Overbought Conditions Extend Further As Currencies Flash Major Signals
Dr. Duru | May 10, 2013 01:55AM ET
: 75.8% (5th overbought day)
VIX Status: 13.1
General (Short-term) Trading Call: Hold (see below for more details)
Commentary
T2108 closed at 75.8%; its 5th overbought day. This is above the median duration of 4 days for an overbought period (at or above 70%) but less than the average of 7-8 days. T2108 is also still within the region of maximum downside risk as discussed in A Mystifying Rate Cut By The Reserve Bank Of Australia .”) With the euro and pound also weakening against the U.S. dollar, I am inclined to think of this move more as a dollar-strong, than a yen-weak move, even as the Aussie surged against the yen as well. Hopefully, the signals will get sorted out in the coming days or week. Until then, I am on high alert (and making numerous quick trades shorting yen and Aussie against the U.S. dollar along with other opportunistic trades – this is the time to make them while stops are getting taken out and trade triggers are fast and loose). Here are the tell-tell charts…
Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)
Be careful out there!
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Full disclosure: long CAT shares and puts, short AUD/USD
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