The bond dollar Panic and beyond
26 Feb 2021 ● 02:29 AM
So rising bond yields are finally here and the dollar bull market starts? Wrong. The dollar chart below does not agree with this thesis as of now. The dollar index fell in 5 waves that were impulsive and overlapping, that is the definition of a leading diagonal typically seen in wave 1 of a move. So the bounce is wave 2 and has done 38.2% retracement and is near the wave 4 region of the fall near 90.44. Most bounces, after a leading diagonal end here, and the 3rd wave that follows leading diagonals is not only faster than wave 1 on the way down but in most cases extended. So expect a wilder move down in the dollar in the coming weeks. What will cause the bond market route and dollar to fade? Who knows, it's anybody guess from a new FED intervention overnight in the markets to a larger QE. Or neither. Enough is being done already and the recent market actions are normal and in line with wave formations, the rest is just what you are reading on news feeds that is often senseless repetition of the same thing when they have nothing better to write or lack the depth, or it simply does not capture headlines and eyeballs. Bonds can rally from being oversold on short-covering and the dollar is in a bear market anyway and just building up inside that trend. Everything else is news.