Shanghai Low?

Here's a chart of the Shanghai Stock Exchange Composite Index (^SSEC). In the background (green), I charted 1/$USD, i.e. the inverse of the dollar index as a measure of dollar weakness. Notice how closely related these two indexes are, for several years now. Strength in the ^SSEC is closely tied to weakness in the dollar, and vice versa. Neither is a function of the other, since sometimes the dollar leads (red circle), while other times the ^SSEC predicts future events in the dollar (blue circle). But changes generally do not happen simultaneously.

Now, look at the ratio between the ^SSEC and the dollar ($USD). Like so many other dollar-related charts, this one is at a critical point right in time for QE3. We're at an important trend line (the base of an ascending triangle), and the RSI is under 30, which would signal the dollar is due to fall and/or the ^SSEC to rally. We'll find out soon enough.

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