Extracted From the Oct 19, 2014, Market Update
The bottom line when the world starts to sing “Kumbaya” in regards to the USA, a very important top will have been reached. This entire recovery is all smoke and mirrors, but we are not going to argue with it. The trend is up and that is all that matters. By the way, the trend is also bullish on the monthly charts, so this rally has pretty strong legs.
As long as the trend is up, the dollar should be in a position to test 88.00 and if the trend is still strong when 88.00 is hit, then it could easily trade well past 90.00. There is a long term downtrend line on the monthly charts which ends in the 91.00-92.00 ranges. Thus this long term downtrend line could represent the point where the rally ultimately ends, but as we have repeatedly stated, we will differ to the trend indicator for the final call. Market Update Sept 30, 2014
The pattern continues to show signs of strength both on the weekly and monthly timelines. The trend is up on both lines and so until the trend changes one can expect the dollar to put in higher highs. As it is rather overbought it would not surprise us if the dollar pulled back a bit. There is a strong layer of initial support in the 84.80-85.00 ranges. If it closes below this level for 24 hours or more, then it will most likely test the 82.90-83.30 ranges; if it were to pullback this much, it would make for a splendid buy.
Dollar Bull Could Overshoot Issued Targets
There is always the chance for the dollar to overshoot during the correction process, so if it closes below 82.80 for more than 3 days in a row, it will most likely test the lower bands of support which fall in the 81.80-82.20 ranges. For the correction to pick up steam the green line would have to cross over the purple line in our custom MACD indicator. We have two custom MACDS the first one has standard deviation envelopes, the second one does not. Additionally, the SD MACDS (MACDS with Standard deviation) would turn negative if the green dots turned red and moved below the lower SD band. At this point, we would not focus on lower price targets. Lastly, as long as the trend is positive every strong pullback should be treated as a buying opportunity. Both versions of MACD are in a bullish mode right now as is the case with our custom RSI indicator.
The trend (according to our trend Indicator) is still up and thus every pullback must be viewed as a buying opportunity; the stronger the pullback the greater the opportunity. D
Dollar Bull Update Aug 2018
The outlook for the US dollar Index (and by default the US dollar)remains quite bright; its present trajectory indicates that it is set to pummel all the other major currencies. If the EU decides to engage the Trump administration with a trade war, the Euro will almost certainly trade on par with the dollar.
On a separate note, the Fed has a huge amount of leeway once we enter the next stage of the currency wars. By hiking rates early on the cycle, the Fed can easily lower them if the need arises, and any nation that decides to match them will experience a rapid decline in the value of their currency. A rapid decline in the value of a nation’s currency will unleash the inflation beast, and that is something nations like China can’t afford right now. We are in the midst of a massive currency war.
For now, the US has a plethora of weapons to deploy against any nation that decides to engage it. We suspect that Europe will decide to work with the US as this will give both Europe and the US a chance to push China to the negotiating table. It will be a painful blow for the leaders, but the Chinese people will benefit from this move as it will trigger a movement in China that will resemble what took place in Taiwan years ago when it broke away from mainland China. However, that’s a story for another day. US Dollar Index Chart Bullish: US dollar Multi-Year Bull Market Still Intact