Loading ...A Most Interesting Chart
The problem with studying and predicting the US Dollar Index is that it is basically the inverse of the Euro
The Euro accounts for over half of The DX ( Dollar Index)
So those predicting a fast drop to 80 on the DX are therefore predicting a fast rise in the Euro
This at a time when Italy and other mega problems are threatening the Eurozone “Experiment” .
Anyhow since the DX seems to “control” so many other markets….Including Gold …we need to have a clue where it is going.
Sometimes the pattern is much more clear if we study the Euro
Here is a most interesting chart. Monthly Euro .
In 2014 The Euro CRASHED ! from 140 to 105….it blew right through support of a giant Triangle
Then it built out what looked to be a halfway pattern…..but lo and behold it broke thru the top of that pattern and made a Bee Line right to …..a direct hit on the Apex of the triangle….a perfect retest …from whence it has this year retreated.
Support is now the top of the previous consolidation at about 115.
Watching how this chart plays out is a GOOD Idea IMO.
The Euro is currently in week 28 of the weekly cycle having topped in week 14.
Although it has not failed yet I expect it to do so and be left translated before it hosts a YCL coinciding with the top for the USD in it’s current weekly cycle.
The Euro hosted a DCL (daily cycle low) on 09 May and while I expect a bounce here I would not expect it to host a DCL/ICL/YCL until around calendar day 34 = 12 Jun
The AUD is in a similar position.
I am waiting patiently for the Euro to host an ICL (low) and the USD an ICH (high) as it should set the scene for a advance in gold plus miners.
If it occurs in early Jun as I suspect then there will still be 10+ weeks remaining in the USD cycle plus historically the next (or second) weekly cycle (lasting around 26 weeks) out of the YCL is weaker.
That gives us 36+ weeks of reasonably clear air for gold + miners.
For anyone following the large diversified miners both RIO and BHP are currently in the timing band for a DCL in only the first daily cycle out of the ICL, so with a rising AUD coming, are in an excellent position to move higher. Buy on weakness is my advice!
“The problem with studying and predicting the US Dollar Index is that it is basically the inverse of the Euro
The Euro accounts for over half of The DX ( Dollar Index)
So those predicting a fast drop to 80 on the DX are therefore predicting a fast rise in the Euro
This at a time when Italy and other mega problems are threatening the Eurozone “Experiment” .”
—————
I like to think of the Euro as an index of the previously exiting individual European currencies, with the DM playing the largest part. The weak links are the Lira and Peseta. Should the “unthinkable” happen and those countries revert to their former currencies, would the Euro (DM) be inherently stronger or weaker? And what about with respect to the USD? And then both to gold? Exciting times.
And to Norvast,thank you again for mapping out the increasingly likely cycle timing.