No Taper, QE on and what to expect from currency pairs, gold, silver
Stocks rally US Dollar drops Gold and Silver rallies
So much ado about Fed tapering the word ‘taper’ did not even appear in the prepared release. Until the next talking head brings it up or 29-30 October when the FOMC next meets. In the meantime, let’s inspect some currency pairs.
AUDUSD bullish reversal
AUDUSD is a pair to watch. Having recently done a bullish reversal, the double bottom chart pattern should make a nice base to rally from. Can make money holding this as a carry trade.
EURUSD breaks out
For EURUSD, next challenge high made early this year.
Silver and Gold
I did this posting yesterday on how Silver price belongs to a retracement and should be considered a bullish proposition. Here it is ‘Silver price making retracement; chart shows nice symmetry for rally‘. Following ‘no taper’ FOMC, we have both gold and silver rally big time.
There is a lot of analysis in the gold and silver community that QE will depreciate the US Dollar further until it loses its reserve status and when that happens Silver and Gold price is going to rally big time. When asked how much gold will end up, Jim Rogers said this back in April:
When the US Dollar becomes confetti any number you want to make up!
USDHKD pushing 7.75
And then we have the Hong Kong Dollar which is really a managed currency that is pegged to the US Dollar. Between 2001 until 2011 when the Singapore Dollar strengthens 54% against the US Dollar, the Hong Kong Dollar stayed in its pegged range. If as reported by the Simon Black that the MAS lost 87% of GDP fighting the Singapore Dollar’s appreciation, then what is happening to Hong Kong? Investors ought to look at that 7.75 peg closely. Read ‘Investors speculate the HK Dollar will change peg‘.
There is a technical analysis rule here about 7.75. It goes like this:
- The more times the level has been tested or validated (by price encountering the support resistance and turning away), the more meaningful it is.
- Traders should assume that a level will hold until it is broken.
- When a significant level breaks, the outcome is a bigger move.