Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

US Dollar Technical Analysis and Forecast, the Fate for Gold

Currencies / US Dollar Sep 13, 2012 - 12:25 PM GMT

By: David_Petch

Currencies

Diamond Rated - Best Financial Markets Analysis ArticleThe following article was presented to the benefit of subscribers on September 12th, 2012. Rather than mimic a few previous articles I have penned, this one will focus on technical analysis of one Index, with interspersed commentary fitting to what is observed. The most interesting part I found from all of the analysis is how well the Elliott Wave pattern of the US Dollar Index matched initial expectations. At the end of the article, it is hoped that the reader has a better understanding of how economic situations unfolding over the next 8-12 months are going to ultimately hinge on the path of the US Dollar.


Currencies

The daily chart of the Canadian Dollar Index is shown below, with the move up yesterday having a price excursion beyond the 21 and 34 MA Bollinger bands, suggestive that a short-term top was put in place. Given the depth of the lower 55 MA Bollinger band, it will take 4-5 weeks of sideways to mildly downward price action before the Loonie heads higher. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 3 and beneath the %D in 3. Even though the Loonie registered an overbought reading with an excursion beyond Bollinger bands, it appears further upward price action could persist for another 5-10 trading days. The situation with the US Dollar Index declining so hard so fast indicates that a potential rally is looming, which will be a temporary set back for commodity prices and the broad stock market indices...this will be a pause as they put in new 542 week highs between December 5th and March 6th 2013. Our target for the Loonie sometime between April and August 2013 is $1.15-1.18. This is a double edged sword for the US...it allows greater number of exports to be made, which boosts jobs, yet incoming item such as energy, food  and other goods etc. rise by a certain cost. This is a silent tariff in many regards because blame can be shifted to currency valuations for reasoning behind other countries having a lag in their exports. As mentioned before, the broads top out first, followed by commodity indices (HUI, XOI), commodities (gold, silver, oil) and finally, the US Dollar Index bottoming sometime between June and late August 2013.

Figure 1


The daily chart of the Australian Dollar Index is shown below, with upper 21 and 34 MA Bollinger bands in close proximity to each other, with a noted gap off the lows from earlier this month. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. The dollar from down under is around 4-5 weeks ahead of the Loonie with respect to bottoming....it is possible that the XAD corrects alongside other currencies in 2-3 weeks time, but it will simply be building a base for higher highs. Our target for next year with the XAD is $1.18-1.21...this fits in line with this currency being generally stronger than the Loonie.

Figure 2


The daily chart of the Euro Index is shown below, with the recent price action having an excursion above all three upper Bollinger bands, suggestive that a short-term top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Stochastics are near the upper portion of their range, indicating that a correction is looming. All three currencies shown set for a correction strongly suggest a rally in the US Dollar Index is looming. Since the extension of the Elliott Wave count did not follow through and 81.0 was broken (mentioned as key support a few weeks ago), the short-term mechanics of the market also changed. Expect weakness in the broad stock market indices beyond September 20th, lasting nearly 2/3 of October. This will set the stage for things to develop as expected. The wave of inflation we are going to experience for the remainder of this year and into mid 2013 could be stronger than any of us ever could anticipate. Key measures for determining when a top is put in place will be looking for expected pricing levels in gold ($2500-3074/ounce), oil ($160-180/barrel), silver ($65-85/ounce) and a US Dollar low (71-73). When these levels begin to be touched, it will be time to exit energy and precious metal stocks. Do not forget that the broads are likely to top between December 5th 2012 and March 6th 2013...biotech stocks are poised for a breakout, which are likely to have an upward trend running alongside precious metal stocks. As seen over the past few weeks, a slight change in what happens with the US Dollar can have immediate implications...this will be extremely important to follow as we near our expected topping dates for exit from positions.

Figure 3


US Dollar Index

The daily chart of the US Dollar Index is shown below, with recent price action having an excursion beyond all three lower Bollinger bands, suggestive that a bottom was put in place or is looming. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. The US Dollar has been down hard for 6 weeks, which strongly suggests that a bottom is looming, with an expected partial retracement somewhere between 80.5-81.0. Nothing in the stock market is “As the Crow Flies”, so expect a downward spiralling trail with bends in the road...one of those upward bends is expected within the next 5-10 trading days.

Figure 4


The weekly chart of the US Dollar Index is shown below, with upper Bollinger bands above the current price, suggestive that a top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3. Extrapolation of the %K in stochastics 2 and 3 suggest anywhere from at least 9-12 months of further sideways to downward price action before a bottom is put in place. Initial support in the US Dollar Index will be found between 72.5-73....chances are a pause for 2-3 months occurs in this area before breaking lower (likely remain above 70) for this down leg expected to bottom sometime between June and late August 2013.

Figure 5


The monthly chart of the US Dollar Index is shown below, with lower 21 and 34 MA Bollinger bands in close proximity to each other beneath the index. As mentioned for the past 6 months, this Bollinger band setup would either have an upward trend like 1996 or a downward trend much like 2006. With the Elliott Wave count developing over the past 4 years, it strongly suggests that a 2006 style of decline will be experienced (given nearly 4 years of sideways price action that must be resolved to the upside or downside. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2 and beneath the %D in 3. Although stochastics are not revealing at present, technical analysis on the daily, weekly and Elliott Wave counts suggest a break to the downside...this has been confirmed with the strength of the downward trend of the US Dollar the past 6 weeks.

Figure 6


The short-term Elliott Wave count of the US Dollar Index is shown below, with wave [E] recently completing. Due to the structure of the count, there was the possibility shown below, or the preferred count at the time which had a wave C that was to have started around mid-August. Since 81 .0 was taken out, the count shown below accurately reflects what is going on. Surprisingly, the green pattern drawn in place back in June turned out to be a rather accurate reflection of what actually happened. Given the depth of the recent decline, look for a retest of the 81.0 level to occur over the coming 3-5 weeks before any sort of partial retracement top is put in place. If the US Dollar declines further without participation of rising prices in gold and silver, a sharp correction could be in store for early October before the broad stock market indices rally to new highs later this year. The 4 year triangle pattern is now complete, with the start of the new downward trending pattern expected to last anywhere from 5-8 years...please note that if an expanding triangle develops as expected, then volatility will be extreme and I mean EXTREME.

Figure 7


The mid-term Elliott Wave count of the US Dollar Index is shown below, with the thought pattern forming denoted in green. Wave [E].b of a triangle forming since 2008 is now though to be complete, with wave [A] of an expanding triangle though to be forming for wave c. With triangles, the downward break potentially could be as long as wave [A] or up to 1.25x the length. This in theory could see the US Dollar Index bottom around 66-68 before bottoming. I do not see the 70 level being taken out during this leg down, but expect the unexpected. We could see $2500/ounce gold with a US Dollar at 70.0, but a break to 66-68 would see $3074/ounce. The prerequisites for pricing action in gold has been laid, now we must wait and see what happens.

Figure 8



That is all for today...have a great day and back tomorrow with an update of gold and related ratios...there are some important observations in relation to gold expectations over the next 8-12 months, alongside further info regarding its lower order Contracting Fibonacci Spiral (dates included).

Have a great day.

By David Petch

http://www.treasurechests.info

I generally try to write at least one editorial per week, although typically not as long as this one. At www.treasurechests.info , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2012 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

David Petch Archive

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


Post Comment

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

6 Critical Money Making Rules