US Dollar Technical Update...So Far, So Good

By: David Petch | Thu, Nov 8, 2012
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No surprise, Barrack Obama handily won the US election, which means that with silly season over, they voted the same rascals back into the White House instead of a different batch of rascals. In the end, Mickey Mouse or the Pope could have been stuck into power in the US, the fate of the currency was baked in the cake a long time ago and we are simply following the cycle path. Today's update will provide some clarity regarding the US Dollar Index, as the developing pattern is somewhat recognizable (Refer to Figure 7).

As side note, I probably will not be posting a US Dollar update on the web for sometime, as the turning point is nearing....maybe after the future bottom is put in place,we will come out after the fact. Future once per month releases onto the web will include S&P 500 Index, HUI, energy and XOI, Gold and related ratios etc.


Currencies

The daily chart of the Canadian Dollar Index is shown below, with lower Bollinger bands in close proximity to each other beneath the current price, suggestive that a bottom was put in place. Upper Bollinger bands are still above the current price and require another 2-3 weeks before a clear indication of an uptrend in the Loonie commences. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Extrapolation of the %K trend in stochastics 1 and 2 suggest at least 2-3 weeks before crossing above the %D to indicate a change in trend. Upside in the Loonie over the next 6-8 months is any where from $1.11-1.13, down 3 cents from our initial target. So far, the expected pattern of the CFS is playing out. The inverse head and shoulders pattern that potentially is forming has a short-term upside target of $1.05

Figure 1
$CDW (Canadian Dollar - Philadelphia) INDX
Larger Image

The daily chart of the Australian Dollar Index is shown below, with all three lower Bollinger bands beneath the index, suggestive that a bottom was put in place. 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. With the %K in stochastic 3 curling up, it suggests that a multi-month uptrend is about to commence.

Figure 2
$XAD (Australian Dollar - Philadelphia) INDX
Larger Image

The daily chart of the Euro Index is shown below, with lower 21 and 34 MA Bollinger bands in close proximity to each other beneath the current price, suggestive that further downside 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. Extrapolation of the %K trend in stochastic 2 suggests another 2-3 weeks before a bottom is put in place. An inverted head and shoulders pattern appears to be forming, with an upside target of $1.30. Going forward 6-8 months out, expect the Euro to rise to $1.46 - 1.48.

Figure 3
$XEU (Euro - Philadelphia) INDX
Larger Image


US Dollar Index

The daily chart of the US Dollar Index is shown below, with upper 21 and 34 MA Bollinger bands in close proximity to the current price, suggestive that further upside is looming. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Extrapolation of the %K trend in stochastic 2 suggests that another 2-3 weeks of time is required before a top is put in place.

Figure 4
$USD (US Dollar Index - Cash Settle (EOD)) ICE
Larger Image

The weekly chart of the US Dollar Index is shown below, with all three upper Bollinger bands in close proximity to each other, suggestive that a mid-term top was put in place earlier this summer. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Extrapolation of the %K trend in stochastics 2 and 3 suggest that a bottom may not be put in place for at least another 8-10 months (looking for late July 2013). One important thing to note is that a bottom in the US Dollar will coincide with tops in commodities, broad stock markets and other currencies.

Figure 5
$USD (US Dollar Index - Cash Settle (EOD)) ICE
Larger Image

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, suggestive that a 1996 style uptrend or late 2006 downtrend is approaching...I am leaning towards the 2006 style of decline based upon positioning of stochastic on the weekly chart. 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. The monthly chart does not really provide any indication of weakness just yet, but the %K in stochastic 1 is approaching critical resistance. At some point within the next 30 days, a top will have been put in the US Dollar.

Figure 6
$USD (US Dollari ndex - Cash Settle (EOD)) ICE
Larger Image

The short-term Elliott Wave count of the US Dollar Index is shown below, with the thought pattern forming denoted in green. I was looking for a diametric triangle, but recent timing of the uptrend invalidated this thought. As it stands, a flat (3-3-5) is thought to be forming at present, with wave [c] beyond the 100% equivalency level of wave [a] it appears that an elongated flat pattern is forming, with the 1.618x level at 81.48, just below the expected high the US Dollar can reach based upon the pattern forming. On very important observation Glenn Neely made with his NeoWave is that elongated triangles will often form either one leg or a segment of the first wave of a triangle. As per Figure 8, this ties in well with the hypothesis that an expanding triangle is likely to form between now and 2020. At present, waves [a] and [b] are nearly equivalent in time, which suggests wave [c] at present will be equal to [a] + [b]. Based upon this, a top is not expected for at least 2 weeks, with the potential to extend out to 3 weeks. Once complete, expect wave C.(A) down to start, with at least 2-3 months of downside, followed by 2-3 months of sideways to upward price action, with one final down leg to the 70-72 area no later than the end of July 2013.Based upon this chart, the US Dollar is likely to remain in wave [c] until the end of this month before topping out and declining in wave C.(A).

Figure 7
$USD (US Dollari ndex - Cash Settle (EOD)) ICE
Larger Image

The long-term Elliott Wave count of the US Dollar Index is shown below, with the thought pattern forming denoted in green. Wave [A] is described as having an (A)-(B)-(C) structure, but this may require modification to (W)-(X)-(Y). Or...wave A is actually wave (A), wave B is actually wave (B) and wave C becomes wave (C). Time considerations fit with the latter, so future updates with a modified Primary Degree (Purple) may be seen. A bottom in the current downward trend is not expected to base until late July 2013, which will be followed by a very sharp upward move in the US Dollar to anywhere from 88-90 from late July 2013 until late in 2014. This period of time is going to be extremely difficult for everyone globally, as the short, but intense period of deflation will hit pension funds, putting many into non-existence. More and more people rely on the government, which is why more and more people have their hand out for government programs. This all costs money and in the end, the safety nets of society will be cut and then family will become very important. I can not stress how important owning gold and silver bullion is going forward, as it will literally help people live and even retire. Balance ownership of gold and silver bullion with precious metal shares. PM stocks are so dirt cheap right now that we probably have seen lows for the next 20 years (Refer to stock picks from a few weeks ago on the site archive). Levels at present are cheaper that 2008 on a relative basis to the price of gold, so carefully pick stocks that pay dividends, along with up and coming producers. Five to 8 years from now, PM stocks will be much higher than present levels.

Figure 8
$USD (US Dollari ndex - Cash Settle (EOD)) ICE
Larger Image

That is all for today...back tomorrow with an update of gold and related ratios. Have a great day. At the request of a few micro mining companies we are trying to structure and assimilate legal forms, swing move dates, projections etc. for aiding in timing future financing to minimize shareholder dilution, so more information on this hopefully will be available in the future.

 


For contact information or to make suggests, criticisms etc. (all comments welcome and will be responded to, simply email accounts@treasurechests.info

 


 

David Petch

Author: David Petch

David Petch
TreasureChests.info

Treasure Chests is a market timing service specializing in value based position trading in the precious metals and equity markets, with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven to be very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested discovering more about how the strategies described above can enhance your wealth; please visit our web site at http://www.treasurechests.info.

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