EDITOR NOTE: The lowest dollar index levels were reached in 2008 and 2011, two “bottoming” points from the financial crisis that brought us into the Great Recession. That level was near the 70.00 range; the dollar index is currently at 90.00; still a long way to go, but the trend confirms a drive toward those bottom levels. The good news in all of this is that the dollar often moves inverse to gold and silver. As the dollar moves southward, we can expect precious metals to make a tremendous move upward. This forecast is based on the technical scenario provided by the article below. On a fundamental level, the writing’s been on the wall for some time.
It’s been 20 years since the last major peak in the US Dollar. Could the greenback’s latest turn lower confirm another peak?
Today’s chart takes a macro view of the US Dollar Index and highlights the long-term down-trend at each point (1). As you can see, the buck is on a topsy turvy ride, bouncing up and down within this down-trend.
The latest bottom formed after the financial crisis and has seen the US Dollar trade within a 9 year up-trend channel marked by each (2). This gave bulls some confidence that the US Dollar may have formed a long-term bottom… Not so fast!
The broader down-trend may be exerting its force here. The US Dollar Index has formed a potential double top pattern right at its 61.8% Fibonacci resistance (as well as down-trend line resistance) – see point (3).
This bearish formation includes a recent move lower that is attempting to break a confluence of support at (4), including lateral and up-trend support lines.
The buck could melt a good deal lower if this support gives way. Stay tuned!
Originally posted on See It Market