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April 01, 2008

Carry trade "blessing or cursing" will be determined by the Dow.

The breakout of the Dow Jones Industrial Average's range will determine where the "carry trades" head in the near term and how well they do.

Check out the chart below. If the Dow breaks the red resistance line below, then it will enter into the "carry trade friendly" zone and it will be smoother sailing for carry trades like EUR/JPY.

The Dow will determine the road to travel for carry trades.

Dow_carry_trades

However, if the recent market rally "tops out" at the red line and then heads lower and even takes out the green support level, you're going to see carry trades enter a "carry trade curse" zone.

Then pairs like EUR/JPY and especially GBP/JPY would have a very tough time.

Sean Hyman
Currency Director
The Sovereign Society

Posted at 06:32 PM in Carry Trade |

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