Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

US Dollar Collapse Imminent

Currencies / US Dollar Jul 23, 2009 - 06:52 AM GMT

By: Frederic_Simons

Currencies

Best Financial Markets Analysis ArticleWe don't like to make bold predictions. But this time, it is different (famous last words). 

You might have seen that we at Crossroads FX tend to trade in a very systematic way, using signals of our proprietary trading system without asking too many questions. But you know, from time to time patterns emerge where you cannot resist.


If you take a look at a 300min chart of the EUR/USD Future, everything looks like "normal business". The Euro is trading well above the green buy line in bullish territory, and the line of least resistance is safely pointing to the upside, predicting higher prices in the near future.

[Please click here for additional information about the trading system and how to read the charts]

If you look at precious metals, you might also think: Ok nothing special. Nice uptrend for the last few days, but nothing of big interest.

Then we came across the following daily chart of the USD. When looking at a chart from a technical analysis viewpoint, you either immediately observe "your trade", or there is none.

To us, this chart is looking more than spectacular, as it displays a big descending triangle formation, which looks pretty much as if it will be resolved as it should. To the downside.

Now, the height of the pattern is about 11 points. From the breakdown point, which will be reached as prices fall below the two red horizontal lines around 78, the measured move to the downside will equal the height of the pattern.

This amounts to a price target of around 67 in the USD index. And as prices tend to move lower quickly when breaking down, the future chart may look like this in a few weeks time:


This is looking nasty, isn't it ? How to play this ? There are certainly a lot of ways to do it, and everybody has his own preferences. It looks however interesting to buy either some put options on the DX Future, or some EUR/USD call options. The big advantage of options is that you will have big leverage for relatively small change, with a limited risk of loss. In addition, if the USD should actually crash, implied volatilities will explode to the upside, which will add to the value of the options, making profits even bigger. 

As far as the implications of a Dollar crash for precious metals and the bond market are concerned, we can only say: they might be of historic magnitude, and mark important upside breakouts for precious metals, and breaks to the downside for bond prices.  

We think that when the USD crash comes, it will start with a big move, has little retracements, and take no prisoners. 

Just in case: a first sign that the probable crash in the USD might be averted for the time being could be observed if and when the EUR/USD exchange rate falls below 1.3952, as this will turn the 300min chart bearish.

If you have any questions, please do not hesitate to contact us by writing an email to

New: Discounted subscription fees for retail (non-professional) investors. 3 Month subscription for only 75 USD !

By Frederic Simons

http://www.crossroadsfx.hostoi.com

© 2009 Copyright Frederic Simons - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

John Newman
24 Jul 09, 19:02
Dollar Crash

I read recently that in 1923 Weimar Germany, the currency lost 2/3rds of its value in only four months. Then it paused with some government intervention. Then it went "poof" and vanished into thin air.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules