I want to take a moment to address the equity markets as I feel they are becoming a major factor for the currencies. Like an afternoon Florida thunderstorm, I’ve seen and heard these familiar flashes and rumblings before. Ohhh - but wait - Global warming makes it different now!

It’s Different This Time…

The Futures markets crumbled Monday as the equity markets were closed for Martin Luther King Day, and Reuters is reporting that the bull market that began in October 2002 is over.

Hi Volatility - Good Bye DOW 

DOW Crumbles as expectations for VIX to pick up the Volatility.

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The Headlines are screaming “Recession” and the traditional news outfits are making room for the financial experts to explain what’s wrong. Contrarians will tell you that means that we are ready for a jolt to the upside. Or in other words - a Bear Market Rally. Click on Image to Enlarge

Although the first part of this market downturn is probably in place -Traders beware - and be aware It’s time to “Strap On” your seat belts - tight (with stops) - just in case - and prepare to enjoy the ride! But only If you have the stomach for it.  As the Daily Chart on the DOW shows we have solidly breached the 200 MA after testing it twice and now we are way south of the 50MA - Which should call for a “Snap Back” - before prices continue to fall.

Currency Traders Watching the Dollar Gain Against the CAD

We all live in this global, Internet based world, So if the dollar continues to lose value - other countries should not need to raise their interest rates - but will they or wont they? Canada and Japan have the opportunity to adjust their interest rates this week. Well they can always adjust their rates at any time (Just like some want Ben Bernanke to do)  - but it’s best to stick to the calendar of events. 

The USD- CAD is trending quite nicely and current price puts it smack in the middle of a channel with upper and lower ranges. If price breaks beyond those ranges - then the dollar may be expected to be moving in other pairs accordingly.

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Jerry is an active trader, educator, and Founder of Investors Education Network (IEN), he is also a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 30 Minute Consultation