Dollar Strength is Helping Our Neighbors

• Posted by Greg Harmon
• on October 5th, 2011

If you trade in the Equity Markets you may not follow the Foreign Exchange world closely, you should though. But if you do, then you know it has been dealing with added volatility from all the shenanigans that have been happening in Europe and Washington, just like Equities. And as an equity trader you don’t have to miss out on the action as there are plenty of ETF’s that mirror the major exchange rate pairs. All the focus has been on the strength of the US Dollar, and the weakness in the Euro, the British Pound and the Chinese Yuan. But our neighbors to the North and South have currencies that are starting to look interesting for a trade. Is the Dollar lending a helping hand to its neighbors? Let’s take a look.

Currency Shares Canadian Dollar Trust, $FXC

The Currency Shares Canadian Dollar Trust, $FXC, has been in a downtrend since late August with a flag mid way through. But there are signs it may be ready to move higher. First the price rocketed through the downtrend line Wednesday printing a long white candle with no upper shadow. Speaking of candlesticks, the print Wednesday confirmed the reversal signals from the 3 previous candles, the two Inverted Hammers and the Hammer Tuesday. The Relative Strength Index (RSI) is turning higher. Also the Moving Average Convergence Divergence (MACD) indicator is starting to improve. A move above resistance at 96 could get it going.

Currency Shares Mexican Peso Trust, $FXM

The Currency Shares Mexican Peso Trust, $FXM, is also breaking downtrend resistance at 73 and has other positive signs. The Bullish Engulfing candle from Tuesday was confirmed Wednesday, signaling a reversal. The RSI is rising up off of the 30 level and the MACD is about to cross positive. Both support more upside.

This of course may have nothing to do with the strength in the US Dollar, but isn’t the thought nice?

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