Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Dollar - A Diamond in the Rough?

Currencies / US Dollar Aug 06, 2013 - 05:22 AM GMT

By: Rambus_Chartology


Today I want to take an in depth look at the US dollar as it is so important to the overall big picture regarding the deflationary outlook that appears to be headed our way. There are just two pieces of the puzzle that need to come into focus and one is a strong US dollar and the other is a weak oil price. Everything else seems to be lining up. I have many different charts for the US dollar that are showing us nothing is broken and basically this consolidation area is still developing.

Lets start with a daily chart for the US dollar that I showed you a while back that shows an expanding triangle forming. Notice the brown shaded support and resistance zone that is made off the top of the blue 5 point triangle reversal pattern just below. As you can see this expanding triangle has been getting bigger so has the volatility been increasing. This is volatility to the max.

With this next chart I want to show you a possible pattern that came into focus last week when the price action failed to reach the bottom rail of the expanding triangle. Please keep in mind this new pattern is still far from complete yet there is now a potential that the expanding triangle is maybe morphing into a big Diamond consolidation pattern which is how diamonds tend to form, expanding on the left side and contracting on the right side. If last weeks low can hold, which is most important for this diamond pattern to form, then we can connect the bottom rail that will start the contracting process on the right side of the chart. As you can see last weeks price action bounced between the 50 dma and the 200 dma with the 200 dma holding support. So we are at a critical juncture for the US dollar right here and now. The top blue rail on the right side of the chart is just a parallel rail to the one on the bottom left side of the chart so it’s not firm. I expect some more chopping on the right side of the chart before the possible Diamond pattern can be completed. This possible Diamond fits in nicely with the longer term charts that are showing resistance at this point in time. Whenever you have a strong support or resistance many times a consolidation pattern will form just below a resistance rail, for example, that gives the stock enough energy to finally break through to the other side. I’ve added some black arrows that will give is a rough look at what I would like to see happen to finish off this most important diamond consolidation pattern to the upside.

This next chart is a three year look that shows you two important support and resistance zones in the brown shaded areas. As you can see the top brown shaded support and resistance zone is still holding resistance. The lower support and resistance zone has been a little sloppy but the potential blue diamond has pretty much found support on top of the lower S&R zone. As you can see our blue diamond has formed between the upper and lower brown shaded support and resistance zones which makes sense if you think about it. Once the US dollar can overcome the top S&R zone it will then reverse its role and act as support from the topside. Also on this chart are the 50 dma and the 200 dma with their bull and bear crosses. So far the bull cross, in April of this year, is still intact.

Lets now go back further in time and look at a five year chart that shows that the US dollar has been in a nice confirmed uptrend channel for 2 1/2 years or so. Like the possible diamond pattern, that is forming on the daily chart above, you can see why this area is soooo important to hold support. I would really like to see our present low form just above the previous low made a couple of months ago giving us a higher low on the bottom rail of the uptrend channel.

Below is a long term chart that shows the big base being built that will launch the US dollar much higher once the black dashed support and resistance rail is finally broken to the upside. As you can see the price action has touched the support and resistance rail several times now in the last few months. This is where the diamond, I showed you on the second chart above, is forming. I believe that diamond is going to give the US dollar the energy it needs to finally overcome that support and resistance rail. I also expect once the big S&R rail is broken to the upside there will be a backtest at some point before the US dollar rally takes off. The red circle shows the area I’m talking about

Below is a 32 year chart, that shows the bottom above is a fractal to the one that formed back in the 1990′s. A big base equals a big move


Below is a combo chart that shows the US dollar on top and gold on the bottom. What strikes me first when I look at this chart is how the dollar has been consolidating while gold has been declining. If the US dollar can bounce off of this most recent low that should put a headwind in golds face. This is what I refer to as an inflection point.

The last chart I would like to show is a long term monthly look at the US dollar that is showing how the price action keeps testing the support and resistance rail. This is telling us that this support and resistance rail, on the monthly chart, is very very hot and once it’s overcome the big base will be competed. It lets us know where we are in the big picture which is one of the most important aspects of charting. You have to know where you are, relative to everything else, in order to make the best judgement call one can make. These charts should get everyone up to speed on what may lie ahead in regards to the precious metals complex and the deflationary episode that looks to be in front of us. All the best…Rambus

All the best

Gary (for Rambus Chartology)


© 2013 Copyright Rambus- 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.

Rambus Chartology Archive

© 2005-2019 - 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