Hey folks, Nick Valdez here ready to
talk to you with some chart setups on
currencies everybody because we have the
dollar pushing up to a level of
resistance and we're going to talk about
what is making this move and what is
going to happen if the dollar rejects
from this level and we got a very insane
chart with the Chinese Yuan. But let's
go ahead and dive into the charts folks.
We're looking at the DXY here and the
DXY measures the dollar against a basket
of currencies essentially measuring the
strength of a dollar. And right now you
can see the dollar has pushed up over
the last few days and it was flat for a
while and actually has been up pretty
significantly since February. This is a
weekly charts that we are looking at
here. So let's go ahead and jump into
the daily and you can see what is going
on with this move right here. Well, rate
hikes is the headline and so all eyes on
what Kevin Warsh is doing over at the
Fed and he is signaling they are taking
inflation very seriously and that is in
turn giving the dollar a lot of
strength. And it wasn't so much the rate
hikes that he did just not that long
ago. It's the forward guidance that hey,
this man is open to even more rate hikes
which is not exactly what we were sold
on when Kevin Warsh was first nominated
by Donald Trump. He said you know, I
want someone in there that's going to
cut rates not hike them. But Kevin Warsh
said you know, hey, I'm going to be
independent and I'm looking at a
scenario where I need to raise these
hikes and get inflation tamed. Now, what
is going to happen if it pulls back? So
if we do reject off this level
and you can see this is just going in
from January of 2025. So you know,
pushing on close to two years after a
few months here. What happens if it
pulls back? Well folks, if we do see the
dollar reject, that means there's going
to be a few assets that's going to
increase in price. And so, I would
expect gold, Bitcoin, silver,
potentially even oil to a lesser extent.
We're going to see the cost of that
increase because the dollar is weaker,
it's going to take more dollars to
purchase those things. So, that Bitcoin,
you know, especially since it looks like
we're leaving a bear market, that's
going to get more expensive. Gold, an
ounce of gold, that's going to get more
expensive. And so, for an asset base,
yeah, it's it's good news if you know
your all your wealth tied up in Bitcoin
or gold, but when people are looking at
the dollars in their savings or, you
know, potentially what they're making at
their job, not the greatest news. Now,
let's look at the Japanese yen.
I love this chart here. Uh last time we
did a video, I was talking about this
descending trend line, and I also talked
about this bull flag setup. Now, you can
see the flag pole, and then you can see
where the flag is, folks, and uh you
know, just kind of get your little
parallel channel, you know, move it
down. All right, well, there we got a
little flag setup. Well, it looks like
we got another flag, but is this a real
bull flag? I'll I'll talk about that in
1 second. First, I want to measure it.
And so, the way you would measure a bull
flag on the Japanese yen, well, you
would look where it breaks out, and
that's essentially where we ended up
pushing up. Now, let's zoom in on this
bull flag. There are a couple rules, a
little bit of criteria when you're
talking about a bull flag. Number one,
you want between a 45° angle and a 90°
angle. This, folks, is pretty close to a
45° 90° would be, you know, move like
that. 45° is going to be a little bit
closer to the downside. And so, you
know, close enough, you could say it's
it's a in spirit of bull flag. What
about the distance? Well, there's
another rule when it comes to bull
flags. You don't want it to go below
50%, but it doesn't mean it can't go
below 50%. So, let's just say this bull
flag is losing a little bit of its
credence here. It's it's a in spirit
bull flag for the Japanese yen.
And so, we might be seeing a little bit
of a pullback, but Japanese, you know,
their their version of the Fed, they're
taking the yen very seriously, and they
don't mind selling US Treasuries to help
prop up their Japanese yen. So, I
wouldn't be surprised if this moves up
before we retest the bottom of this flag
here. Let's jump over to the euro. Euro
getting pretty close to a level of
support, and I wanted to extend this
trend line just to show you an extra
level here, folks. So, looking at this,
we can go to the weekly.
Looks a little bit cleaner. Yeah, it
ended up just, you know, formally
resistance, then turned into support.
Let's go back to the daily here. We're
again we're looking at the euro here.
So, if you extend this, we do have some
pretty strong support, but we also have
this former resistance
that might also act as support. And so,
I wouldn't be surprised if we kind of
move a little to the side as we move
down, you're going to have a double
layer of support for the euro price in
dollars. So, you know, all the more
reason why the dollar might be heading
down. We have the Japanese yen
potentially gearing up for a move to the
upside. We have the euro potentially
moving up to the upside. That's going to
not be, you know, good news for the
dollar strength there. Let's go to China
here.
Look at this move. Chinese currency is
just on a tear here. Let's go ahead and
measure this. This is the daily chart
here.
Chinese yuan, 530
days of essentially just nonstop upside
pressure here, but we do have a couple
levels of resistance. One, we got the
pivot top all the way from January 2023.
We are approaching that level. We're
basically at that level. But, what
happens if we break that level? I would
expect a pullback. I don't think it just
continues up, continues up. What I would
expect is a move back to the scene of
the crime, then you would see its move
to the upside. This would be scenario A.
This would be, you know, less likely
scenario B. Maybe I should have done
that a little different order there, but
that's what I'm looking at there. But,
what's this top descending trend line
here?
Well, this one we actually have to go
back to the weekly. Major, major
resistance in my opinion. This is all
the way January of 2014. So, you're
going on a 12-year trend line. Came in
for a retest back in February of '22.
Now, potentially gearing up for a second
retest for a third touch on this trend
line. So, that's what I'm looking at on
the Chinese Yuan. Now, let's look at the
British pound here. This is the British
pound price in dollars.
This is coming to a head, folks. We got
this ascending trend line. We have this
slightly descending trend line.
And what's the end date for this? Well,
let's go ahead and measure that. Let's
move that there. That's going to be
April of 2027. So, plenty of time for
this one. But, folks, when it, you know,
the more it coils, the stronger the move
it is either to the upside or to the
downside. And so, keep an eye out on
this one for a major move pretty soon,
folks, you know, cuz when you're talking
about currencies, 6 months not all that
much. But, you see you saw right there,
the dollar
hitting that resistance. Meanwhile,
these other currencies hitting that
support. And so, we might see assets
like gold, assets like Bitcoin have a
major move upcoming soon, folks. So,
keep an eye out on those assets in
particular, in my opinion. Those are
going to be basically the the flights
from the dollar. I think it's going to
go into those, too. But, go ahead smash
that like button. I appreciate you guys
sticking around until the end, as
always. I'm Nick Valdez for Verified
Investing. And until the next time,
folks, see you in the future. Appreciate
it.