I know this may be a shock, but this long-term chart of the dollar suggests that the greenback may be setting up for massive gains in value, over the next 15 years or so. This chart is full of bullish formations. Let's start with the largest of the formations, which is the descending wedge (in black.) You can see that since these futures contracts went live in 1985, the dollar has been forming this massive descending wedge. That's nearly 35 years spent forming this pattern — amazing. In case you didn't know, descending wedges are bullish chart patterns, and the descending wedge here is enormous.
The next largest pattern is a massive cup and handle pattern (in blue.) So far, it is a textbook cup and handle pattern. You can see that price is inside of the handle right now, and could remain there for another year or two. What's even more interesting, is that the handle and the top of the falling wedge are converging in the same area. So, if price breaks out above the falling wedge, that will be a very bullish indication that the cup and handle could be setting up for a breakout as well. Now, if we look across the exact top of the cup and handle, we can see that it corresponds to a lateral resistance level at 104 (red dashes.) As you can see, that level has acted as major support and resistance in the past. So, assuming these bullish patterns break to the upside, we can expect powerful surges higher in response, since these levels have stood as resistance for so long.
The next pattern is the rising channel/wedge. I would say that this pattern is more of a channel than a wedge, but it is slightly closing toward the end. Regardless, it's rising to the upside, suggesting that price will continue to rise as it remains inside of that formation.
Assuming a breakout occurs from these patterns in the future, we can expect the USD to soar 40% or more in value. Obviously, that is contingent on a breakout, and the breakout hasn't occurred yet. A strong US dollar is good for US consumer purchasing power, but it isn't good for US companies who export products, or companies who conduct business overseas. So, it could have an overall positive effect, enticing companies to remain stateside.
However, some companies wouldn't have that option, if their business relies on foreign markets. This is why our response to China's trade war is critical. If the USD rises in the future, as this chart projects, we will need a stronger advantage in global trade, so that the US consumer can benefit while US companies are protected with trade renegotiations. Don't let the media lie to you, and tell you that America shouldn't be engaging China with tariffs. This isn't "Trump's Trade War," as the left would like you to believe. This is China's Trade War, which they started decades ago when Bill Clinton opened the doors. The only problem, is that no president has had the courage to respond, until President Trump took office. When America is under attack, we have an OBLIGATION to respond. The American economy has been under attack by China for decades. They've stolen our intellectual property to the tune of over $100 billion per year. They reverse engineer our products and sell billions in knock-offs in the global marketplace. They've polluted China and the world around them, by carelessly allowing companies to operate there without any regulatory costs or responsibilities, which enables companies to dump their waste products at random to save billions in regulatory costs that they would have otherwise paid in America. China artificially suppresses the value of its currency, so that it can take advantage of the US in trade expenses. Make no mistake about it, they've been executing a calculated attack on our nation for decades. When you go to the store, most products that you see are Made in China, and most of those products are made with toxic chemicals or otherwise do not meet US product quality standards. Yet, their products flood American markets, and every former president hasn't lifted a finger to stop it. Now that we actually have a president who understands the importance of this issue, and how dangerous it is for the future of America's national security, we have outrage from the leftists who wrongfully criticize Trump's response. I guess they would rather turn a blind eye, while the enemy quietly destroys us from the inside out. I am outraged and disgusted with Americans who don't have the courage to fight, when our country is under attack!
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
"we can expect the USD to soar 40% or more in value"
The USD purchasing power certainly won't increase 40%.
The USD Index is only increasing in value relative to 6 other currencies that make up this index.
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
What you are witnessing in your charts is the weakening of the Euro, Yen and Canadian dollar. They are printing money like crazy over there. When a country's currency is being destroyed by inflation (Venezuela, Argentina, Brazil etc.) their first impulse is to flee to the USD which strengthens it. But that too will eventually devalue when it gets hit by higher inflation with all of the money printing that is necessary to bail out the banks and the economy. It will take at least 5x more money than it did in 2008 so we are talking about trillions of dollars. The Federal Reserve still has to destroy the remaining 3% of the dollar's purchasing power (compared to 1913) and I am quite sure they are up to the task. (sarcasm)
I think it was Gerald Celente who once said "The U.S. dollar is the best looking horse in the glue factory". I couldn't agree more. :-)
MagicPoopCannon
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@BDG, I agree with that. The other central banks are printing and inflating their monetary supplies, in many cases, at a rate greater than the US has done. So, it's true that the dollar could rise in value due to proportional changes in the FX market.
kardia
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USD is more likely to return to 70 cents.
MarketsAnalyzed
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Sorry I disagree. The dollar topped. The 15 year cycle peak. And bottoms every 7 years.. this will be the last one. I exclusively published this concept to my clients while back. We are in the final stage.
xtreme3362
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I totally agree on China. Clinton got us in this mess and nobody said anything. What's crazy is that most traders, in the groups I'm in, are actually in favor of socialism. Trading is one of the most capitalist things you can do yet they want socialism which would be devastating to trading.
kardia
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Is it just me or does it look like the Feds are trying to destroy the US economy?
Boss_Coyote
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Amen !
without_worries
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Have been studying the chart for a wee while now. It is baffling. I see bullish and bearish cases. Value is climbing up a rising wedge (bearish), while RSI is continuing to test resistance together with overbought Stochastic RSI (bearish). I expect the dollar to increase in value in the short term as the recession takes hold and folks use the dollar as a flight to safety. Longer term I see an almighty crash in the value as the rising wedge confirms. Short term demand increase. But don't forget, China, Russia, they are dumping US debt like there's no tomorrow. Together with money printing, the short term gains will come crashing down on the day demand shrinks faster that sellers can catch it.
f1etch
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I thought you had more nowse about you than to be suckered into the left/right panto
rampman10
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@f1etch, I agree and 'suckered' is a good term to use to describe this post. It is scary how one bad man can sucker so many lemmings into following him off the cliff.
The USD purchasing power certainly won't increase 40%.
The USD Index is only increasing in value relative to 6 other currencies that make up this index.
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
What you are witnessing in your charts is the weakening of the Euro, Yen and Canadian dollar. They are printing money like crazy over there. When a country's currency is being destroyed by inflation (Venezuela, Argentina, Brazil etc.) their first impulse is to flee to the USD which strengthens it. But that too will eventually devalue when it gets hit by higher inflation with all of the money printing that is necessary to bail out the banks and the economy. It will take at least 5x more money than it did in 2008 so we are talking about trillions of dollars. The Federal Reserve still has to destroy the remaining 3% of the dollar's purchasing power (compared to 1913) and I am quite sure they are up to the task. (sarcasm)
I think it was Gerald Celente who once said "The U.S. dollar is the best looking horse in the glue factory". I couldn't agree more. :-)