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
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

U.S. Dollar Fiat Cliff

Currencies / US Dollar Mar 23, 2013 - 01:24 PM GMT

By: Joseph_Russo

Currencies

I would like to start this piece by recommending a rather thorough and viable chart study of the US dollar by an analyst writing under the pseudonym Rambus, titled Dollar Bears Prepare to Hibernate. Rambus has produced some excellent charts in this piece along with sound analysis, and in my view, provided readers with valuable information and insights.

It is my hope that Rambus and the readership at large will not mind if I attempt to add another layer to his cogent work.


Albeit spawning from a relatively recent and still fragile signal, at present, my work also reveals a long-term bullish bias for the dollar and a contrasting bearish bias for gold. I will endeavor to add value to the good work of Rambus using a monthly bar chart going back to 1971.

monthly bar chart going back to 1971

The first thing I would add relative to the big-picture monthly chart from 1981 presented by Rambus, rests specifically with regard to the H&S top mentioned. That peak occurred in 2001, and more importantly, the bearish neckline associated with it, which rests near the 80.39 level was absent from the observations he shared.

This is a critical FIAT-CLIFF bearish (neck) line in the sand, which the dollar has been struggling seriously with since July of 2007. The Dollar has traded above and below the FIAT-CLIFF for nearly six years. A wide coiling pattern akin to a rather sizable flag pattern has formed, which in this case, would imply the presence of a continuation pattern with better than fair odds for an eventual bearish resolution.

I have replicated Rambus's 4-point fractal sequence and boxed point 4 on the left, and point 1 on the right to illustrate the genesis of this major neckline. This is a line very much worth keeping a sharp eye on.

As noted in the lower right, the neckline drawn from these two points governs the active defense or suspension status of a downside price target in the low forties, which if achieved, would result in a 50% haircut from current levels.

Risk of Ruin

The final layer I wish to share surrounds what I refer to as a "risk of ruin" trajectory. When breached, risk-of-ruin-trajectories calibrate downside price targets, which for all intent and purpose virtually destroy 100% of all existing value.

Spawning from the pivot low in the late 70's and the first point labeled 1 in the late 80's, the thin rising trendline moving upward and to the right, ending just above the prayerful Ben, identifies a clear risk of ruin trajectory.

So long as the dollar maintains trade and closes beneath this rising trajectory, complete obliteration of the fiat currency to the tune of 90% from current levels, is a defended and working target. The FIAT-CLIFF line simply adds a level of immediate drama associated with the first 40% of a cataclysmic 90% wipeout.

Note how the risk of ruin trajectory twice rejected the dollars attempt to break above it upon twice approaching the rising resistance rail associated with right shoulder of the FIAT-CLIFF head and shoulder pattern.

Having said all that, until the shorter-term price action dictates otherwise, we remain bullish the dollar right alongside Rambus.

In wrapping up this view from 50,000 feet, each of us should hope and pray along with Ben for a sustainable rally to the 105 target, which would place the dollar-trade above the implied risk of ruin trajectory.

If such a bullish feat occurs, to remove the risk of ruin entirely, the dollar must never register a monthly close beneath that rising trajectory for if it does, the risk of ruin is back in play.

The Elliott Wave Take

Below is a long-term chart similar to the one Rambus used from 1981. I have held to this wave count (as has the dollar) for nearly a decade. This does not imply that I will be right in the end, it simply proves that I have been right thus far.

Dow Chart June 19 - 2009.png

To fully appreciate our unconventional application of the theory, specifically as it relates to the above chart, please refer to "US Dollar: Wave Counts, Flight-to-Safety" penned in June of last year.

The following is brief excerpt from the above link:

As graphically inferred by the articles introductory image, there is no doubt whatsoever that since its general inception, the US dollar remains by politically exploitive design, enmeshed in a long-term secular decline toward oblivion.

The end game will play out like those of all other fiat currency throughout humankind's history, which shall of course lead to an outright failure and the existential necessity for the country (or world) inevitably to manufacture and adopt a suitable

Trade Better/Invest Smarter

By Joseph Russo

Chief Publisher and Technical Analyst
Elliott Wave Technology
Email Author

Copyright © 2011 Elliott Wave Technology. All Rights Reserved.
Joseph Russo, presently the Publisher and Chief Market analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program.

Joseph Russo 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