Dollar down all else up

Weekend post

While equities are grinding higher, I wanted to present some predictions on the approaching major top and cautions from other bloggers. Now that we have made a new high, the negative divergence on RSI is evident that is similar to the 2011 top. Back in 2011, maximum RSI coincided with 1344 on S&P. The negative divergence top was at 1375. Between them were 31 points or 2.2% from 1344. Coming back to today, the same calculation would take us from May top of 1687 with a 2.2% rise to 1724. Of course I'm not saying the same thing will happen here. All I'm saying is that this number is in parallel with my channels predictions and the target wouldn't be too far from 1724 if this negative divergence delivers a major top. Below you will find the charts supporting this target.

Two charts from one of the other blogger sites I visit presented very alarming charts on debt margin levels. An analogy of the markets between 2003 to 2008 and 2009 to 2013 has surprisingly similar characteristics.

Euro's long term support has held at the recent bottom. This long term chart and the closer look shows that as long as this red support is held, the long waited dollar rally will not start. The green sideways channel is in charge here.

Cable's long term broken blue support is calling for another hit. I have seen this kind of broken supports acting like magnets. The green declining channel is in charge but its slope is too low to take us towards 1.35-1.40 levels soon. The positive divergence on the weekly RSI delivered this recent bounce. Unless we revisit the recent lows around 1.4830, I expect a strong rally to 1.59-1.60.