Cinco de Mayo with Shirakawa, Geithner and Shakira

Oh what a night. Head is still pounding. I can vaguely remember over the tequila….

Shirakawa said the Dollar is still dead. When Timothy Geithner first heard this statement he was wondering what the Colombian singer knew that he did not. The Dollar Index had a strong move higher Thursday rising over 1.5%. Clearly the downward death spiral has ended. Looking at the chart for the US Dollar Index shows the move and the many layers of resistance it must move through to reverse the trend.

US Dollar Index, ticker: $DX_F

There is resistance from the 20, 50, 100 and 200 day Simple Moving Averages (SMA). There is resistance from previous support and resistance levels at 74.23, 74.80, 75, 75.60 and 76. And there is Andrew’s Pitchfork that plants the Upper Median Line firmly between the SMA’s. But none of these suggest a reversal of the move Thursday, only hard work higher. And we American’s have always been hard workers, when we have jobs. So Shakira must be wrong. He had to call her and tell her she was wrong, we have a strong dollar policy.

As you can imagine her response was that he was Loca, and that it was Bank of Japan Minister Shirakawa that proclaimed the US Dollar dead, although she offered that she was happy that her Colombian peso could buy more blue jeans on the US Tour now. So Geithner called Shirakawa and asked him to explain. He went to his chart.ly account and forwarded the chart below to Timbo.

CurrencyShares Japanese Yen Trust, ticker: $FXY

This chart tells why your currency is still dead. Whenever the CurrencyShares Japanese Yen Trust, FXY, touches the upper Bollinger band, it rejects lower. I have circled the 16 times it has happened since December 2010 to make it simpler for you to see. It is touching the Bollinger band again so it will fall again. So there you have it. Timmy took it in and then responded that he did not understand. All the other times it fell there was a circle and there is no circle this time so it is different. Shirakawa shook his head in disgust saying my hips don’t lie.

It was just then I happened to be walking by and noticed the charts the two were sharing and they related the exchange above. Wow! And I thought I was scared before that. Well thank goodness I was there to put them straight. First pointing out to Timmy that with the Dollar Index near all time lows no one believes that he has a strong dollar policy and that the trend on it remains down until it gets much higher and second that Shirakawa’s point about the Yen weakening against the Dollar was a good one, despite no circle. But then turning to Shirakawa I explained that there are other currencies that influence the Dollar Index, not just the Yen, so the Yen weakening against the Dollar did not necessarily mean that the US Dollar Index would weaken. The both looked confused and frustrated so I invited them to Casa Oaxaca to share Cinco de Mayo Margarita and watch Shakira videos.

Who cares what she’s saying.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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