Dollar Ascendance: Anticipating a Multi-Month Surge
Updated Dec 2022
The following excerpts, taken from our Market Updates sent to subscribers, provide compelling evidence that the Dollar is on the cusp of a Multi-Month Rally… with the potential to evolve into a multi-year surge.
Navigating Bull Markets: Expect Corrections and Prepare for a Dollar Rally
Every single person needs to remember that every single bull market has experienced several strong corrections and at least one incredibly painful correction; there has never been an exception to this rule, and there will never be. Commodities are slowly falling one by one. It is just a matter of time before oil and precious metals are hit. Despite the dollar trading to new lows, there are still many signals that validate that the dollar will mount a multi-month rally. The time frames have moved, but the pattern has not turned bearish.
Lastly, everyone is harping about the dollar trading to new lows; in reality, its July 2008 low is still holding, but many commodities have traded to new all-time highs. This development alone is one of the most significant possible positive divergence signals any market can or could ever generate. Market update May 4, 2011
Dollar Reversal: Strong Weekly Close Signals Potential Bottom Formation
The weekly close above 74.50 in record time was an enormously positive development and validated the outlook the dollar has put in a bottom. Last week we stated that the dollar would need to close above 76.40 on a weekly basis to generate the next confirmation. This is still valid, but the strongest confirmation would be for it to trade above 77.50 for 3 days in a row. The current pullback the dollar is experiencing is a normal reaction given the strength of the initial move. However, nothing has changed in Europe and one could argue that the situation actually looks worse now than it did last year. Market Update May 24, 2011
Conclusion:
In conclusion, the market updates from May 4, 2011, and May 24, 2011, provide compelling evidence suggesting that the dollar is poised for a significant rally. While commodities are experiencing a gradual decline, indications validate the potential for a multi-month rally in the dollar, possibly extending into a multi-year surge.
Despite the dollar trading at new lows, the market signals and positive divergence from commodities reaching all-time highs suggest a potential bottom formation for the dollar. The recent weekly solid close above 74.50 further reinforces this outlook. Although a pullback is currently observed, it is considered a normal reaction given the initial move’s strength. It is important to note that the situation in Europe has not improved and may have worsened, potentially providing additional support for the dollar rally.
FAQ:
Q: Are corrections a regular part of bull markets?
A: Every bull market experiences several strong corrections and at least one painful correction. This pattern has been consistent throughout history.
Q: What signals validate the potential for a dollar rally?
A: Despite the dollar trading at new lows, multiple signals suggest a forthcoming multi-month rally, including positive divergence from commodities reaching all-time highs.
Q: What confirmation is needed to strengthen the view of a bottom formation for the dollar?
A: While closing above 76.40 on a weekly basis is relevant, the most potent confirmation would be for the dollar to trade above 77.50 for three consecutive days.
Q: Why is the current pullback considered a normal reaction?
A: Given the initial move’s strength, a pullback is a natural and expected response in the market. It does not negate the potential bottom formation for the dollar.
Q: Has the situation in Europe changed since last year?
A: No, the market update suggests that the situation in Europe may have worsened compared to the previous year, which could further support the dollar rally.
Q: What should be monitored to track the progress of the dollar?
A: Key levels, such as the weekly closes and trading above certain thresholds, along with any developments in Europe, should be closely monitored to assess the dollar’s future trajectory.
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