Central Banks around the world continue to fight natural market forces. They continue on the one hand to print funny money and junk bonds to float the insolvent banks while on the other hand stealing from their countries citizens life savings and pensions to pay for it.
The problem the Central Banks have is the world has a system of natural performing markets that price in risk and reward according to the reality of today or tomorrow.
Foreign Bond yields for insolvent countries like Spain and Italy and commodities have overcome manipulatation by Central Banks.
Central Banks have thus far been able to hold currencies at bay and keep stocks a float. As will see with the US dollar charts, this leg of deception is also quickly ending.
The 1st US dollar chart represented by the ETF UUP is a daily, volume by price chart. Volume by Price charting gives us an indication of where the largest amount of purchases/sells are; in other words resistance or support. The chart indicates strong support and potential short covering above the $22.75 price point.
The dollar found resistance at the 50% retrace of the June hi-low range-normal for all tradable assets. Expect this to be resolved higher after a one to seven day consolidation of the no QE3 bounce.
Next we look at a weekly, multi year time frame. Note the Inverted Head n Shoulders formation that has taken over a year to establish. This lends credibility to the market winning out over the Central Banks.
Duration of time is the key technical; true trend changes take months, in some cases a year or more. If this pattern were of a fast nature, then it would be void. The validity of a pattern depends on the larger trend.
Trends take time to change and the US dollar trend is now up; despite the best efforts of the FED.
Here we are looking at a daily one year time frame. The key technical take away here is higher lows and higher highs.
The US Dollar trend is up. Only QE3 will put a stop to this, but stocks are too expensive and Presidential election too close to allow the FED to begin a massive printing campaign.
A rising US dollar will sink the US market and corporate earnings when S&P 500 companies have to repatriate foreign earnings back into a value increasing US dollar.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.