A Macroeconomic Overview Using Chart Analysis

Dollar index chart with technical analysis (source)For lots of who do not like DXY because it is too narrow (euro 57.6%, yen 13.6% and pound 11.9%), I provide a chart of the trade-weighted dollar that consists of 30-plus currencies consisting of the Chinese yuan and Mexican peso.In the below chart, we see the exact same consolidation beginning, however the high that the dollar accomplished (omitting the COVID-19 crash highs) is a new high. I believe this signifies a stair-step function higher for the trade-weighted dollar as well.Trade-weighted dollar with 30-plus currencies (Source)Remember, a strong dollar is the Fed failing and it also provides huge tension to the rest of the worlds economy.The euro is almost the inverse of the DXY. One thing is for sure, the euro has actually broken its two-decade assistance trend line and its in big problem of crashing much lower.Chart of the euro versus the U.S. dollar showing a down breakout (source)The next 2 charts are of the Hong Kong dollar versus the U.S. dollar. The dollar capture quickly started this year.Monthly chart of the Hong Kong dollar versus the U.S. dollar (source)The second chart of the Hong Kong dollar is a close up of the day-to-day timeframe. Daily chart of the Hong Kong dollar versus the U.S. dollar (source)The Hong Kong authorities release their reserve data, so we can get an idea to the severity of their situation.

Watch This Episode On YouTube or RumbleListen To The Episode Here: In this episode of the “Fed Watch” podcast, we focus on crucial macro charts. We cover bitcoins chart, currencies like the dollar, the euro, the Hong Kong dollar, and gold along with energy products. We didnt have time to get to all the charts I prepared, due to the fact that the live show has time restrictions. I will attempt to get a second part out today to cover the rest of my product charts, in addition to supply chains and shipping costs. You can find the slide deck of charts here.Other topics covered in todays episode consist of President Joe Biden and Federal Reserve Chair Jerome Powells meeting yesterday, where I attempt to flesh out the significance of this Wall Street (Powell) versus globalists (Biden) face-off, and we enter a couple of things from Davos recently, particularly the Kissinger remarks about Ukraine.”Fed Watch” is the macro podcast for Bitcoiners. Each episode we talk about present occasions in macro from throughout the world with an emphasis on central banks and currency matters.CurrenciesThe first currency we speak about is bitcoin. I go over the current pop in cost on Memorial Day, and how it is simultaneous with a growing bullish divergence in the indicators.However, I likewise return in time to approximately one year back, when there was an extremely similar situation. In June 2021, there was a bullish divergence in these 2 signs and a breakout of a descending wedge. That relocation was a fake out, cut brief by the Grayscale (GBTC) unlock wave in July. The current situation is similar on the chart, but not similar in the basics. I just wished to point out a previous example where a breakout like this week failed.I make an effort to remove the “bitcoin increase equals dollar collapse” false narrative here. The dollar and bitcoin can rise together due to deflationary pressures pushing people to money and away from counterparty risk.Next up is the dollar. On the live stream, I reveal the following chart and talk about how we could be headed for a new higher variety on the dollar. Maybe we see another five to 7 years of the dollar index (DXY) in a range of 100-110, sort of like how it delved into the 90-100 range in 2015. Dollar index chart with technical analysis (source)For numerous who dont like DXY due to the fact that it is too narrow (euro 57.6%, yen 13.6% and pound 11.9%), I offer a chart of the trade-weighted dollar that includes 30-plus currencies including the Chinese yuan and Mexican peso.In the listed below chart, we see the very same combination beginning, however the high that the dollar achieved (leaving out the COVID-19 crash highs) is a brand-new high. I think this symbolizes a stair-step function higher for the trade-weighted dollar as well.Trade-weighted dollar with 30-plus currencies (Source)Remember, a strong dollar is the Fed stopping working and it likewise provides massive stress to the rest of the worlds economy.The euro is nearly the inverse of the DXY. It also reveals a current breakout, but in this case downward. If the dollar rally is to combine prior to heading greater, the euro is going to combine prior to heading lower. Something is for sure, the euro has actually broken its two-decade support trend line and its in huge trouble of crashing much lower.Chart of the euro versus the U.S. dollar showing a down breakout (source)The next two charts are of the Hong Kong dollar versus the U.S. dollar. There is a peg in location that is clearly obvious on the very first chart: It is a variety in between 7.75 and 7.85. Recently, the exchange rate has raced to the top of this pegged range, signaling enormous dollar pressure in the Asian economies like China, Hong Kong, Taiwan, Japan and South Korea. The dollar squeeze rapidly began this year.Monthly chart of the Hong Kong dollar versus the U.S. dollar (source)The second chart of the Hong Kong dollar is a close up of the day-to-day timeframe. The peg was protected effectively this time, by the authorities selling U.S. dollars and purchasing Hong Kong dollars, but the huge question is do they have sufficient reserves to continue defending this peg for the remainder of the year, like they performed in 2018? Daily chart of the Hong Kong dollar versus the U.S. dollar (source)The Hong Kong authorities release their reserve information, so we can get an idea to the intensity of their circumstance. At the end of April 2022, prior to the peg experiencing its greatest pressure, their reserves stood at $465.7 billion, $16 billion less than March.The last currency we look at is partially a currency and partially a commodity: gold. It has actually been hard being a gold bug for the last 11 years. Presently, the gold cost is listed below the 2011 high of $1,920, sitting at $1,840 at the time of recording. Imagine, holding gold for 11 years and losing cash despite the narrative of cash printing. Your option at that point would be either abandon your defective inflation dogma or go bananas on conspiracy theories. That summarize the gold neighborhood at this point, in my opinion.Gold area cost April 2021 through May 2022 (source)Energy CommoditiesMoving onto products, on this episode, I just have an opportunity to cover 2 charts. The first is Brent crude (U.K. crude rate in orange) and West Texas Intermediate (WTI) crude (U.S. crude cost in blue). They typically are very associated, with a small premium on European Brent.I desired to cover this chart today, due to the fact that of the headlines about the sixth round of EU sanctions on Russian oil; it is an absolute joke. As you can see on the chart, the orange line in fact drops on the day the theatrical sanctions were announced.Brent crude and WTI petroleum rates (source)My thesis for oil costs is as follows: Global demand is collapsing faster than oil supply. Recent elevated prices beginning in March 2022 are due to the conflict in Russia and Ukraine causing market unpredictability. Oil is very overbought. The cost of oil will start to fall quickly, lowering rates and customer cost index (CPI), and accompanying a growth downturn. This is not a stagflation scenario, it is a deflationary anxiety situation after a short-term spike in prices.Natural gas futures in Europe support my conclusion. They have been radically elevated, far above rational market fundamentals apart from sanctions on Russia. Russia has refused to be impacted by succeeding rounds of sanctions, and the chart is telling us that these price levels are mainly due to individualss concerns, not market basics. Once those worries disappear (when completion of the Ukraine scenario becomes more clear), costs will adjust down quickly.European natural gas futures (source)That does it for today. Thanks to the listeners and readers. Review and share!This is a visitor post by Ansel Lindner if you enjoy this material please subscribe. Viewpoints expressed are totally their own and do not necessarily show those of BTC Inc. or Bitcoin Magazine.

