The US Dollar has been performing poorly since March 3rd; but I’ve held the position because I believe in the overall strength of the currency AND it remained above long term support. While I still believe in the overall strength of the US Dollar, today it gapped below the 2 year trend line. The next major support level is at the 4 year moving average, nearly 4% below its current value.
Yesterday the Bank of Japan joined the European Central Bank and the People’s Bank of China in NOT devaluing their currency. Because of the unrelenting global slowdown, I believe further currency devaluation is inevitable; HOWEVER, I don’t argue with the Market. The best risk mitigation strategy is to sell when a trend line is broken and thus today I sold UUP (long US Dollar) and DGZ (short Gold).
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