commodity currencies (CAD via Rydex CurrencyShares CAD Trust (NYSE:FXC) and AUD via Rydex CurrencyShares AUD Trust (NYSE:FXA)) are still contained within a bear phase (chart 1 and 2). These phases, a combination of trend, leverage, and time are shown below. Only a bullish crossover, DI closes below DI2s, transitions the phase from bearish to bullish. This extends the commodity rally beyond a technical bounce.
Chart 1
Chart 2
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