Other Questions People Ask

What insights can chart analysis provide in a macroeconomic overview?

Chart analysis offers a visual representation of economic trends, allowing analysts to identify patterns and make informed predictions. For instance, examining the dollar index chart reveals consolidation phases that indicate potential future movements in currency strength. By analyzing the trade-weighted dollar against over 30 currencies, one can gauge the broader implications of a strong dollar on global economies.

How does the euro's performance relate to the U.S. dollar in macroeconomic chart analysis?

The euro often behaves inversely to the U.S. dollar, making its chart analysis crucial for understanding macroeconomic dynamics. Recent breakdowns in the euro's two-decade support trend line suggest significant vulnerabilities that could lead to further declines. This relationship highlights how shifts in the euro can impact the dollar's strength and overall market sentiment.

What role does the Hong Kong dollar play in a macroeconomic overview using chart analysis?

The Hong Kong dollar's pegged exchange rate with the U.S. dollar is a critical aspect of macroeconomic stability in the region. Chart analysis of the Hong Kong dollar against the U.S. dollar reveals pressures that could threaten this peg, especially as reserves fluctuate.

How can technical analysis of currency charts inform macroeconomic strategies?

Technical analysis of currency charts provides actionable insights into market trends and potential shifts in economic policy. For example, observing bullish divergences in bitcoin alongside dollar movements can inform investment strategies that account for both assets' behaviors. By integrating these analyses, stakeholders can better navigate the complexities of macroeconomic environments and make data-driven decisions.

What are the implications of a strong dollar as indicated by chart analysis?

A strong dollar, as indicated by chart analysis, often signifies underlying issues within the Federal Reserve's policies and can create stress on global economies. The trade-weighted dollar chart illustrates how a robust dollar impacts international trade dynamics and currency valuations. Understanding these implications is vital for businesses and investors looking to mitigate risks associated with currency fluctuations.