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Just a quick heads-up before I crash tonight. Long day at work, then 3-hr hockey game with the 4 daughters (well, the friend was hangin’ with us tonight, so we adopted her for the evening).

The dollar is at a critical level around 1.28-1.30 per Euro:

If the big head-and-shoulders holds, we would break down (stronger dollar) decisively from here. Although the H&S is a major pattern, I just can’t see that happening. Leading Dems have been pushing to speed up the rate at which China revalues the yuan, so I can’t imagine the election results having a strengthening effect on the dollar, UNLESS there is some great fiscal restraint showing up really soon. Heh, not with our politicians, of either ilk.

If the H&S gets broken, and the dollar heads up thru 1.30 and 1.35 per Euro (i.e. weakens, which seems more likely from a fundamental perspective [did I just use the “f” word?]), it would actually make sense with our deficit, anemic growth, nothing but increased spending in the future, more pressure on China, etc, etc.

The rapidly-weakening dollar would show up, of course, in higher gold and oil prices and more expensive imports. Caveats to the stock market.

We’ll see the result of this multi-year setup within the next few days to weeks. Let’s not forget its profound effect on every facet of our lives, not the least of which is our trading.