Sunday, November 9, 2008

Dollar Sentiment ($USD:$Gold) Update

on October 23rd I wrote a post entitled, 'Dollar Sentiment Approaches Resistance'.

and indeed, that Thursday did mark the top. the top so far.

but the ratio really isn't going back down, now is it? the direction of this ratio is something the whole world should be watching. but luckily (for you, not me) practically noöne reads this blog.

I'm sure we all have our own idea about which way this Dollar Sentiment will turn, but doesn't it seem more prudent to let the market inform us of its direction when it's damned well ready? a violation of last Tuesday's low would target a downside of .100 with a very reasonable possibility of achieving .950, where extremely strong support should be expected.

but a break above .120 would likely push this to up to .130 right quick. and .140 or even close to .150 ought to be taken seriously. but I'm willing to predict that this ratio will never go above .150. ever.

and the obvious just occurred to me. one could easily trade this ratio with two very liquid ETFs. to 'go long' the ratio simply buy UUP and short GLD. or do the opposite to bet on a decline in Dollar Sentiment. this equivolume chart of the UUP:GLD ratio may be of some use to us:

for the immediate bull trend to be sustained there should not be any serious violation of that ascending trend-line.