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Well, the recent move has burst through the ‘domed top’ on my Dollar Chart. Someone on Twitter asked why don’t I draw it to take the spike highs into account, so I’ve done that here…
I left the original arc on so that you can compare the two. If valid, the new arc needs 99.3 to be breached. Before everyone starts crying foul and accusing me of constantly moving the goalposts, I agree. However the previous Dollar ‘domed top’ did accommodate the spike highs on the monthly chart…
Having said all of that, I’m open to the idea of a right translated Dollar cycle, and if this goes up much further, we need to start thinking in those terms. It would surprise me, but gold seems to have been doing ok with a rising Dollar so far. Some initial thoughts…
Once the FOMC decision is fully digested by the markets, I’d expect the next PM upleg to get underway.
Hi Northstar – just want to say I really appreciate your charts and your ability to see the other perspective – I agree with you that once the FOMC is fully digested by the markets the PM train will be underway – however I think that the markets will throw their temper tantrums and will tank – in addition the stronger dollar will feed on itself creating the synthetic dollar short that has crushed emerging markets and Europe – the dollar may me the last one standing and if this plays out expect gold to flounder a bit
Appreciate the comments Todamoon. Agree with your comments. It’s probably the case that we all have our view about how the ‘big picture’ will develop. Anyone who doesn’t consider EVERY possibility is at the least being naïve. Low probability events can, and do happen. I may view DXY 100+ is a low probability, but clearly as we close in on that number, the probability increases. The question then becomes, just how high will it be allowed to go, and what are the knock-on effects. I’ve set 99.3 as the absolute maximum that the ‘domed top’ scenario can accommodate. After that, the pattern is invalid, and I’m thinking about what that might mean. Looking at PM action globally, I’m very confident this is just the start, but it looks like gold priced in US Dollars will be the last to reach new all-time highs.